Looking to bring your foreign company into Malaysia? Not sure which entity to register, or need help dealing with the nitty gritty of company registration? Give our highly experienced team of company secretaries a call today.
So you've decided to bring your company into Malaysia. You're excited about the prospects of your business here, but you're not sure how exactly you want to conduct your business. Here are a few options for you to consider:
1. Branch Office
A branch office is an extension of its parent company, and is not a separate entity for legal purposes. This means that the parent company is legally responsible for all actions and undertakings of its branch office in Malaysia. The activities of the branch office must match those of the parent company. There must be at least one resident Malaysian agent to set up the branch office. A branch office is most suited to companies who want to expand their business into Malaysia short-term.
2. Representative Office
A representative office does not have legal standing in Malaysia, and therefore cannot undertake any activities that will turn a profit, enter into any agreements, or engage in trading. A representative office is most suited for foreign companies who want to explore and understand the market and business opportunities in Malaysia, and can conduct activities such as promotion, market research, and co-ordinating activities for its parent company.
3. Sole Proprietorship
A sole proprietorship is probably one of the most common forms of business in Malaysia, and is quick and easy to set up. Note that if you want to set up a sole proprietorship, you must be a permanent resident of Malaysia. There is a single owner, who has unlimited liability. This means that his/her personal assets will not be protected should the company be in debt or is declared bankrupt.
A sole proprietorship is not required to undergo audits or submit annual accounts and is easier to maintain, requiring only a renewal of registration with the Companies Commission of Malaysia every year.
4. Private Limited Company
The private limited company, otherwise known as Sendirian Berhad (Sdn Bhd) is one of the most commonly used entities by foreign owners. Foreign owners are allowed to own 100% of the company (with the exception of certain industries such as agriculture, banking, education, and oil & gas).
Unlike the sole proprietorship, a Sdn Bhd is its own legal entity and as such, its owners are only liable for its debts to the extent to which they contributed to the company. It can also enter into agreements, buy and sell property, or sue and be sued in court.
To register a Sdn Bhd, you will need to have at least one shareholder, and submit a registration form with a fee to the Companies Commission of Malaysia.
5. Partnership
A partnership has anywhere between a minimum of 2 to a maximum of 50 partners. Only foreign investors who have permanent residence status are allowed to register partnerships.
Partners are allowed to outline the responsibilities and liabilities of each partner via a partnership agreement. The partnership does not pay tax, but each partner is required to declare their earnings from the partnership in their individual tax submissions.
6. Limited Liability Partnership
A limited liability partnership is almost like a combination of a limited liability company and a partnership. It is its own legal entity and therefore separate from the partners. This means that the partners are financially protected from the liabilities and debts of the partnership.
Foreign investors can be a part of a partnership, and do not need to reside in Malaysia. It's worth noting though, that a partnership requires a compliance officer (this does not need to be a partner), and this officer must be a resident of Malaysia.
To find out which business entity suits you best, give us a call.