6 Key Things Businesses Must Know About Company Registration in Malaysia

Starting a business in Malaysia is an exciting venture, but navigating the legal landscape is crucial. Company registration is the foundational step that sets your business on the right path. This article will delve into the essential aspects businesses must know about company registration in Malaysia.

Before embarking on the company registration journey, businesses must carefully consider their objectives, legal obligations, tax implications, and ownership structure. These factors are crucial in determining the most suitable business entity and ensuring compliance with regulatory requirements. For example, a family-owned restaurant planning to expand its operations to Malaysia must assess whether a partnership or a private limited company structure aligns best with its growth objectives and ownership dynamics.

1. Choosing The Right Business Entities is Vital

Before registering your company in Malaysia, it's essential to familiarise yourself with the various types of business entities available. Besides that, all businesses in Malaysia are categorised according to the MSIC code system. Understanding these options will help you choose the most suitable structure for your venture. Consider the following business structures:

• Sole Proprietorship
• Partnership
• Limited Liability Partnership
• Private Limited Company
• Public Limited Company (Berhad)

Each business structure has its characteristics, advantages and disadvantages.

Here is a screenshot table from Suruhanjaya Syarikat Malaysia (SSM) about Comparisons of Business Entities in Malaysia for your reference.

Although the most common choices for businesses starting their first business in Malaysia are sole proprietorships and private companies. Then, you might wonder which one you should choose: a Sdn Bhd or Enterprise? No worries, here I list out types of people and characteristics of choosing the business entities for you as below:

1. Sole Proprietorship

• Ideal for individuals looking for a small business in Malaysia.
• Suited for freelancers, consultants, or small-scale businesses with minimal risk.
• Owners have complete control over decision-making and operations.
• However, owners are personally liable for all business debts and obligations, which may pose a risk to personal assets with unlimited liability.

2. Partnership

• Suitable for businesses owned and operated by two or more individuals or entities.
• Partners share responsibilities, resources, and profits, allowing for diversified skills and contributions.
• Partnerships are between professional firms, such as law firms or accounting practices.
• Partnerships offer flexibility in management and decision-making.
• However, partners have unlimited liability, which means they are personally responsible for the partnership's debts and obligations.

3. Limited Liability Partnership (LLP)

• Ideal for professionals or small businesses seeking a balance between liability protection and flexibility.
• LLP offer limited liability protection to partners, shielding them from personal liability for the business's debts and obligations.
• LLP is suitable for professional services firms, such as legal or accounting firms.
• LLP have fewer compliance requirements than companies, making them a cost-effective option for small businesses.
• However, LLP may have limitations on ownership and transferability of interests.

4. Private Limited Company (Sdn Bhd)

• Recommended for businesses planning to grow and expand, seeking limited liability protection, and raising capital.
• Separate legal entity with limited liability protection for shareholders, protecting personal assets from business debts.
• The private limited company in Malaysia can have one to fifty shareholders, offering ownership and shareholding structure flexibility.
• Suitable for startups, medium-sized enterprises, and businesses with growth aspirations.
• However, private limited companies in Malaysia have stricter compliance requirements and may involve higher setup and maintenance costs than other business entities.

5. Public Limited Company (Berhad)

• Suitable for larger businesses planning to raise capital through public investment.
• Shares of the public limited company in Malaysia are traded on stock exchanges, providing liquidity and access to a broader investor base.
• Subject to stringent regulatory requirements and reporting obligations.
• Suitable for established companies with significant growth potential and a strong track record.
• However, public limited companies have complex governance structures and are subject to public scrutiny.

2. What Are the Registration Fees for Establishing a Business in Malaysia?

You may refer to the Registration of Company (ROC) fees for various application SSM costs. Below is a screenshot table from Suruhanjaya Syarikat Malaysia (SSM) about Registration Fees Based On Business Entities in Malaysia as a reference.

3. Can You Register Your Business by Yourself?

Sure can. You may refer to this chart from the MyGovernment Portal, which clearly shows which online platform you should register your business based on the types of business in Malaysia. Example: To register Sdn Bhd Company, you must go through MyCoID to get a business registration certificate. For more information, refer to Step-by-Step Guide on Registering a Sdn Bhd Company in Malaysia. 

4. What Are the Guidelines for Naming Your Company?

When choosing new company names in Malaysia, it's essential to adhere to the Company Naming Guidelines provided by the Suruhanjaya Syarikat Malaysia (SSM). This increases the chance of approval for the new business name during the company's incorporation. Even if your chosen company name is initially approved, it's important to note that the SSM reserves the right to request a name change.

10 Tips for Naming Your New Company Name

a. Check Availability

You need to check the company name in Malaysia and ensure it's available for registration with the Suruhanjaya Syarikat Malaysia (SSM). For example, if you plan to name your company "Tech Solutions Sdn Bhd", you would do an SSM search company name on the SSM website to ensure that no other company in Malaysia has already registered this name.

b. Follow Guidelines

Adhering to the company naming guidelines provided by the SSM is essential to avoid any issues during registration. These guidelines outline the requirements and restrictions for the company name in Malaysia, including prohibited words and phrases. For instance, if you're considering naming your company "Green Earth Ventures," you would review the SSM's guidelines to ensure that the name complies with all requirements and restrictions.

c. Be Unique

Choosing a new company name in Malaysia that stands out and is memorable can help your company distinguish itself in the marketplace. Instead of generic company names like "Best Services Malaysia," consider a more unique and memorable name like "Vibrant Solutions Group."

d. Consider Branding

Your new company name should reflect your brand identity and values. For example, if your company focuses on sustainable fashion, a name like "EcoStyle Creations" would reflect your commitment to environmental sustainability and resonate with eco-conscious consumers.

e. Keep it Simple

A straightforward, easy-to-understand name can help customers remember and relate to your brand. For instance, "QuickFix IT Services" clearly communicates the nature of the business and is easy for potential customers to understand.

f. Check Trademarks

Before finalising your new business name, ensuring that the business still needs to trademark it is essential. Searching for the Intellectual Property Corporation of Malaysia (MyIPO) website can help verify trademark availability. For example, if you're considering naming your company "InnovateTech Solutions," you would check the MyIPO website to ensure the name is available.

g. Think Long-Term

Choose a new company name that will remain relevant as your business grows and evolves. For instance, if you plan to expand your business beyond Malaysia, a name like "GlobalTech Innovations" would suit future growth and international presence.

h. Legal Compliance

Ensure that your chosen company name complies with all legal requirements and regulations. Avoid using sensitive or restricted words in your company name. For example, if you're in the healthcare industry, ensure that your chosen name does not include medical terms that require special licensing.

i. Get Feedback

Before officially registering your new company name, seek feedback from peers, mentors, or industry experts. Their input can provide valuable insights and perspectives. For example, what do you think of the name 'Bright Future Consultancy' for my new business?

j. Register Domain

Once you've decided on a name, register the corresponding domain name to secure your online presence and brand identity. For example, if you choose the new company name "DigitalMarketingPro" for your company, you would register the domain name digitalmarketingpro.com to establish your online presence.

5. What Is the Requirement for a Company Incorporation in Malaysia?

Incorporating a Sdn Bhd is possible when the following conditions are met:

• There must be at least one director residing in Malaysia.
• There must be at least one shareholder.
• A minimum of RM1 paid-up capital is required.
• The appointment of one Company Secretary is necessary.
• A Malaysian registered address must be provided.

For more information, you may refer to the Requirement ​​In​corporation of Company under the Companies Act 2016 based on the types of companies in Malaysia.

6. What Comes After Successfully Registering a Company in Malaysia?

Upon registering your company in Malaysia, you can proceed with the following steps to kickstart your business:

a. Obtain the Requisite Business Licenses From Local Authority

For example, if your business location is within the Petaling Jaya area, you may apply for your business licence at Majlis Bandaraya Petaling Jaya (MBPJ) Licensing. The same applies to business operations within the Kuala Lumpur area: You may apply at Dewan Bandaraya Kuala Lumpur (DBKL) e-lesen.

b. Open a Business Bank Account Through Banks in Malaysia

Below are some banks to consider for opening a corporate bank account:

• OCBC Bank

• Maybank

• CIMB Bank

• HSBC Bank

c. Register With Statutory Bodies for Tax and Payroll Deduction Purposes

Complete the tax registration process with the Inland Revenue Board of Malaysia (IRBM) through the company's tax file registration for statutory declaration and corporate income tax. Additionally, you may register your employees' information with the Employees Provident Fund (KWSP).

d. Commence the Process of Recruiting Employees

A recruitment agency can help you hire talent for various departments, including administration, finance, IT, marketing, and operations.

• HIREDLY

• Jobstreet

• REERACOEN

e. Establish Internal Business Processes to Ensure Operational Efficiency and Compliance

Establishing internal business processes is vital for maintaining operational efficiency and ensuring compliance with regulatory standards. By defining clear procedures and workflows, businesses can streamline operations, reduce errors, and improve productivity by providing corporate training. These processes cover various aspects of business operations, including sales, marketing, finance, human resources, and customer service.

Check out this comprehensive checklist for seamlessly implementing e-Invoicing in Malaysian Businesses for smooth internal business planning.

For example, implementing standardised procedures for order processing, invoicing, and inventory management through SQL Accounting Software can enhance efficiency in the sales and finance departments and ease corporate tax submissions. For more information, refer to E-Invoicing in Malaysia: A Comprehensive Guide for 2024. 

Similarly, establishing protocols for employee onboarding, performance evaluations, and leave management through Payroll Panda ensures compliance with labour laws and promotes a positive work environment.

• SQL Accounting Software

• Payroll Panda

Conclusion

In conclusion, navigating the process of company registration in Malaysia requires careful consideration of various factors, from selecting the appropriate business entity to complying with legal requirements and regulations. Understanding the nuances of each company type, adhering to naming guidelines, and fulfilling incorporation procedures are essential steps toward establishing a successful business venture in the Malaysian market. By following these guidelines and seeking professional assistance when needed, such as the compliance officer for tax compliance in Malaysia. Business owners can ensure a smooth and efficient registration process, setting a solid foundation for growth and success in the dynamic Malaysian business landscape.