Companies Act 2016 have finally come into force on 31st January 2017. It is said to create an environment that is more cost-effective for businesses .

Main changes that YOU SHOULD KNOW :-

1. One Person Company – Private companies can now be incorporated with one person being the only director and the only shareholder. Besides, the appointment of the first company secretary can be made within 30 days from the date of incorporation of the company.
2. Removed Authorised Share Capital – Private companies would no longer have Authorised Share Capital. There will only be Paid Up Capital.
3. No Par Values Shares – This means that issuance of shares no longer carries a par value.
4. Memorandum & Articles of Association (M&A) – M&A is no longer needed for incorporating a new company. For existing company with M&A, the M&A will now be deemed to be the Constitution. It is recommended that companies  review their M&A and make appropriate amendments, construct a Constitution; or choose not to have their own M&A / Constitution.
5. Common Seal Not a MUST HAVE – Companies are no longer required to have a common seal.
6. Annual General Meeting – Private companies are no longer required  to hold AGM as it can be simplified by passing written resolutions, unless constitution stated otherwise.
7. Filing of Annual Return – The annual return shall be lodged not later than 30 days from the anniversary of the incorporation date. Previously, the annual return would be filed after the AGM.
8. Dividends – Before declaring dividends, directors must be aware of the new solvency requirement.
9. Form 9 Has Been Removed – Companies will only receive Notice of Incorporation upon successful incorporation. Certificate of Incorporation will be issued upon application by the company and upon payment of a prescribed fee.
10. Publication of Name – A Company shall disclose its registered name and registered number on websites and all other forms of its business correspondence and documentation.

As a business owner, you dream of undivided focus on growing your business and increasing your profits. Last thing you want is your management resources being tied up by unproductive reporting, compliance and administrative work. However, you felt that you had no choice, as hefty penalties can be disastrous to your business should your team overlooked any material requirements.

At Bayabumi, we are professional accountants who understand business. That is why our solid, comprehensive offerings are put together to satisfy needs of most business owners. With a dedicated service personnel and multiple expert teams to help you in areas including GST, income tax, bookkeeping and company secretary, you can allocate more time to focus on your business activities. In terms of business consultancy, we are also able to leverage our one-stop proposition to take a helicopter view and share useful insights of your business situations.

For any business entrepreneur, selecting an ideal jurisdiction for company incorporation is a critical decision. Some of the most important variables to consider include the costs and procedures associated with incorporation, the regulatory requirements of the local Companies Commission and the degree of foreign ownership and directorship allowed.

In Malaysia, company incorporation is a relatively easy and quick process. The favorable market conditions, strong economy, tax benefits and 100% foreign ownership has encouraged several entrepreneurs to incorporate limited liability (Sdh Bhd) companies in Malaysia. Foreign investors are required to apply to a foreign investment committee when applying for more than 30% shareholding of their newly incorporated company.

In addition, setting up a company in Malaysia requires the appointment of a company secretary. According the rules set out by the Companies Commission Malaysia (abbreviated SSM in local vernacular), the company secretary shall be a local resident and a natural person and not a corporate. The secretary shall also be a member of any professional body as prescribed by the Minister of Domestic Trade and Consumer Affairs or as licensed by the SSM itself.

Extensible Business Reporting Language, which is also known as XBRL, is an electronic language designed to enable the automation of business information requirements, i.e. the preparation, sharing and analysis of financial reports, statements, and audit schedules. Governments, regulators, and other organisations in many nations have adopted XBRL as it automates the process and communication of business and financial data. Furthermore, XBRL helps to save cost, improve efficiency and accuracy to all involved in supplying or using financial data.

XBRL initiatives in Malaysia

Although the XBRL initiatives in Malaysia are in its infancy, we can foresee that the development and deployment of a new SSM’s XRBL online document submission platform will improve the administration of business reporting and the maintenance of data.

a) The automation of business reporting

The implementation of XBRL will be enable companies to file their annual returns and audited accountselectronically. In addition, it allows SSM to capture critical financial information from registered companies and provide analytical insights into the Malaysian business landscape.

b) The improvement in transparency and efficiency of data analysis

The new XBRL initiative will improve transparency and enhance the efficiency of capital markets by enabling analysts and other users to sort out and analyse facts easily with the automation of business intelligence.

c) The enhancement in data exchange

The new XBRL platform will make business information to be exchangeable among regulators (regulators here include tax and financial authorities, central bank and governments) because XBRL is a global standard used to electronically exchange business information.

Why XBRL?

The implementation of XBRL initiative has many advantages:

a) Global standard

XBRL is a global standard that has been accepted and adopted to reduce inconsistencies in terminologies and data formatting.

b) Improved accuracy

The automation of business data improves data accuracy, as the data can be both calculated and verified.

c) Speed

XBRL enables producers and consumers of financial data to switch from expensive manual processes to the automation of business data. The automation of business information is less time-consuming – where the time needed to assembly and re-entry of data is now much shorter than before.

d) Reusable

The XBRL data is reusable – the data can be reused to represent the same data in multiple ways and multiple formats once entered.

Who will benefit from using XBRL?

The following is a list of how XBRL will affect various parties in the financial information supply chain:

a) Companies who prepare financial statements

Financial statements will be created one time and rendered as printed reports, on websites, or as other regulatory filings.

b) Analysts, Investors, and Regulators

Automated analysis, less re-entering of financial information from one form into another form, are the advantages that will benefit analysts, investors and regulators.

On a final note, XBRL’s language is flexible in which it supports all current aspects of reporting in different countries and industries. It can be adjusted to meet particular business requirements, even at the individual organisation level. SSM’s new XBRL platform will automate the data collection process, transform the submission of statutory reports by registered companies and allows data consumers to conduct company information analysis easily.

Though the concept of unfair dismissal or unlawful termination is not new in Malaysia, there have been numerous misconceptions about it. Though there has been increased awareness about the rights of employees in Malaysia, many still remain unclear. Below are several salient points on the matter.

Limitation period

From the time of dismissal, an employee has 60 days to file a complaint of unfair dismissal under Section 20 of the Industrial Relations Act 1967. As for those dismissed with notice, they are free to file the complaint any time during the notice period, but not later than 60 days from the expiry of his notice. If for any reason, the complaint is not filed within the limitation period, the complaint will be barred. If this happens, the complainant may look at other avenues in the civil courts. However, the damages and remedies awarded may differ.

Cases are not heard immediately at the Industrial Court

Anyone who wants to lodge a complaint on unfair dismissal must firstly do so at the Industrial Relations Department (IRD). Following this, the IRD will get both parties, the employer and employee to attend a reconciliation meeting with the hope of amicably settling the dispute. However, if there is no positive outcome, the IRD can then refer the matter to the Industrial Court. At times, it could take more than a year for a claim to be referred to the Industrial Court. This all depends on the number of backlog cases. Also, there is no guarantee the claim will be referred and those who are unhappy with the IRD’s decision can apply for judicial review at the High Court.

IRD meeting not a court hearing

The IRD officer does not have any power to decide on the merits of the complaint during the conciliation meeting. It must be remembered that the IRD meeting is not a court hearing and the IRD will not make any ruling or decision as to whether the dismissal is unfair. The purpose of the IRD meeting is to get parties to reach an amicable settlement. Section 54 of the Industrial Relations Act 1967 provides that no evidence shall be given of any conciliation meeting other than a written statement agreed to and signed by the parties. Parties should feel comfortable to discuss matters freely during the conciliation meeting.

A big part of forming a company is choosing a name. Why is this step so important? Because the name of the company is going to be a lasting one. It is going to be around for as long as your business is, and it is what your customers will associate and come to recognize when they hear the name of your business. A lot of thought and careful planning needs to go into the company name selection process.

Another important part of the company naming process is to conduct a company name search to determine whether your chosen name is already in use or too similar to an existing company name. If the name already exists, you will need to change it and if it is too similar to an already existing company, you may want to consider changing it too because you do not want to create confusion among your clients. There is also the risk that your company name may not get approved if a similar name already exists or is in use.

How to Conduct a Company Name Search

The company name search process would depend entirely on where your company is being set up. Different countries would have their own systems and processes in place with which company name searches are performed. In Malaysia, for example, the company name search process is done through the Companies Commission of Malaysia (SSM).

Should an investor or entrepreneur choose to set up a company in Malaysia for example, the company name search process through the SSM would go through the following process:

• The first step is to log on to the SSM’s official website, which is the http://www.ssm-einfo.my/
• Once logged on to the website, the user will be required to register as an e-account member with the SSM before they can proceed to the next step.
• The user will be required to fill out an e-registration form and select a username and password to proceed with the membership signup.
• Once registered as a member, the user can then begin the company name search process by entering the desired company name into the search options displayed on the SSM’s website.

Once your company name search is complete and your chosen company name does not appear in the search results, congratulations! That means your chosen company name is most likely available for use.

You can then go ahead and submit an application with the SSM to have that name registered and reserved for your use officially. The SSM will then review your submitted company name and if approved, your company name will be reserved for up to three months which gives you time to completed the entire company registration process and submit all the necessary documents accordingly.

Payroll fraud, as the name implies, is the theft of funds from a business via the payroll system. It is a form of asset misappropriation and one of the most common types of fraud in businesses. Precisely speaking, payroll fraud can be defined as the unauthorized altering of payroll where the person (an employee) committed the fraud could make financial gain.
 

What is Payroll Fraud?

In general, employees can commit payroll fraud in several ways.

1. Ghost Employees

One of the common ways behind the payroll fraud is the existence of ghost employee. Ghost employee is the fictitious identity created by the dishonest employee, recorded on the payroll system, but does not work for the business. The fraud happened when the salary is paid to the false employee and the dishonest employee will then collect the fund.
 
2. Timesheet Fraud

A timesheet fraud involves incorrect wage payment to the employees for the hours they work. The fraud happened when employees falsify records in order to get more wages. In some cases, dishonest employee will add extra hours to their timesheets, claiming for hours they did not work. There are also cases that companies overpay employees based on falsified timesheet submissions.  
 
3. False Expense Claims

Another common type of payroll fraud is false expense claim. It involves the submission of completely fake or unreal expenses for items (or events) which never happened. Other than this, it could also be the submission of duplicate claims and inflated expenses.
 

How to Identify and Eliminate Payroll Fraud in Malaysia

Though payroll fraud is unavoidable, it is preventable. The key idea here is to identify the fraud before it spirals out of control and eliminating the risk. Below are some preventive measurements in identifying and minimizing the occurrence of payroll fraud.
 
1. Schedule Regular Payroll Audits

Conduct regular payroll audits to review the company’s payroll records and identify any suspicious activity in the payroll system. The regular payroll audit will help to minimise the risk of fraud cases within the company.
 
2. Eliminate and Identify Ghost Employees

One way to identify ghost employee is to have periodic checks on the employee information to ensure that every employee indicated on the payroll system is real and working in the organisation.
 
3. Verify Employees’ Timesheets

Timesheet fraud happens especially in organisations that require tracking of employees’ working hours. Employees might falsify records, which could result in overpaying. One way to minimize timesheet fraud is to conduct regular timesheet audits to ensure the accuracy of the working hours as recorded in the timesheets.
 
4. Engage a Payroll Services Provider

Another effective way that worth mentioning is to engage a payroll service provider to ease the hassle of payroll as well as to prevent the fraudulence. Having to manual calculate and handle payroll can be a very taxing and tedious. At times, miscalculating or mistakes occurring while preparing the payroll may leave a negative impact on the business, let alone the risk of payroll fraud that may hurt the organisation. To hack this problem, outsourcing the payroll matters to a third party payroll services provider is one of the good solutions

How do you choose the type of business structure or entity that is best suited for your business? Well, for one thing, it would depend on the type or products or services that you intend to provide with your business. Other factors that would help to determine the business entity choice would be the kind of ownership structure preferred and what the current state of finances are (some business entity structures are more affordable than others).

There are several options of business entity structures to choose from, such as sole proprietorship, partnership, limited liability companies and private limited companies to name just a few. As an entrepreneur, what should you take into consideration when deciding the type of business entity you should choose?

What to Consider When Choosing a Business Entity

Below are some of the considerations an entrepreneur should take into account to help them select the right kind of business entity for optimum success:

• The Ability to Raise Capital – Capital is one of the most important factors of any business success. If a business is not raising capital, it isn’t making money. And if it isn’t making money, it is only a matter of time before it goes under. Analyse your business plan and if your plan does not already do so, analyse the strategy portion of your plan and what needs to be done to achieve your business targets. Having a clearer picture about your business goals and strategies will help you better decide on which type of business entity will be the best fit for you to achieve those targets.

• The Types of Taxes – Different business entity types would have different tax structure systems in place. For example, the tax on businesses which are partnerships, LLCs or sole proprietorships may not necessarily be the same amounts or percentages. Some structures even allow for exemptions depending on the type of business you run and where you run your business.

• The Risk Factor – With every business, there is risk involved. But a smart entrepreneur looks for ways to minimise risk, including selecting the right kind of business entity that will help achieve that goal. Selecting the wrong business structure could result in your business being more of a liability than a profit maker, so take your time, scrutinise every aspect before making a decision.

• The Liability Involved – Some business entities offer more personal liability protection for the owner than others. For example, certain structures like corporations and LLCs separate ownership and management, thereby protecting the business owner from any potential suits brought against the business. Other structures, such as sole proprietorships for instance, leave the owner exposed and vulnerable to being held personally responsible for all business and managerial decisions.

At the end of the day, it also comes down to the personal preference of the business owner in question. After taking into account all the different scenarios and possible risk factors involved, the entrepreneur would have to make the choice that is going to bring about the most benefit not just for themselves, but for the overall business involved.

Malaysia has always had the benefit of a strategic location on its side when it comes to doing business in the international front. Strategically positioned right in the trading path in the middle of the Eastern and Western world, Malaysia is known as one of the important shipping routes in the world.

Doing business in Malaysia has also been of keen interest to many an investor because of the rich natural resources that the country has to offer. Malaysia for example, is the largest producers and exporters of tin, rubber and palm oil, all of which are lucrative trades that have bolstered the country’s economic status.

Malaysia is ranked as the 23^rd in the world for the ease of doing business by the World Bank Group, although it is continually recognised for its business-friendly policy and competitive economy. Malaysia’s excellent infrastructure, transport connectivity, well-developed financial sector make it a very cost-effective gateway into doing business in Malaysia and the Asian markets that surround the country as well.

Doing Business in Malaysia – How to Set Up Your Own Company

Establishing a company for the purpose of doing business in Malaysia can be accomplished with the following steps:

• Reserve a name for your company with the Companies Commission of Malaysia, known locally as the SSM. The SSM is the Suruhanjaya Syarikat Malaysia, which is the local Malay name equivalent of the Companies Commission of Malaysia.
• The company secretary would need to prepare the required documents for incorporation and provide a statutory declaration of compliance, in accordance with the Companies Act 1965.
• The required documents would need to be filed with the Companies Commission of Malaysia to obtain the incorporation and post-incorporation package which include the company seal, share certificates and statutory books.
• Opening a bank account for the business can be done at any of the local banks.
• Registration for the goods and services tax needs to be done at the Royal Malaysian Customs.
• Registration for the income tax needs to be done at the Inland Revenue Board of Malaysia, known locally as the LHDN.
• Employees would need to be registered for the Employees Provident Fund.
• Employers would also need to be registered for social security at the Social Security Organisation, known locally as SOCSO-PERKESO.

Entering into the local market when it comes to doing business in Malaysia is best done by working with a local business counterpart if you have one. A local business counterpart would best understand the needs and inner workings of the market, and they would know how to handle matters related to customs clearance, wholesalers, retailers and more.

The safest way to establish a company to do business in Malaysia would be to enlist the help of a professional services agency to handle the paperwork and navigate the bureaucracy with minimal hassle.

Accounting Firms & The Services They Provide

Accounting is a necessary part of the business process and many business owners and entrepreneurs need the services of a good accounting firm in their fold to use them to their best business advantage.

Accounting firms are essential to business owners because without, for example, a system of internal controls which are also known as audit systems, it would be difficult for a company to evaluate the effectiveness of its internal controls. And monitoring this effectiveness if a company is determined on achieving its business objectives, acquiring reliable financial reports on its operations, prevent fraud and misappropriation of the business assets as well as minimise the cost of the business capital.

Running the business aspect of the business is challenging enough as it is, sometimes demanding long hours to be put in. There is just not enough time for an effective businessman to run the day to day operations and manage the booking side of the business as diligently as they should, and that is where the services of accounting firms come in handy.

Accounting Firms and The Services They Offer

The services offered by accounting firms would differ depending on the size, experience and specialisation of the firm in question.

In general, an entrepreneur can expect accounting firms to cover the following services:

• Accounting – High level accounting services are usually offered by CPAs employed by accounting firms. The range of services include assisting clients with budget creation, perfecting financial statements as well as preparing local, state and federal tax returns. Audit and business valuation services are also included under this branch, with some firms even offering forensic accounting services for companies who are faced with fraud issues.
• Bookkeeping – Services that fall under the bookkeeping category include accounts payable and receivable, billing, payroll, monthly and quarterly taxes, general ledger entries, bank reconciliations and monthly trial balances.
• Tax Filing and Planning – Accounting firms assist businesses in figuring out tax codes to ensure that the businesses financial reporting practices are in compliance with the current regulations, determine the company’s tax liability and ensure that the businesses meet the necessary filing requirements and deadlines. Accounting firms come in handy in this aspect to help businesses prepare the federal, state and local tax returns, and how to reduce the taxes to be paid.
• Consulting – Accounting firms also provide consultancy services for clients who need advice on the financial strategies they may need to take for their business. The subjects that consultancy would cover include advice or suggestions on how the client can lower their tax burden, review or suggest updates on business plans and in some cases, how to manage financial investments.

When selecting an accounting firm, consider what the needs of the business are and what kind of accounting servicesare the most important to the smooth running of the business. That would help business owners narrow down the kind of accounting firm they would prefer to engage with.

Our Annual Financial Audit approach is based on an understanding of our clients’ business processes, goals, and strategies. This enables us to identify and assess the risks that impact their business and achievement of goals

We understand how important it is for you to maintain business as usual during the audit process, with minimal disruption to your day-to-day operations. We will also work with you to identify weaknesses and assist with suggested rectification procedures.

Statutory audit not only requires the review of financial information and application of regulation, but there also needs to be support; support for the accountants completing the compliance, the trustee and the members. Our team of specialists can be relied on to not only identify issues but to also provide assistance and guidance according to the International Auditing Standards and compliance with the requirements of Malaysian Institute of Accountants.

As Malaysia is transitioning to adopt the Financial Reporting Standards, our professional auditors are prepared to guide your finance department on the complexity of changes and keep you updated on current and upcoming amendments so that your financial statements remain relevant and fully compliant at all times.

Advantages of Auditing

A true and fair financial statement may be able to satisfy the following:

• Satisfy stakeholders such as employees, customers, suppliers and pressure group, as well as the investing community, as to the credibility of published information
• Facilitate the payment of corporate tax, goods and services tax, and other taxes on time and accurately, thereby avoiding interest, penalties and investigations
• Enable company to comply with banking covenants
• Help to deter and detect material fraud and error.
• Facilitate the purchase and sale of businesses
• Take advantage of the spin-off benefits such as advice on the structure and operations of systems
• Demonstrate good corporate governance and citizenship

Every company operating in Malaysia must file tax returns every year. This is for resident companies i.e. those that have their management and control based in Malaysia, and non-resident companies i.e. companies that have more than 50% in foreign shareholding. The Inland Revenue Board is the tax agency to which these returns are made.

Corporate Tax

• Effective rates

For Small and Medium Enterprises the rate is 19% for the first RM 500,000 and 24% for any amount beyond that was effective 2016. SMEs in Malaysia are defined as companies with a paid-up capital of less than RM 2.5 million. This company should not be part of a company group that has a company with a paid up capital of this amount.

The standard tax rate is 24% for other companies.

• Labuan companies or representative offices are allowed to choose a minimum tax rate of 3% on any amount of profits or pay a flat rate of RM 20,000 per financial year. All income derived from doing business in Malaysia is taxed. Income from foreign sources is not taxed unless the company is in banking, insurance, shipping and air transport.
• Taxable income is calculated as all income that is accrued from doing business in Malaysia which includes gains and profits, rents, interests, dividends, premiums, royalties and any other income. Companies are required to adopt the Single-Tier System (STS) and companies that do so are exempt from tax on dividends.
• Capital gains are tax exempt except when the gains are realized through the sale of real property, or when a shareholder sells shares in a real property company at a profit. The tax rate is 30% for selling in less than 3 years after the acquisition, 20% in the 4th year, 15% in the 5th year and 5% in the 6th year and beyond.
• Losses are permitted to be carried forward indefinitely and offset with income from the same company.
• Foreign tax credit

If the company has paid a foreign tax, the same tax may be credited against the Malaysian tax on the same profit. Note that,this is limited to 50% if the tax jurisdiction has a tax treaty with Malaysia. This tax credit is only applicable to foreign income. Domestic dividends are also tax exempt.

• Tax for holding companies

An investment Holding Company is defined as one that is involved in holding investments and derives a minimum of 80% of its gross income from such investments. Such a company is only permitted expenses that are tax deductible.

• Tax incentives

Industries that enjoy tax incentives include IT, Islamic Finance, biotechnology, environmental protection and energy conservation. Pioneer status investments enjoy up to 10 years’ tax holiday. This can be 60-100% investment tax allowance, accelerated capital allowance, and reinvestment allowance up to 60% of invested capital.

• Withholding tax

There is no withholding tax on dividends. Interest paid to a non-resident is subject to 15% withholding tax unless there is a tax treaty. However, interest paid by a Malaysian bank to a non-resident is exempt unless that interest forms part of income accruing at the non-resident’s place of business in Malaysia, or is part of networking funds.

Royalties to a non-resident are subject to 10% withholding tax unless there is a tax treaty with the non-resident’s tax jurisdiction.

Technical services payments to non-residents for work done in Malaysia are subject to 10% withholding tax.  This rate also applies to payments of rental of movable property or installation fees paid to non-residents unless there is a tax treaty in place.

f you are a foreigner looking to do business in Malaysia, you have the choice of picking the sole proprietor model of business, partnership or a private limited company.  Among the three models of business ownership, the private company (Sendirian Berhad Company, Sdn Bhd) is the preferred choice as it has numerous advantages in legal matters as well as in raising financial capital.

he private limited company by shareholding is known as “Sendirian Berhad” (Sdn Bhd) Company. This type of company is a separate legal entity from its owners. This means that the company is considered a legal ‘person’ that can buy or sell property, enter into legal contracts, sue and get sued in courts of law.

There are several advantages and disadvantages of the Sendirian Berhad company. However, the advantages far outweigh the disadvantages. They include:

• Personal Wealth Protection

The Sdn bhd company is a limited liability entity. This means that the liability of the owners end at being shareholders. They are not responsible for the company’s debts. This means that the investor’s wealth as a shareholder is protected.  His assets cannot be attached to pay for the Sdn Bhd company’s debts unless he has provided a personal guarantee for the debt. This is unlike the sole proprietorship or partnership models where the owners are responsible for the debts of the company.

• Continuous Existence

As a legal entity able to buy and sell property, the sdn bhd is able to operate continuously expanding its assets and business portfolio even as the owners come and go. Private companies stand in existence until such a time when they are dissolved by a court of law. This means that an investor can achieve a long term business vision through a company safe in the knowledge that his goals will be achieved by those who come after him. This is unlike a sole proprietorship or partnership where the business dissolves upon the departure of one of the owners.

• Transferable Ownership

Ownership in a private company is held among several shareholders. These shareholders can transfer shares among one another, or sell to outsiders who then become owners of the business too. The investor is able to transfer his ownership to relatives, friends or other entities without changing the ownership structure of the company. This is very flexible for the business as the operations are not affected by changes in ownership. This is unlike a sole proprietorship or partnership where the ownership transfer is complex.

• Better Access to Capital

Need for capital arises now and then when a business wants to expand? A Sdn Bhd company will find it easier to raise capital by issuing more shares, or bonds which buyers hold as guarantee against debt.  A private company can access more capital through the stock exchange by issuing an IPO, which makes its access money by selling shares to the general public.  These options are unavailable to sole proprietorships or partnerships in which owners have to personally raise funds at a risk to their assets.

• Lower Taxes

Malaysian tax laws are more favorable to the Sdn Bhd company than any other model of business or taxpayer entity. The corporate tax for the first MYR 500,000 profit is taxed at 20%, and 25% beyond this amount. The maximum tax rate is 26%. This is unlike tax rates applying to individual tax payers which can rise up to 30% and beyond.

• Other Factor to Consider

However, there are some requirements / disadvantages of a Sdn Bhd company that foreign investors must be aware of when looking to invest in Malaysia.

-Local partnership

Forming a company in Malaysia using Sdn Bhd company structure requires you to have at least two directors living in Malaysia. This means the foreign investor will have to identify suitable partners in his ventures. This bears an element of risk as control of the business is whittled down.

-Legal compliance

Even when the sdn bhd company becomes dormant, it will be forced to file tax returns, do annual returns and be open for audit.

-Annual expenditures

The sdn bhd company has to engage a tax auditor and a company secretary every year to remain compliant with corporate requirements in corporate tax and governance regulations. These are professionals whose services do not come cheap.  A dormant sdn bhd will spend MYR 4,000-5,000 for just staying legally compliant.

-Strict bookkeeping

Sdn bhd companies operate under a more watchful eye from the government. There are many corporate regulations and laws to observe, and failure to do so will result in a risk of heavy fines.

The structure of Sdn Bhd company still offers the best flexibility and protection for anyone intending to do foreign investment in Malaysia. Registering one is not difficult as Malaysia has eased the incorporation procedures.

In 2018, the World Bank ranked Malaysia one of the easiest place in the world to start a business. This is a testament to how easy it is to start a business in Malaysia, especially with the right guidance from company formation experts in Bayabumi Accountancy Services.  

All companies in Malaysia must be registered with the Companies Commission of Malaysia, known locally as Suruhanjaya Syarikat Malaysia (SSM). They are the statutory body responsible for overseeing and regulating corporate and business affairs. 

Being the capital city of Malaysia, Kuala Lumpur is not only the business hub for the country, but also the place most foreigners seek out to start their Malaysian company incorporation journey.  

To open a company in Malaysia is a fairly straightforward process. This guide will provide you with all the requirements you need for your Malaysia company incorporation process.  

Malaysia Company Incorporation End Goals

Before commencing your business in Malaysia, it is important that determine your end goals. Why do you want to start your business in Malaysia? Clarifying your intention and reasons helps to put your goals into perspective. It is not just about preparing for the how to incorporate a company in Malaysia part, but why you’re choosing Malaysia as your base of business?  

When starting any business in Malaysia, chances are you might make it, or you might just fail. Not everyone that has started their business in Malaysia has succeeded. However, there are a few that actually surpassed expectation and eventually made it to the top too. 

Malaysia Company Incorporation Requirements

To register a company in Malaysia, you will need to fulfil the following requirements: 

• Prepare the minimum paid-up capital of RM 1. 
• Have a minimum of one director who is at least 18-years old with no prior criminal convictions and bankruptcy records. The director should also be residing in Malaysia.  
• Have a minimum of one subscriber to the shares of the company. 
• Have a minimum of one Company Secretary. They must be a member of any of the prescribed professional bodies or licensed by the SSM. Alternatively, Bayabumi Accountancy Services can assist through our Company Secretarial Services package. 
• Have a registered office address in Malaysia. 

You will also need to provide the following information: 

• Prepare your proposed company name and its meaning. 
• State the primary business activities of the company. 
• A copy of the NRIC or passport of all directors and shareholders. 
• Recent proof of residential address of all directors (utility bills, phone bills, etc). 
• Contact details and occupation of all directors and shareholders. 
• Details of the beneficial owner (if they are not listed as the shareholder). 
• Information about your paid-up capital. 
• Registered business address. 
• Source of funding. 
• Expected location of customers and suppliers. 
• Written confirmation from directors, shareholders and beneficial owners that they are not a Politically Exposed Person. Email confirmation is acceptable.