Questions to Ask Before Setting Up a Company in Malaysia
By: Josephine Loh
(1) Should I set up a Sole Proprietorship, Partnership, or Sdn. Bhd.?
This is the most fundamental decision before registering. Here is a quick comparison to help you decide:
• Sole Proprietorship / Partnership – Cheap and easy to set up (from RM60–RM100/year via SSM). However, there is NO separation between you and the business — you are personally liable for all debts and legal claims. Suitable for small, low-risk, owner-operated businesses.
• Sdn. Bhd. (Private Limited Company) – More expensive to set up and maintain, but the company is a separate legal entity. Your personal assets are protected. It builds more credibility with banks, investors, and government contracts. This is the recommended structure for growth-oriented businesses.
• LLP (Limited Liability Partnership / PLT) – A hybrid between a partnership and a company. Good for professional service firms (e.g., consultancies, law firms).
Recommendation: If you plan to grow, seek investment, hire employees, or deal with significant contracts, incorporate a Sdn. Bhd. from the start.
(2) Do I need a local Malaysian partner or director to set up a company?
If you are a foreigner, you do not need a Malaysian partner as a shareholder — 100% foreign shareholding is allowed in most industries.
However, there is one key requirement: at least one director of the company must be ordinarily resident in Malaysia. This means the director must be:
• A Malaysian citizen, OR
• A Malaysian Permanent Resident (PR), OR
• A holder of a valid Employment Pass or other long-term residency status in Malaysia.
If you are a foreign entrepreneur who is not yet residing in Malaysia, you will typically need to appoint a local nominee director (a resident Malaysian) to fulfil this legal requirement while you manage the business operations.
Important: A nominee director arrangement should be governed by a proper legal agreement to protect both parties.
(3) What business name can I use, and are there naming restrictions?
Our company name must be approved by the Companies Commission of Malaysia (SSM) before incorporation. Key rules include:
• The name must end with 'Sdn. Bhd.' for a private limited company.
• The name must not be identical or too similar to an existing registered company name.
• Certain words are restricted and require approval from relevant authorities — for example, words like 'Bank', 'Finance', 'Insurance', 'Royal', 'National', 'Malaysia', or 'Berhad' need special ministerial or regulatory approval.
• Names must not be offensive, misleading, or contrary to public interest.
• Foreign language names may be used but must follow SSM's guidelines.
You can check name availability via the MyCoID portal (https://www.ssm.com.my) before submitting your application. Once approved, the name is reserved for 30 days.
(4) Can a foreigner own 100% of a Malaysian company, and are there restricted sectors?
Yes — in most sectors, foreigners can own 100% of a Malaysian Sdn. Bhd. Malaysia has progressively liberalised its foreign investment policies, especially in manufacturing, technology, services, and trading.
However, restrictions exist in certain sectors:
• Bumiputera equity requirements (30% or more) may apply in sectors such as construction (CIDB grading), defence, and certain government-linked procurement.
• Banking, insurance, and financial services are regulated by Bank Negara Malaysia with specific foreign ownership limits.
• Telecommunications and broadcasting are subject to the Malaysian Communications and Multimedia Commission (MCMC) rules.
• Retail and distribution businesses may require approval from the Ministry of Domestic Trade and Cost of Living (KPDN).
• Education, healthcare, and agriculture have additional ministry approvals.
Always check with MIDA (Malaysian Investment Development Authority) or a legal advisor to confirm the rules applicable to your specific industry before proceeding.
(5) What is a Company Secretary and is it mandatory to appoint one?
Yes — it is a legal requirement under the Companies Act 2016 to appoint a licensed Company Secretary within 30 days of incorporation, and this appointment must be maintained at all times.
A Company Secretary must be:
• Licensed by SSM, OR
• A member of a professional body approved by the Minister (e.g., MAICSA — Malaysian Institute of Chartered Secretaries and Administrators, or a qualified lawyer).
What does a Company Secretary do?
• Prepares and files statutory documents with SSM (Annual Returns, changes of directors/shareholders, etc.)
• Maintains the company's statutory registers and minute books
• Advises the board on corporate governance and compliance
• Prepares resolutions and meeting minutes
• Acts as the liaison between the company and SSM
You cannot self-appoint as your own Company Secretary unless you hold the required licence. Annual fees typically range from RM1,500 to RM5,000 depending on the scope of services.
(6) How long does it take to set up a company in Malaysia?
The company incorporation process in Malaysia is relatively fast compared to many other countries:
• Name reservation: 1 working day (via MyCoID)
• Company incorporation: 1–3 working days (once all documents are submitted correctly)
• Certificate of Incorporation: Issued digitally by SSM upon approval
Post-Incorporation Steps (may take longer):
• Business bank account opening: 4–8 weeks (varies by bank and nature of business)
• Business licence applications: Varies — local authority licences typically take 1–4 weeks; industry-specific licences can take 1–6 months
• Employment Pass for foreign directors/employees: 8–12 weeks via MyExpat / Immigration Department