What are the benefits of incorporating a company in Malaysia?
Incorporating a company in Malaysia gives business owners legal protection, credibility, and access to a competitive business environment. The most significant benefit is limited liability — under Section 192 of the Companies Act 2016, shareholders of an Sdn Bhd are not personally liable for the company’s debts beyond any amount unpaid on their shares.
A registered company can sign contracts, open corporate bank accounts, apply for government grants, and bid on public procurement contracts. Malaysia’s corporate tax structure is also favourable — qualifying SMEs pay as low as 15% on the first RM 150,000 of chargeable income, compared to the standard 24% rate (LHDN, Year of Assessment 2023–2024).
Malaysia’s strategic position at the centre of ASEAN, its English-friendly business environment, and operating costs significantly lower than Singapore make it a preferred regional base. Government agencies such as MIDA also offer targeted incentives, including Pioneer Status and Investment Tax Allowances for qualifying sectors and activities.
What types of company structures are available in Malaysia?
Malaysia offers several business structures under the Companies Act 2016 and the Registration of Businesses Act 1956, each suited to different ownership profiles and business goals.
The Sendirian Berhad (Sdn Bhd) — private limited company — is the most widely used structure. It is capped at 50 shareholders, cannot offer shares to the public, and requires at least one resident director and one shareholder (who may be the same person). It is suitable for most SMEs, startups, and foreign-owned businesses.
A Berhad (Bhd) is a public limited company with no cap on shareholders. It can raise capital from the public and apply to list on Bursa Malaysia. It requires at least two resident directors and carries more extensive regulatory obligations.
A Limited Liability Partnership (LLP) is regulated under the Limited Liability Partnerships Act 2012. It offers flexibility and limited liability, making it a common choice for professional service firms, such as legal and accounting practices.
Sole proprietorships and partnerships are simpler but offer no liability protection — owners are personally responsible for all business debts. These structures are only available to Malaysian citizens or permanent residents.
What are the requirements for incorporating an Sdn Bhd in Malaysia?
To incorporate a Sendirian Berhad, the following minimum requirements must be met under the Companies Act 2016 and SSM guidelines:
- At least one director who ordinarily resides in Malaysia with a principal place of residence in Malaysia — this may be a Malaysian citizen, permanent resident, or a foreign national holding a valid long-term pass with a local address (Section 196(4), Companies Act 2016)
- At least one shareholder, who may be an individual or a corporate entity of any nationality; the director and shareholder can be the same person (Section 14, Companies Act 2016)
- A registered office address in Malaysia where statutory records and official correspondence are maintained
- A licensed company secretary appointed within 30 days of incorporation, who must hold a valid practising certificate issued by SSM (Section 236, Companies Act 2016)
- Minimum paid-up capital of RM 1, though practical requirements may be higher depending on the sector or Employment Pass applications
All directors must declare, at the point of incorporation, that they are not undischarged bankrupts and have not been convicted of a relevant offence, as required under Section 14(1) of the Companies Act 2016.
How long does the incorporation process take?
Once all documents are correctly submitted through SSM’s MyCoID online portal, a Notice of Registration is typically issued within 1 to 3 working days. Straightforward applications with complete documentation are sometimes approved within a single business day.
The full end-to-end timeline — from initial planning to a fully operational company — is generally 1 to 2 weeks, covering these stages:
- Company name search and reservation via MyCoID (1–2 days)
- Document preparation — director and shareholder IDs, statutory declarations, and company constitution if applicable
- SSM submission and approval (1–3 working days)
- Company secretary appointment — required within 30 days of incorporation
- Corporate bank account opening — typically 1–2 weeks after incorporation, depending on the bank
Delays most commonly arise from incomplete documentation, name conflicts with existing registered entities, or business activities requiring additional approvals from regulatory bodies such as MIDA or Bank Negara Malaysia.
Can a foreigner own 100% of a company in Malaysia?
Yes — in the majority of sectors, foreigners can own 100% of a Malaysian Sdn Bhd. Malaysia has progressively liberalised its foreign equity policies, and there is no general restriction on full foreign ownership of private limited companies.
However, certain regulated industries impose local equity participation requirements or require approval from sector-specific regulators. These include areas such as retail trade, wholesale distribution, financial services, education, healthcare, oil and gas, and certain professional services. Requirements vary by industry and are governed by the relevant regulatory authority rather than SSM.
Regardless of ownership structure, at least one director must ordinarily reside in Malaysia under Section 196(4) of the Companies Act 2016. Foreign founders without Malaysian residency typically satisfy this through a professional resident director arrangement.
Foreign owners should also note that if more than 20% of a company’s paid-up capital is held by non-Malaysian companies or non-Malaysian citizens, the company does not qualify for the reduced SME corporate tax rates administered by LHDN
What documents are required for company incorporation?
For a standard Sdn Bhd incorporation via SSM’s MyCoID portal, the following are required under Section 14(1) of the Companies Act 2016:
- Identity documents — MyKad for Malaysian directors and shareholders, or passport copies for foreign nationals
- Proposed company name, approved by SSM and compliant with naming guidelines
- Registered office address in Malaysia
- Business activity description using the appropriate MSIC 2008 code
- Full details of all directors and shareholders — names, identification numbers, nationalities, and addresses
- Statutory declaration by each director confirming they are not an undischarged bankrupt and have not been convicted of a relevant offence
- Company constitution (optional — if not provided, the default constitution under the Companies Act 2016 applies)
- Declaration of compliance confirming all requirements of the Companies Act 2016 have been met
For corporate shareholders, a consent letter from the corporate body must also be included. InCorp manages the entire document preparation and submission process on your behalf.
What is the minimum paid-up capital for an Sdn Bhd?
The statutory minimum paid-up capital for an Sdn Bhd is RM 1, following the removal of the previous minimum under the Companies Act 2016. This makes incorporation accessible for early-stage businesses and startups.
In practice, the appropriate paid-up capital depends on your business objectives. Companies sponsoring Employment Passes for foreign directors or staff are generally required by the Immigration Department to demonstrate paid-up capital of at least RM 500,000. Certain regulated sectors may require higher capital for full foreign ownership. A higher paid-up capital also improves credibility with banks, landlords, and clients, and is often required for government tenders or financing applications.
Paid-up capital can be increased after incorporation, so many founders begin with a nominal amount and raise it as the business grows. Our advisors can recommend an appropriate starting amount based on your industry, hiring plans, and intended activities.
What is the difference between Sdn Bhd and Bhd?
Both are companies limited by shares incorporated under the Companies Act 2016, but they differ significantly in structure and purpose.
An Sdn Bhd (Sendirian Berhad) is a private limited company capped at 50 shareholders. It cannot offer shares to the public or list on a stock exchange, and requires at least one resident director and one shareholder. This structure suits the vast majority of SMEs, startups, and foreign-owned businesses.
A Bhd (Berhad) is a public limited company with no cap on shareholders. It can raise capital from the public through share issuance and apply for a listing on Bursa Malaysia. It requires at least two resident directors and is subject to more extensive financial reporting and disclosure obligations, including those under the Capital Markets and Services Act 2007.
Most businesses incorporate as an Sdn Bhd and convert to a Bhd only when pursuing a public listing. The regulatory burden and cost of operating as a Bhd is significantly higher, making it unsuitable for most early-stage businesses.
Do I need a company secretary, and when must one be appointed?
Yes — every Malaysian company must appoint a company secretary. Under Section 236 of the Companies Act 2016, the board of directors must appoint a secretary within 30 days of incorporation. Failure to do so is a compliance breach under the Act.
The company secretary must be a natural person aged 18 or above, a Malaysian citizen or permanent resident, and hold a valid practising certificate issued by SSM. They may alternatively be a member of a professional body prescribed by the Minister, such as MAICSA (Malaysian Institute of Chartered Secretaries and Administrators).
The company secretary’s responsibilities include maintaining statutory registers, filing annual returns with SSM, ensuring resolutions are properly recorded, managing share transfers, and keeping the company compliant under the Companies Act 2016. InCorp’s licensed company secretaries are available from the point of incorporation.
Last updated: April 2026. This FAQ is for general guidance only and does not constitute legal or tax advice. For advice specific to your situation, contact InCorp Malaysia’s incorporation team.
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