How Foreigner Start Business in Malaysia 

Are you intending to expand your business in Malaysia but not sure what are the documents and requirement needed to start your company in Malaysia because you are a foreigner? Here are some of the criteria need to consider before you incorporate a company (Sdn Bhd )in Malaysia.

1. Type of business entities and requirement to set up a company

All foreigners are permitted to register a private limited by shares (Sendirian Berhad - "Sdn Bhd") corporation in Malaysia under the Company Commission of Malaysia (CCM). Foreigners are not permitted to register sole proprietorships, enterprises, or LLPs in Malaysia; these entities are solely available to Malaysians. 

Under Companies Act of 2016 in Malaysia, foreigners can own 100% shares in a company in Malaysia and do not require to have local ownership in the company, except for certain industries where local shareholding is required. 

Although a foreigner is permitted to own 100% ownership in a company, you need to fulfill the requirement below:
• At least one (1) director who ordinarily resides in Malaysia by having a principal place of residence in Malaysia ("Resident Director requirement")
• To have minimum one shareholder (Malaysian/Foreigner/Body Corporate)
• Minimum capital to be RM 1.00

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2. Working visa/employment pass

When a foreigner want to set-up a company in Malaysia, you do not need to meet the minimum paid-up capital, you can even register a company with a paid-up capital of RM 1.

However in the event you intend to apply work visa/permit in Malaysia, you are required to meet the minimum paid-up capital. For foreigner who want to apply for working visa/employment pass, below are the minimum paid-up capital needed to fulfill depends on the type of ownership and industry:

Equity/OwnershipPaid-Up Capital
100% Local OwnedRM 250,000
Joint Venture (minimum foreign equity is 30%)RM 350,000
100% Foreign OwnedRM 500,000
Foreign-owned companies (foreign equity at 51% and above) operating in the Wholesale, Retail and Trade (WRT) sectors (mandatory requirement to submit valid WRT license, if applicable).
Please refer to the Ministry of Domestic Trade and Consumer Affairs for WRT license application guidelines.
Foreign-owned companies (foreign equity at 51% and above) involved in the sub sectors on unregulated services are required to refer to the Services Industry Division, Ministry of Domestic Trade and Consumer Affairs on the application guideline to obtain approval.
RM 1,000,000

Other documents needed to apply for a director employment pass
i. e-SSM Printout (Corporate Information)
ii. Company Profile
iii. Resume / Curriculum Vitae (CV)
iv. Highest Academic Certificates
v. Full Passport Copy in Colour
vi. Job Description
vii. Job Position to Apply

3. Paid-up Capital

Paid-up capital refers to the actual amount of funds or capital that invested by the shareholders in a company usually in return for company shares. The funds or capital will be used for company’s day-to day activities, such as paying salaries, bills, and expenditures. There is no minimum paid-up capital required to set up a company in Malaysia, however, a company may need to meet a minimum amount before they apply for a loan, license, raising capital fund as well as any business dealings. Upon registration with SSM, it is recommended to put an initial paid-up capital of RM 1000 for all newly set-up company. This is due to the banks normally will request for a minimum of RM 1000 deposit when you are setting up your company bank account, so you can use that as paid-up capital.

 Step to increase paid-up capital
i. Deposit the money into company’s bank account & produce the Bank-in slip to company secretary
ii. Company secretary will prepare the relevant board’s & members’ resolutions & documents
iii. All directors & shareholders must sign the resolutions & documents
iv. Company secretary will lodge the Form 24 & 11 to SSM for registration of increase paid-up capital 

4. Nominee Director

According to Malaysia Companies Act of 2016, to set up a company in Malaysia need to have at least one director residing in Malaysia with a principal place of residence. For foreigner who are not residing in Malaysia, you will face a difficulty to set up the company and run the business. However, you can appoint a nominee director in Malaysia to act as your company director. Nominee directors are often nominated only to meet regulatory compliance requirements. His authority is limited in that he is not permitted to manage your company's day-to-day financial or operational affairs, function as a bank signatory, or sign any invoice, contract, or legal documents on your behalf. 

5. License

SSM company registration is insufficient for a foreigner to start a business in Malaysia. There are some other permissions are required such as a signboard and a premise license. It is illegal to start a business if you did not apply for a license. The type of business licences required is determined by the nature of the business. For example, if you are starting a retail business, you will need to apply for premise license, and signage license. Different town councils have different documents needed to apply for a Business Premises and Signage Advertisement License. You may get the list of documentation needed to apply for the licence from the local council.

For a detail guideline regarding to business license application, you may click here for more information.

Contact us today to learn how we can help you get started fully online with our digital company secretary. 

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If you're looking to form an Sdn. Bhd. in Malaysia, or have any other questions on starting your business, contact the team at Altomate. Starting your own business and in need of assistance? Feel free to reach out to our Company Incorporation Service to get all the help you need.

We're here to answer any questions, provide resources, and give you the exact answers you need to get your business to the next level. We thank you for reading this article and hope it gave you some new thoughts and business ideas to move forward with.

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