SECRETARIAL & INCORPORATION
(For more information, please click on sub-paragraph / subject matter)
Why set up a Private Limited Company (Sdn Bhd) ?
1. Financial Protection
Setting up a private limited company provides the business owner with a level of financial protection not available in a sole proprietorship. If a sole trader’s business fails, he is personally liable for its debts.
Furthermore, he risks personal bankruptcy if he can’t pay his debt.
On the other hand, setting up a limited company offers the business owner protection and security since the finances of a private limited company are entirely separate from those of its owner(s).
Its “Limited by shares” status means that the Company has shareholders, whose liability to creditors of the company would be restricted to the capital originally invested.
A Private Limited Company adds important credibility to the business , and as a result, face less difficulty raising money for expansion.
What are the requirements to incorporate?
To set up a private limited company, you first need to register with the Companies Commission of Malaysia ( Abbreviation in Malay is “SSM”) The Private Limited Company is required to have the suffix “Sdn. Bhd.” as part of its name.
1. Main Requirements
- You need to select a suitable company name
- A company must appoint at least one director / shareholder
- A company with only one director / shareholder must have a permanent residential address in Malaysia
- You must disclose the nature of your company’s intended business
- The company must determine the number / percentage of shares to be held by each director (s) & its shareholders
- All directors need to sign a statement of compliance
2. Director Qualifications
It would just require a minimum of 1 director (Non Malaysians is acceptable) to form a “Sdn. Bhd.” Here are the following criteria of qualifications and requirements:-
(a) A director must be 18 years old and above.
(b) A director must not be an un-discharged bankrupt.
(c) A director must not be convicted of an offence.
(d) In a scenario where there is only one non-Malaysian director, he or she is required to have a permanent residential address in Malaysia
(e) A Director must give written consent before appointment
(f) A Director must disclose names of the next-of-kin in forms provided by SSM
3. Significant Changes (CA 2016)
- Company may incorporate with Single Director cum Single Shareholder (Previously minimum 2 directors)
- The maximum age criteria as a director was abolished ( previously 70 years)
- No Constitution or “written rules” known as Memorandum of Association & Articles of Association (“M&A”) would be required as it is already imbedded into the new Act and shall be binding on the Company, its Director (s) , Shareholders, Nevertheless the company is allowed to adopt a Constitution (Section 32) under the following conditions,
(a) The adoption shall be by way of Special Resolution
(b) The adopted constitution has no effect to the extent that it contravenes or is inconsistent with the provisions of the ACT
(c) Subject to the provisions of the ACT, the adopted constitution shall be binding on the company, its directors and its members.
(d) The new constitution must be lodged with the Registrar within 30 days after its adoption, failing which, the Company and its officers are liable to be penalized with a heavy fine.
- Common Seal & Share Certificates are optional
What are the incorporation services ?
1. Name Search
The first step is to select your proposed company name and upon approval, it will be reserved for 30 days pending lodgement of the incorporation documents.
You must carefully choose a name for your private limited company which must end in the abbreviation “Sdn. Bhd.”
Example : ABC Engineering Sdn. Bhd.
Your name can’t be similar or identical to another registered company’s name because it would be rejected and consequently, delay the process of incorporation.
SSM Guide For Naming A COMPANY
Take note that SSM prohibits the use of certain words (please refer to this link below for more information)
The First Name Search is free. The next attempt costs RM50/- per search until successful.
Supporting Information for Name Search
Please send the following particulars to CPA Secretarial Services Sdn. Bhd.
(a) 3 proposed names for the new company
(b) Nature of your Business
(c) Photocopy of directors’ IC / Passport
(d) Email Address
Document preparation will commence upon successful application of your company’s name. This is then followed by the payment and signing of the documents by the director(s).
3. Document Submission
Document submission to the Companies Commission of Malaysia (CCM) will be done within 24 hours after signing by the director(s) . Notice of incorporation from CCM, where possible will be relayed to the client within the same day.
2. Secretarial Services
Provision of Nominee Director(s)’ service
Companies are required to have at least one director having his/her principal or only place of residence within Malaysia. Responsibilities are quite onerous for all directors, including the nominee director.
If you do not have a director to meet the requirement of the Malaysia Companies Act, you can engage our Nominee Director Service.
The job function and responsibilities of a nominee is as follows:
(a) The routine attendance at Board Meetings and General Meetings;
(b) The signing of Directors’ Circular Resolutions; and
(c) The signing of statutory returns in compliance with the Act and relevant statutory legislations.
Nominee Director will perform the above responsibilities according to the following provisions:-
(a) To assist the Company comply with the requirement of Section 122(1) of the Act (i.e. minimum resident director).
(b) The nominee director will not have any role other in the Company except to satisfy the statutory requirements of local resident director for your Company;
(c) Nominee Director will have little or no involvement in the day to day management of the Company;
(d) The nominee director will NOT be a signatory to the Company’s bank account nor will he/she manage the Company’s bank account on behalf of the Company;
(e) Shareholders to sign a nominee director indemnity letter
Provision of a Registered Office Address
Section 46 of the Company Act 2016 makes it mandatory for a company to have a registered office in Malaysia with an address to which all communications and notices may be sent to.
Should there be any change in its registered address the, company must notify the Registrar within 14 days, failing which, the company and every officer who contravenes this regulation is deemed to commit an offence .
Therefore, it is often the practice of newly instituted private limited companies to have their registered offices fixed at the company secretary‘s office to fulfill the above requirements. ,
A point to take note of is that, the Registered Office Address should not be confused with the Business Address, the latter can be at any place in Malaysia.
Maintenance of Statutory Registration and Record Books
Section 47 of the new Act stipulates that all documents and statutory records are required to be kept at the registered office. For instance;
- Notice of registration
- Constitution of the Company, if any
- Certificates given under the Companies Acts
- All registers, books and documents.
- Common Seal of the Company
Section 48 requires that documents and records to be made available for inspection by authorised officers.
The registered office must be open for 5 working days, to be available for visits by officers to inspect the company’s record.
Our Secretarial Office, manned by qualified staff serves as the Registered Office and are readily available and able to attend to queries by authorised officers, directors / shareholders.
Preparing and filing of the company’s annual return
Under the provision of Section 68 of the Companies Act 2016, it is also mandatory to submit the Annual Return to the Companies Commission of Malaysia.
The Annual Return, signed by a director or by the manager or secretary of the company consists of the following information:-
- Registered office Address
- Business office address Branch office address
- Principal business activities
- Charges registered with SSM (i.e. company assets pledged)
- Company directors
- Appointed company secretary
Formerly, the annual return would be filed after the Annual General Meeting (AGM); however the new Companies ACT 2016 now requires the filing of the annual return to be not later than 30 days from the anniversary of the incorporation date. Our practice is to regularly monitor the anniversary of the incorporation date and send reminders to our clients in order to help them avoid late filing penalties.
Dealing with transfers and allotments of shares
All Return of Allotment of Shares (ROA) occurring after 31 January 2017 must be lodged online (MyCoID 2016).
If the company has a period for the date of allotment, the date of lodgment of the calculation is calculated at the earliest date of the allotment.
Only the company secretary who has been registered as a user, can make the lodgment.
Filing changes in the statutory registers with SSM
Bringing up to date to SSM important matters such as:-
- Changes in the director(s) of a company or particulars relating to director(s)
- Changes to a directors name or residential address
- Removal of Director from office in accordance with the Malaysia Companies Act or the constitution
- Disqualification from holding office
- Changes in the annual return
- A change in company name
- The adoption, alteration and revocation of its constitution
- The issue of shares
- Any other changes that requires updating
Expert support and advice on your statutory compliance
At a time when compliance is becoming more and more important, knowing that you are compliant is essential to stay clear from attracting unnecessary fines and penalties from SSM. You can be confident that we have the knowledge and experience to help you.
Our qualified chartered secretaries, will apply their knowledge to your specific circumstances, giving you complete assurance that our advice is correct.
Preparation of Resolutions, Organizing Meetings of Directors, Minutes of Meeting
Under the provision of Section 340 of the new Companies Act 2016, it’s no longer compulsory to hold an AGM, unless the company’s articles still insist on one taking place. However, if holding one is of benefit to the company’s shareholders, then there’s nothing to stop the company from doing so.
We can provide expert service for all your company’s law requirements, including the calling and conduct of general meetings.
We further ensure that the preparation, authenticating and filing of various resolutions, documents and returns with the Registrar of Companies are done professionally and on time.
Advice on Corporate Procedures
Changes in the new Companies Act 2016 has underlying consequences across the business cycle spectrum. For example, the simplification of company incorporation, transforming capital restructuring, enhancing corporate governance and financial reporting through reforming insolvency procedures.
Given this new scenario, business owners / directors are advised to seek professional help in order to leverage on new opportunities as well as to avoid pitfalls in their business. There are many more things that Companies need to get used to and to fully understand.
3. Closing Down Services
Closing down introduction
There comes a time when the business journey has come to an end and then it becomes important for business owners to know how to close down a Company.
Getting everyone to agree to the closure at Members Meeting
You need to get a consensus from company directors and shareholders to agree, before you can start closing down a “Sdn. Bhd”. Once you get an agreement from everyone, the way that you close the company depends on whether the company, is solvent or insolvent.
If your company is solvent, there are two options to close your business i.e. Strike Off or Member’s Voluntary Liquidation (“MVL”)
Striking off Dormant Companies
You can apply to SSM to get the company struck of its name in its register because it is the cheapest way to close it. However there are other criteria that needs to be fulfilled which makes striking off not an easy process.
1. All these criteria must be met before striking off
- The company must be dormant and not in operation
- The company must get consent form the majority of the shareholders
- The Company has no assets and liabilities.
- The Company has no bank account
- The Company has no outstanding tax or other liabilities including compound, fines with any government bodies such as EPF, SOCSO etc.
- The company has no outstanding penalties or compound due to SSM
- The company Is not involved in any ,legal proceedings within or outside Malaysia
- The company does not have any charges in the Register of Charges
- The company has not made any return of Capital to Shareholders
- The company Is not a holding company or subsidiary of another company
- The company Is not a Guarantor Corporation
2. Benefits of Striking-Off
- Directors are allowed to change their mind regarding the closure of their company and be able to apply to the Court for recommencement of their business within 15 years after the name of their company has been struck of.
- In order to ease the striking off procedure, SSM has provided guideline and practice note for striking off a company.
Members Voluntary Winding Up
The winding up of a company is known as “liquidation” and hence MVL is the liquidation of a solvent company whereby the directors has formed an opinion that the company will be able to pay off its debts in full within a period of 12 months after the legal commencement of the winding up process.
Once liquidation has begun, it will be advertised in the main newspaper(s) to inform the public about the status of the company.
The responsibilities for winding up lies with a qualified person appointed by the company. He is called a liquidator and upon his appointment, all the powers of directors and shareholders shall cease and he will take charge to ensure that the company is properly dissolved.
Court Ordered Winding Up
If the company cannot pay its outstanding bills and creditors, it is classed as insolvent.
The court ordered winding up is triggered on the application of one or more parties. The process of winding up the affairs of the company is carried out by the Official Receiver currently known as the Director General of Insolvency or a liquidator.
Circumstances for Winding up
The circumstances that may lead a company to wind up include:-
- The company cannot pay its debts to financial institutions , suppliers or any related parties
- One or more if its directors has acted in his/her personal interest or unjustly to other directors or acted against the interest of the company and has been served a court order.
- The court is convinced that it is equitable that a company should be dissolved
- No business operations have been started since the day of registration (period of one year) or business operations is suspended for one year.
- Where the Memorandum of Association and Articles of Association of the company sets an expiry date for the business.
4. Licensing & Permits
Department of Environment
If your business necessitates building a factory, it is important to know that factories must be sited at specific, allocated zone. You need to undertake research to identify all potential locations that meets your needs as permitted by the law. Alternatively, we can provide the required information for you to decide on.
Siting a factory requires approval from the Department of Environment (DOE)
In Malaysia, manufacturing Industries have been differentiated into Light, Medium and Heavy Industries and because of this, a factory must be built on land that has specifically been earmarked as such and approved by the Department of Environment (DOE). (Refer to next chart)
Therefore any purchase of land for manufacturing purposes must be properly researched. Otherwise it could end up as a costly mistake for the investor.
Identify your Industrial Zones
Department of Occupational Safety and Health (DOSH)
THE OCCUPATIONAL SAFETY AND HEALTH ACT (OSHA) 1994 (ACT 514) makes it necessary for any new building / factory to obtain a clearance letter from the DEPARTMENT OF OCCUPATIONAL SAFETY AND HEALTH (DOSH) , a government department under the Ministry of Human Resources Malaysia, before it can commence operations. Site inspection by DOSH officers will be a prerequisite before approval is given. Moreover, the clearance letter constitutes an important supporting document, required by the Local Authority before approving the Business License
DOSH will ensure that employers, self-employed persons and all employees practice a good working culture and comply with existing legislation, guidelines and codes of practice through its enforcement and promotional activities. Their focus is to encourage high standards of safety and health at workplace.
The OSHA is applicable throughout Malaysia in the following industries:
- Mining and Quarrying
- Agriculture, Forestry and Fishing
- Sanitary Services
- Transport, Storage and Communication
- Wholesale and Retail Trades
- Hotels and Restaurants
- Finance, Insurance, Real Estate and Business Services
- Public Services and Statutory Authorities
A letter of clearance from the Fire Department is another important supporting document required by the Local Authority before approving your Business License.
Prior to on-site inspection by Fire Department Officers, these are the following supporting documentations required for submission to the Fire Department:
- Certified True Copy (CTC) of Registration of Company
- Applicant’s I/C or Passport (Photostat)
- Photostats of H13/ Receipt of Fire Extinguishers
- Photostat Plan of Original Building & CFO
- Fire Certificate for Sprinkler System
The Local Authority, (Majlis), has the power to collect taxes (assessment tax), to create laws and rules (in the form of by-laws) and to grant licenses and permits for any tradein its area of jurisdiction, in addition to providing basic amenities, e.g. collecting and managing waste and garbage as well as planning and developing its area.
The Company must apply and obtain a Business And Signboard License from the Local Authority before commencing business by submitting the following documents:
- Cover Letter Authorizing representatives to submit all documents on behalf of the Applicant
- Letter Authorizing Company’s Senior Malaysian Employee to apply for the license on applicant’s behalf (if applicable)
- Photocopy of Applicant I/C or Passport
- Tenancy Agreement or Purchase Agreement
- Assessment for Current Year
- CFO of Factory
- Photo of Factory
- A4 Size drawing of Sign Board (Coloured); approved & verified by Dewan Bahasa Dan Pustaka
- CTC of Form 49, 24, 44, 9 or 13
- CTC of Memorandum and Articles of Association (M&A)
- Supporting Approvals Letters from Fire / Department of Environment / Department of Occupational Safety and Health
Malaysian Investment Development Authority (MIDA)
The investor who intends to build a factory must apply for a manufacturing license and then explore the possibility of getting investment incentives from as MITI (Ministry of Trade & Industry) and or its agency MIDA. (Malaysian Investment Development Authority) or SMIDEC
|Manufacturing License||Must have at least 75 full-time employees or if its Shareholder’s funds exceed RM2.5 million|
|Manufacturing License Exception||Apply for License Exemption if company does not meet the above criteria|
|Pioneer Status||Enjoys a five year partial exemption from the payment of income tax. It pays tax on 30% of its statutory income|
|Investment tax allowances||Alternative to getting Pioneer Status, a Company may apply for Investment Tax Allowance and be entitled to an allowance of 60% on its qualifying capital expenditure|
For more detailed information, please refer to MIDA Website http://www.mida.gov.my/
The Company will also need to apply work permits on behalf of its expatriate staff from the Immigration Department. Expatriate posts are categorized as follows:
- KEY POSTS :-High level managerial posts of foreign-owned private companies to safeguard their interest and investments
- TIME POSTS [Executive] :- These are intermediate level of managerial and professional posts requiring professional qualifications, practical experience, skills and expertise related to the respective jobs
Employment Pass Basic Requirements
Work Permit applications (Employment Pass) must comply with the following equity conditions.
|Equity||Minimum Paid Up Capital|
|Combination of Local & Foreign||RM350,000/-|
- Minimum age of applicant is 27 years old.
- Minimum Salary declared to the Immigration Department is RM5,000/-
- The post applied is for a minimum period of two years or more.
- The Company must have a place of business with fixed telephone & fax line.
- The applicant must be under the local payroll.
Timing / application procedures
The Malaysian Immigration Department vets information and documentation provided by the applicant along with corporate documentation provided by the sponsoring company in Malaysia.
There are 2 stages to the application:
- DP10 Application
Authorization and approval of the position in Malaysia by the Malaysian Immigration Department. Processing time for citizens from certain countries (e.g. India, China etc.) may be longer as there are additional procedures to comply with Employment Pass Endorsement.
- DP11 Application
For restricted nationalities, the applicant is required to remain outside Malaysia while the application is being processed and is only permitted to enter Malaysia on a Single Entry Visa . This is a visa with reference – upon approval of his application.
Professional Visit Pass (“PVP”)
- A Professional Visit Pass (PVP) can be issued to foreigners with acceptable professional qualifications or possess specialist skills for the purpose of providing services to a Malaysian company on behalf of an overseas company .
- The PVP is a Temporary Work Permit that does not exceed 12 months. Under this scheme, the applicant must not be in Malaysia at the time of application. The foreign worker is still employed by their company in their home country.
- PVP can be extended for another 12-month period, but only after a break of three months after the first 12-month period has expired. A new application must be made for all extensions.
- The PVP application is made to the Malaysian Immigration Departmentby the Malaysian company that is acting as a sponsor. Foreign workers must stay in their home country until the visa has been approved. Processing takes from seven to fourteen working days.
Expatriate Posts in Manufacturing Companies
(a) Manufacturing companies with foreign paid-up capital of US$2 million and above
1. Automatic approval is given up to 10 expatriate posts, including five key posts
2. Expatriates can be employed up to a maximum of 10 years for executive posts, and 5 years for non-executive posts
(b) Manufacturing companies with foreign paid up capital of more than US$200,000 but less than US$2 million
All employment passes are valid for the period approved for the post.
However, for key post holders, employment passes will be issued up to five-year renewable basis except in circumstances
- The validity of the expatriate’s passport is less than 5 years.
- The expatriates’ employment contract is less than 5 years.
- The employer requires the services of the expatriate for less than 5 years
Employment of Foreign Worker
In Malaysia, foreign workers can be employed in the manufacturing, construction, plantation, agricultural, services and domestic help sector. Services sector consists of eleven sub sectors: (restaurant, cleaning services, cargo handling, launderette, caddy in golf club, barber, wholesale/retail, textile, metal/scraps/recycle activities, welfare homes and hotel/resort island.
Only nationals from the specified countries below are allowed to work in the selected sectors:
|Approved Sectors||Nationals of:|
Approval is based on the merits of each case and subjected to conditions that will be determine from time to time.
Applications to employ foreign workers will only be considered when efforts to find qualified local citizens and permanent residents have failed.
An annual levy on foreign workers is imposed as follows:
|Approved Sectors||Annual Levy|
|Domestic Help||RM 410|
– Welfare Home- Island Resort- Others
|RM 600RM 1,200
All applications for foreign workers should be submitted to the One Stop Centre, Ministry of Home Affairs except for applications for foreign domestic helpers which should be submitted to Malaysia’s Immigration Department.
Source: Adapted from the MIDA website
Royal Customs & Excise
Licence Manufacturing Warehouse (LMW)
LMW primarily caters to export oriented industries whereby manufacturing process can be carried out, although, subjected to very minimal custom procedures.
LMW can be set up speedily anywhere in the Principle Customs Area without any need to be near ports of entry unlike the Free Zones established under the Free Zones Act, 1990. Raw materials / components directly used in the manufacturing process are exempted from payment of customs duty. Under this facility, the fee for the manufacturing license is waived.
Licensee is required to submit a bank guarantee for manufacturing goods under the category of critical goods and a general bond for other goods. Furthermore, activities other than manufacturing can be carried out by the licensee at the licensed premise subject to Customs approval. Licensee is allowed to sell the finished products to the local market based on their allocated quota as imported goods which are subject to duty/tax.
The company must complete and submit 3 copies of JKED 1 Forms & Lampiran A, along with other supporting documents such as,
- The Memorandum and Articles of Association
- Certified True Copies of documents under the Company Act 1965
- A List of machineries, raw materials / components used,
- The Flow-chart of manufacturing process,
- The Manufacturing License or Letter of Exemption of Manufacturing License from MIDA,
- The Architect’s layout plans and so on.