Updated: Feb 19
What is a Certificate of Incorporation?
A Certificate of Incorporation is a document issued by SSM that certifies the incorporation of a company. The certificate contains the official company name, date of incorporation and company number.
Why is a Certificate of Incorporation important?
A Certificate of Incorporation is the strongest evidence you can provide that your company is legally incorporated. It bears the SSM seal and contains all important information related to the legality of the company. You can find the registered company name, address and date of incorporation in this document.
How to obtain a Certificate of Incorporation?
A Certificate of Incorporation is issued only upon incorporation of the company. But unlike before, only registration notifications will be issued once the registration is complete. To obtain a Certificate of Incorporation in Malaysia, one must first apply to SSM and pay the prescribed fee. After processing, a certified registered copy of the Certificate of Incorporation will be issued.
An application for a Certificate of Incorporation usually takes 5-10 days to process and complete.
Can foreigners set up a company in Malaysia?
Yes, foreigners can set up a company in Malaysia. However, foreigners can only set up private limited companies (local term: Sendirian Berhad or “Sdn Bhd”). Foreigners can fully own it (100% foreign ownership) with a minimum paid-up capital of RM1.
What is the procedure for setting up a company?
In general, setting up a company with professional assistance is as easy as the following four steps.
1. Name reservation application
2. Preparation of company documents
3. Signing of company documents
4. Submission of relevant forms and documents to SSM
What is the difference between company incorporation and business registration?
Incorporation is the process of creating a completely separate entity - a company. Companies, distinct from their owners, have their own rights, responsibilities and obligations. Due to the barriers that separate the owners from the corporation, incorporating a company provides more protection to its owners without limiting opportunities.
Meanwhile, business registration is simply a license to operate a business. No entity is created. Instead, it acknowledges that the owner will operate a for-profit activity under a business name.
How long does it take to set up a company in Malaysia?
The process of company incorporation in Malaysia usually takes 5-7 days to complete. This time will vary depending on the availability of the signatory and the completeness of the document.
Here are the estimated days for each step.
Company name reservation
Preparation of incorporation documents
Signing of the documents
Submission to SSM
Issuance of Registration Notice
Within 24 hours
Can a private limited company be owned by one person?
Yes. A limited company in Malaysia must have at least one shareholder (owner) and one director. In addition, shareholders can also be directors. Therefore, only one shareholder is sufficient to form a company as long as the other conditions are met.
Who can form a company?
Anyone who intends to set up a company can incorporate a company in Malaysia. You can do it yourself, or hire an agent to do it for you. Those handling incorporation must be familiar with the incorporation guidelines and process. This is why it is recommended to get an incorporation service to speed up the process and get it done smoothly.
How many members can a private company have?
Any private company in Malaysia can have a maximum of 50 shareholders (members). The reason for this limitation is to restrict the transfer of its shares to those whom the shareholders trust or who are already members.
How important is the paid-up capital for Malaysian company incorporation?
Paid-in capital represents the resources a company has when it is formed, not borrowed. For start-ups, especially small businesses, it is important to have paid-up capital to cover operating and other expenses. Paid-up capital is also preferable to borrowed capital because you don't have to worry about repayments and interest.
What is the minimum paid-up capital for a Malaysia Sdn Bhd company?
The general minimum paid-up capital for a Malaysian company is RM1.
Banks, government agencies and other institutions may also require a prescribed amount of paid-up capital before you can apply for a license, loan, tender or other business dealings with them.
Is high paid-up capital a good thing?
Having a high paid-up capital is a good thing because it means the company is well-capitalized and has sufficient resources to fund day-to-day operations. High paid-up capital is also ideal so you can easily apply for a license or loan. Finally, high paid-up capital is good because it means high liquidity and greater credibility.
What is company share capital?
Share capital is the amount of money a company raises by issuing or selling shares. Share capital is the total value of all ordinary and preferred shares issued. For example, with an initial issue of 1,000 shares at RM10 each, your share capital will be RM10,000 upon incorporation.
Share capital differs from paid-up capital in that the former represents the value of all issued shares, while the latter is simply the shareholder payments at the time of issue.
Can a company have no share capital?
In Malaysia, a company limited by guarantee cannot have a share capital. It is a public company and is widely used for non-profit activities such as charities, community projects, etc. Since it has no share capital and is not for profit, it does not pay dividends to its owners.
What are the two basic types of shares?
Ordinary shares and preference shares are the two basic types of shares. Each type of share confers different rights and preferences on its owner.
Gives holders voting rights (participation in company management).
Does not confer voting rights on the holders.
Shareholders receive dividends after payments are made to preference shareholders.
Priority for dividend distribution.
Dividends are not fixed but decided by the board of directors.
According to the constitution of the company, there is a fixed dividend rate.
Some categories may be convertible.
What is the difference between a stock and a share?
The terms stock and shares basically mean the same thing - ownership of a portion of a company. Their difference is only syntactic, not legal or financial, and this distinction is often overlooked. "Stock" is a term used generically to refer to ownership of a company; while "share" is used to refer to ownership of a specific company.
How many types of share capital can a company have?
Both basic types of shares (ordinary and preference) have subclasses that companies can choose to offer to buyers. Choosing the number of share classes to issue depends on the company's vision and direction. Company owners just need to understand how offering such shares will affect their ownership, management and control.
Some types of joint-stock companies are as follows:
Deferred ordinary shares
Non-voting ordinary shares
Cumulative preference shares
Is there a minimum or maximum share capital?
The minimum share capital for Sdn Bhd in Malaysia is RM1 (qualifications for certain industries and activities). Furthermore, the share capital of a company can be up to any amount.
What are Class A and Class B shares?
Class A and Class B shares are ordinary shares that differ in the number of voting rights they offer shareholders. For example, Class A shares may have 10 votes, while Class B shares have only one.
Class A shares are the typical shares of public companies that give their holders more voting rights than other classes. Class B shares are usually created so that a company can change the voting rights it wants to offer buyers. Class B shares are also issued to concentrate voting power among specific groups of people.
What are the important documents required for incorporation?
- Constitution (Memorandum and Articles of Association)
- Form 48A (Statutory Declaration By A Person Before Appointment As Director, Or By A Promoter Before Incorporation Of Corporation)
- Form 6 (Declaration of Compliance)
- Original Form 13A
- Copy of letter from SSM approving the company name
- Copy of ID card (for each director and company secretary)
- Letter of Authorization (if the proposed company name contains controlled words or trademarks)
What are a company's advantages?
- Protect the owner from liability and legal obligations
- Easier to transfer ownership
- More capital opportunities
- Great potential for expansion
- Business risk is shared among company members
- Professional management
- Perpetuity of the company even if shareholders or directors are incapacitated or die
- Tax incentives
What are a company's disadvantages?
- Forming is more complicated.
- It is expensive to set up, maintain and close.
- There are more annual compliance requirements.
- The company's financial affairs are made public.
- Taxation is complicated.
- There are many statutory guidelines to follow.
What is the main document of the company?
The Constitution is the main document of a Malaysian company. The Constitution was formerly known as the Memorandum and Articles of Association in Malaysia. The Constitution is very important as it regulates the internal affairs and management of the company and defines the powers and objectives of the company.
What is the difference between shareholders and directors?
Owns a company through purchase of shares
Elected by shareholders
Generally not involved in corporate decision-making, except for major changes and transactions
Controls the day-to-day operations of the company, but must obtain shareholder approval for certain corporate decisions
Receives dividends as income from investing in company
Earns compensation for managing the company
What happens when a company is formed?
When a company is incorporated, under the powers of law, a fictitious entity (company) is created and given the right to conduct business. It will be given a name, address and responsibilities in order to follow the purposes set out in its Constitution. As a result of incorporation, a company can conduct transactions in its own name, enter into contracts, and can be sued if found guilty of illegal acts.
Are there any guarantees for a registered company?
Incorporations provide owners with certain protections. First, shareholders have limited personal liability that protects them from creditors if the company fails to pay its debts. Second, they cannot take personal responsibility for the company's actions because the owners and management are separated from the company itself by a veil.
How do you tell if a company is private or public?
Not traded on a stock exchange
Sells shares and bonds on an open market, such as a stock exchange
Shareholders are usually founders, management, or a group of private investors
All or some of the shareholders come from the public who acquired their shares through an initial public offering (IPO)
Not required to disclose its financial information to the public
Reports are available to shareholders and the public
What is Company Incorporation Service?
Company incorporation service is professional assistance provided by service companies to help investors incorporate their companies. With this assistance, all a service seeker has to do is provide the necessary information and documents, and the incorporation service provider will incorporate their company for them.
Why do I need company incorporation services in Malaysia?
The incorporation process is complicated for those who don't know what to submit and what to do. Getting incorporation services in Malaysia not only speeds up the process but also ensures that your incorporation is fully compliant. Additionally, your service provider can provide you with guidance on the technicalities and legalities of starting and running a company.
What is a Sdn Bhd?
Sdn Bhd or Sendirian Berhad is the Malay term for a private limited company. It is a type of company that provides limited liability to its owners. This means that the shareholders of the Sdn Bhd are only liable up to the amount unpaid for their shares of the company.
What are the advantages of Sdn Bhd?
- Limitation of member's liability
- Growth potential - third party investors are often attracted to this business structure
- Tax efficiency
- Credibility and trust
What other issues should I consider after company incorporation?
- Corporate bank account opening
- Obtaining a license if required
- Sales and Services Tax (SST) registration
- Opening an account with the Employment Provident Fund (EPF)
- Registration of company's tax file with LHDN
- Determining the financial year end date (any date within 18 months of the incorporation date)
- Tracking income and expenses (bookkeeping)
- Preparing financial statements and annual returns
Is it mandatory to open a corporate bank account after incorporation?
A company does not have to open a bank account in the official name of the company. However, opening a business bank account can make it easier for companies to manage their finances. It also provides additional protection and an impression of trustworthiness to the company if it trades under a business account instead of a personal account.
Where to register Sdn Bhd Company?
Sdn Bhd company registration is with Suruhanjaya Syarikat Malaysia (SSM) or Companies Commission of Malaysia. You can do this manually through your local SSM office or register online. You can also choose to get professional company registration services to make your Sdn Bhd company registration more convenient.
Can I register a company directly with SSM?
Yes, you can register a company yourself without any help from a company registration service provider.
You can go directly to SSM's MyCoID online portal and register for an account. You first need to verify your identity at the SSM counter, once your account is registered, you can log in to the MyCoID portal to register Sdn Bhd. Then, just go to the Direct Incorporation menu to start the procedure.
What happens after I decide to hire a company incorporation service provider in Malaysia?
Complete the form to declare the details and information required for registration.
Suggest a company name for us to perform a name search to check its availability.
After the company name reservation is approved, we will prepare the company registration documents.
The directors and shareholders will sign the relevant documents.
Submit the documents.
After company incorporation is successful as evidenced by the Notice of Incorporation, we will email you all relevant documents for your records.
How many directors do I need to appoint to form a company?
Private companies in Malaysia need to appoint at least one director who must be a natural person and a resident of Malaysia to be established. Public companies must have at least two directors.
Can foreigners be company directors?
Foreigners can be directors of a company as long as the company meets the minimum number of resident directors in Malaysia.
When and where do I have to pay the paid-up capital?
A company representative will contact the company on how to transfer the money you, as a shareholder, paid for the shares to them. After receiving the company's paid-up capital, they record it in their books with proof of transactions. The company secretary will then submit such supporting documents to SSM.
What is name reservation?
A name reservation is an application to SSM to register and reserve a proposed name for your company. Reserving your business name will prevent other companies from using a company name similar to yours. Name reservation requests are subject to SSM guidelines and approval.
What are the possible reasons for rejection of a proposed company name?
The proposed company name is the same as or similar to the existing company name.
The proposed name may confuse the public (eg, sound the same as another registered company name).
The proposed name has been reserved.
Proposed name is prohibited by the Companies Act 2016 or other laws.
The proposed name is unacceptable for use as a company name.
Minister directed not to approve or accept the proposed company name.
How long is the approved company name kept?
Once a proposed company name has been approved, its hold period will last for 30 days or as long as the registrar allows. During this time, SSM will not be permitted to reserve the name to another company.
Does Sdn Bhd need to appoint a company secretary?
Yes, the appointment of a company secretary is essential for any type of incorporated company in Malaysia. A company may appoint one when going through the formalities of incorporation. However, if the company chooses to appoint a secretary later, this must be done within 30 days from the date of incorporation.
When can a private company start business operations?
A private company can begin operations immediately after incorporation.
Can I keep my business (Sole Proprietorship or Partnership) and open a Sdn Bhd company?
Yes, you can choose to keep the business and open a Sdn Bhd company if you can manage it. Registering Sdn Bhd will not affect your business as every entity is different. However, this only happens if what you are incorporating is not the business itself.
When do I need to file the Constitution?
Constitution is optional under the Companies Act 2016 for companies limited by shares.
A company may adopt a Constitution by special resolution. Companies must lodge their Constitution 30 days after adoption.
What types of companies can you set up in Malaysia?
Below are the types of companies you can form in Malaysia. These companies can be public or private.
Company limited by shares
Company limited by guarantee
Are private companies better than public companies?
Whether a private company is right for your business depends entirely on the goals and needs of the organization. Private companies are not subject to public scrutiny because they are not obligated to disclose their financial performance to the public. However, public companies have more financing opportunities because their shares are open to the public.
When choosing between a public or private company, you have to weigh each side and consider which factors are more critical to your business.
What does a nominee director do?
A nominee director, usually a director of the company, is a person hired to represent a group or individual interest. He is mostly appointed by foreign shareholders to meet compliance requirements when setting up a company.
Can you provide nominee director services for my company?
Absolutely! We are a team of highly skilled professionals who can act as your nominee resident director for short term or annually.
To what administrative nature can a nominee director be responsible?
Under the new Section 217 Companies Act 2016, a nominated representative or nominee director is expected to act in the best interests of the nominee. Failure to do so will result in imprisonment and a fine of up to three million ringgit.
According to the new Section 217 Companies Act 2016, the appointed representative or nominee director should act in the best interest of the nominator. Failure to compromise is subject to imprisonment and a fine of up to three million ringgit.