Companies Law and Procedures – Malaysia

Companies Law and Procedures – Malaysia

Let’s begin by defining what a company is; it is basically a legal entity that is separate from its member and the shareholders. So when a company is formed it is said to be incorporated. This also means that the company is capable of making contracts, being sued, owning property, employing people or suing others.

Also unlike the sole proprietorship or partnerships type of businesses, the businesses have continuity of succession. This is because they are unaffected by the incapacity or the death of one or more of its members. There are three types of companies; there is the company that is limited by the shares where the member’s personal liabilities are limited to the par value of the shares. The company that is limited by guarantee where the liabilities of the members will then be restricted to the amount that each have agreed to contribute to the assets of the company in the event of liquidation or dissolution. There is also the unlimited company where there is no limit to the members’ liabilities.

The most common type of company structure that can be found in Malaysia is the company that is limited by shares. Companies that are limited by shares fall into two type of categories that include the private limited companies and the public limited companies. A private limited company cannot sell their shares to the general public and the name of the private limited companies will usually end with the word “Sendirian Berhad” or the abbreviation “Sdn. Bhd”. This of course is in comparison to that of the public limited companies, where they will raise the capitals by selling the shares. The company is administered by a board of directors that is elected by the shareholders. They will show their status by using the abbreviation such as “Bhd.” or the word “Berhad” after their name.

The public limited companies can only offer the shares if the prospectus that compiles the requirements of the Companies Act 1965 has already been registered with the Registrar of Companies. However the prospectus can only be accepted for registration if the proposal for the issue or the offer of the shares to the public has been already submitted to the Securities Commission for approval.

It is also subject to the requirements that have been laid down by the Kuala Lumpur Stock Exchange (KLSE). This means that the public limited companies would need to apply to the KLSE for the permission to have its shares quoted on the exchange. It is important that you obtain the permission from KLSE; this is because even if the public listed company has its prospectus issued and registered it will not be allowed commencement of its business.

The public listed companies are either listed on the Main Board or the Second Board of the KLSE. And any subsequent issue of the securities such as the issue by the way of a rights or bonus will require the approval from the Securities Commission.

What is the principal legislation that governs the formation and operation of the companies in Malaysia?

The Companies Act 1965 is basically the principal legislation that governs the formation as well as the operation of the companies in Malaysia. This particular Act enables an association of persons so that they can form various types of corporate organization known as the registered company. This is also used to protect the rights and the interests of the shareholders and the investors in general. The Act will also provide the facilities for the incorporation of the companies along with its constitution, the relations with its members and creditors, the management as well as winding-up.

The Registrar of Companies Malaysia or ROC will enforce as well as administer the Companies Act 1965. Every company that intends to carry out any form of business in Malaysia must register with the Registrar of Companies before they are able to conduct any business activities in the country. Also the Trust Companies Act that regulates the formation and the operation of the trust companies as well as the Kootu Funds (Prohibition) Act 1971 that was introduced is used to prohibit all the undertakings which promote or which are designed to promote the kootu funds are also administered by the ROC.

Other regulatory frameworks include the Securities Industry Act 1983 which provides the securities industry in Malaysia and is under the responsibility of the Ministry of Finance. There is also the Securities Commission Act 1983 which provides the powers and function of the Securities Commission and the provisions for the take over and mergers. Finally there is the Securities Industry (Central Depositories) Act 1991 which provides for the regulation of the central depository in the respect of the electronic, withdrawal, the holdings as well as the dealings in securities that are deposited and also other matters that are related.

What are the advantages of setting up a company?

A separate legal person of a company will exist independently from its members and a limited company will have limited liability for its shareholders. In the event that the business fails the shareholders are protected from the loss of more than that of the normal value of their shareholding. This means that it will provide greater potential as compared to the partnership as well as the sole proprietorship, since most of the companies have ease in securing finance for the growth of the business.

What are the disadvantages of setting up a company?

Things that you may need to take into consideration when setting up a company is the lengthy legal procedures that is involves as well as the possible high cost of incorporation. This will also include the procedures that are incurred in the publishing of the various financial accounts of your company. Other things that you may want to think of are that small limited companies may encounter difficulties in borrowing as extensively as desired. This means that they have limited liability and the banks and other financial institutions will be unable to recover their funds if the business fails. Also the growth of the private limited companies may be limited as they are unable to offer the shares to the general public, so the option to pass through the losses to the investors is not available in this situation. Private limited companies also restrict the rights for their members to transfer their shares.

What are the ownership features of a company?

The company must have at least two members before they can form a company; however for a private limited company the members are only limited to 50 people while in a public listed company there is no limit. The 50 limit membership as mentioned earlier does not include the employees or its subsidiaries.

What is the minimum capital requirement to start up a company?

The minimum capital that you will need to start a private limited company is only RM2. For the public listed companies the requirements include having an issued and a paid-up capital of not less than RM60 million. This comprises of the ordinary shares of not less than 10 cent per share if it is seeking the listing of and the quotation for its securities on the Main Board of the Kuala Lumpur Stock Exchange. Or the minimum issued paid-capital of RM40 million but no less than RM60 million that comprises of the ordinary shares with the, per value of not less than 10 cent per share for the listing on the Second Board of the stock exchange.

What are the names that we can’t use to name our company?

Gazette names No. 716/97, so unless you have obtained prior approval from the ministry, the Registrar of Companies will not accept the registration of any company names or of foreign companies that has been mentioned in the Schedule pursuant to section 22(1) and (341) of the Companies Act 1965.

Names that suggest connection to the members of the Royal Family or Royal patronage that includes names that contain the words such as “Queen”, “Prince”, “Crown”, “Imperial”, “Royal”, “King”, “Princess” and “Regent” are prohibited. Other names that are not allowed include the names that suggest connections with the State or a Federal agency or any of the municipality, other forms of local authority, Commonwealth, United Nations, ASEAN, foreign government, any other international organization, cartel that includes the names that contain such words such as “State”, “ASEAN”, “UNESCO”, “EEC”, “Federal”, “National”, “NATO”, “OPEC” and so on.

Companies also cannot include use words such as “Banker”, “Bumiputra”, “Chamber of Commerce and Industry”, “Chartered”, “Consumer”, “Credit”, “Exchange”, “Fair Price”, “Foundation”, “Guarantee”, “Insurance”, “International”, “Made in Malaysia”, “Registry”, “Trust”, “University”, “Bank”, “Banking”, “Bureau”, “Chamber of Manufacturers”, “College”, “Council”, “Exchange”, “Executor”, “Finance”, “Fund”, “Institute”, “Investment”, “Leasing”, “Prime”, “Treasure”, “Unit Trust” and so on.

You are not allowed to register the names that can be misleading as to the nature, purpose, identity, objects of the company or in any other capacity, names that are blasphemous or likely to be offensive to the members of the public and the names that include the proper names which is not the name of the director.

The Registrar of Companies has sole discretion in rejecting the registration of the names for example which are the translation of a name of a company or that of a foreign company that has already registered under the Act. Or it may resemble or be mistaken for the names of any other local or foreign company, or for the purpose of the incorporation of a new company or registration of a foreign company, for the purpose of a changed in the name of the local or foreign company registered under the Act.

How to start a company?

At all times a company must have two directors, the director must be a natural person and they must also have their principal or a place of residence within Malaysia. The secretary of the company must also be a natural person where their principal or only place of residence is in Malaysia; the secretary must also be a member of a prescribed body or is licensed by the Registrar of Companies in Malaysia.

The first thing that you would need to do is make an application to the Registrar of Companies to ascertain whether or not the intended name of the company is available. If that particular name is available then there is a three month reservation for the name from the date it was approved. You must submit Form 13A and you will also be charged RM30 for each of the application.

Within the three months of the reservation period you will need to submit documents such as the Memorandum & Articles of Association, Form 48A and Form 6 along with the registration fee to the Registrar of Companies. For each of the proposed directors and the subscribers of the company the Statutory Declaration Form 48A is required. As mentioned before a company must have at least two directors to be named in the Articles of Association of that company and two subscribers to the Memorandum and Articles of Association of the proposed company. In Form 6, the articles must have at least one secretary of the company needs to be named.

The list shows the registration fee that is payable for a local company, the fee is based on its authorized share capital.

Authorized share capital (RM) Fee payable
Up to 100, 000 1,000
100, 001 – 500, 000 3, 000
500, 001 – 1, 000, 000 5, 000
1, 000, 001 – 5, 000, 000 8, 000
5, 000, 001 – 10, 000, 000 10, 000
10, 000, 001 – 25, 000, 000 20, 000
25, 000, 001 – 50, 000, 000 40, 000
50, 000, 001 – 100, 000, 000 50, 000
100, 000, 001 and above 70, 000

Upon registration the Registrar of Companies will then issue to you the certificate of incorporation. Under the Companies Act 1965, a company must has a registered office in Malaysia which all the books and accounts must then be kept. The register of the members, the directors, managers and secretaries, the charge as well as the interest holders must be kept and any form of changes must be file at the Registrar of Companies.

Usually companies are required to submit their audited accounts to the Registrar of Companies within 1 month after the adoption of the annual shareholder’s meeting. The meeting should be held within six months after the end of the company’s financial year. So the company must prepare the account for both profit and loss, a balance sheet and a director’s report at the annual shareholder’s meeting within 18 months after the incorporation of the company and subsequently at least once in every calendar year.

For the purpose of reporting the shareholders of the accounts of the company an approved auditor or and approved auditing firm must be appointed to carry out the duties. All the entries of the account must be done within 60 days from the completion date of the transactions and the records must be kept for at least 7 years. As for the public limited company, it will be up to the directors of the company to ensure that the prospectus is issued and that it will be circulated to the public and the contents are in accordance with the requirements of the Companies Act 1965.

How to register a company in Malaysia?

A foreign company that wishes to carry out its business in Malaysia must either register a branch in Malaysia or it must incorporate a local company as its subsidiary. So before the foreign company wants to establish a place of business in Malaysia, they must first procure registration with the Registrar of Companies. However before you register you must gain approval from the Ministry of International Trade and Industry.

By acquiring the majority or all the shares of an existing Malaysia company a foreigner can also carry out its business in Malaysia or they can choose to enter into a joint venture with a Malaysian company or an individual particularly through shareholdings in a newly incorporated joint venture company. For the foreign companies that intend to do business in Malaysia, the Ministry encourages them to incorporate into the local subsidiaries. So this basically means that the Ministry will only allow those companies that have a government or quasi-governmental contract to register their branches here in Malaysia.

As mentioned before to register a foreign company you must apply at the Registrar of Companies after you have gained approval from the Ministry. You can apply at the Kuala Lumpur office or to any of the branch offices in Malaysia by submitting the Form 13A to inquire whether the proposed name of the foreign company is available. For each of the application a RM30 fee will be imposed. The applicant will then be informed if the name is available and whether or not it is approved, the approved name will then be reserved for three months from the date of the approval.

After that the applicant will then required to submit the following documents for registration within the three months period and they include; a certified copy the charter, statue of Memorandum and Articles of Association or other instrument constituting or defining the constitution, a memorandum of appointment or power of attorney authorizing one or more persons residing in Malaysia that accepts on behalf of the company, service of the process and any other notice that requires to served on the company, a statutory declaration in the Form 80 that is made by the agent of the company, a certified copy of its certificate of incorporation or document of similar effect and a list its directors as well as certain statutory particulars regarding them in Form 79.

To ensure the compliance of the Companies Act 1965 there will be an appointed agent. If there are local directors then you will also need to submit a memorandum that states the powers of each of the directors. There should also be certified translation copy either in the National Language or in English if the documents are in a foreign language.

Based on the authorized share capital you are required to pay a registration fee.

Authorized share capital (RM) Fee payable
Up to 100, 000 1,000
100, 001 – 500, 000 3, 000
500, 001 – 1, 000, 000 5, 000
1, 000, 001 – 5, 000, 000 8, 000
5, 000, 001 – 10, 000, 000 10, 000
10, 000, 001 – 25, 000, 000 20, 000
25, 000, 001 – 50, 000, 000 40, 000
50, 000, 001 – 100, 000, 000 50, 000
100, 000, 001 and above 70, 000

The Registrar of Companies will register that particular company as a foreign company under Division 2 or Part XI of the Act, once they have received the payment of the appropriate fees and once all the requirements of the Act has been fulfilled. A certificate in Form 83 will also be issued as evidence of the registration. The forms are technical in nature and they are set out in the Companies Regulations 1966.

If there are any changes in the particulars of the foreign company such as in the company’s name or the authorized capital, then it must be filed with the Registrar of Companies within one month from the date of the change and together with the appropriate fees. After the foreign company has established its place of business in Malaysia they must register with the Registrar of Companies within one month time as well as the notice of situation of its registered office in Malaysia in the prescribed form. All of the branch companies are required to keep proper accounting records and the annual returns are required to be lodged with the Registrar of Companies once every calendar year.

Are there any requirements for the documents to be submitted to the Registrar of Companies?

The simple answer to this is yes and any of the documents that you submit to the Registrar of Companies in pursuant to the Companies Act 1965 shall be submitted in duplicate. The requirements for submitting the documents includes that it should be paper of medium weight, of good quality, international sheet of size 4A, the paper should not have margins of not less than 25 millimeters on the left and of not less than 15 millimeters on the right. The document that you are submitting should be clearly printed, typewritten or otherwise produced in a manner that is permanent. The document should be able to be reproduced by photographic means and the type size should not be less than eight points or unless it has been approved by the Registrar of Companies.

The documents that you submit cannot be of carbon copy unless you have consent from the Registrar of Companies. If the documents comprises of more than two sheets then the sheets must be bound together securely and each of the sheets must have a margin that is not less than 20 millimeters on the side that is bounding addition to any of the other space requirement for binding. If the document that you are submitting consists of more than 20 sheets then it should be bound securely in a durable yet flexible cover.

The documents would then need to be punched with two holes of 6 millimeters in diameter and it should also measure 80 millimeters apart on the left margin. The document must then be endorsed with the name, address and contact number of any of the person or on whose behalf the document was lodged. These details must also be included at the end of each of the document.

Any other related documents must be endorsed on the upper left corner of every page of the document with the company number that has been allotted by the Registrar of Companies. If there are any prescribe fees that are payable in respect to the submission of the document with the Registrar of Companies then it shall be paid at the time that the documents were submitted.

What are the other things that we should consider after the certificate of registration has been issued?

Your company will come into existence as a body corporate after the Certificate of Registration has been issued. The name that is stated on the Certificate of Registration is the name of your company and you will also receive an identification number known as the “Company Number”. The company name must be prominently displayed at the place that you carry on your business which is opened to the public. The name of your company must be displayed as well as the wording “registered office”.

Your company should be in legible Romanized letters and the company number must appear on the seal and in all business letters, the statements of accounts, the invoices, official notices, publications, promissory notes, endorsements, bills of exchange, orders, checks, letter of credit, receipts or purporting that is to be issued signed by or on behalf of the company.

Is insurance required for the business?

Based on the type of business that you are conducting and the amount of liability that you are exposed to from the activity, from there you can determine the need for the insurance. You should also take note that there are certain insurance such as SOCSO which are required for the employees.

There are commons forms of business insurance that you can consider that includes commercial multi-peril policies that covers a variety of exposures, liability insurance that covers premises, business interruption insurance, surety and performance bonds, employee fidelity bonds, activities and products, as well as malpractice and errors and omissions coverage.

Before you decide on purchasing insurance it is best recommended that you perform a risk exposure analysis. If you are unable to determine the risk of loss from engaging in that particular business, what you can do is contact the commercial lines insurance broker to help you make an assessment.

Is a company secretary required for my business?

Each company must have at least one secretary that is a natural person of full age, and as effective of the 10th of September 1992, the pursuant to the Company Secretary License section 139B (3), no person can act as the company secretary unless they have been licensed by the Registrar of Companies or is a member of a professional body or of any other body which has been for the time being prescribed by the Minister. You should also take note that it is any offence for any person that contravenes the requirements that were mentioned earlier and they will also be liable to a penalty that does not exceed the amount of RM5, 000.

What are the requirements to apply for a company secretary license?

The applicant should be a person that is of 18 years and above and have a place of residence in Malaysia. The person should also not an un-discharged bankrupt or a convicted person pursuant to the section 130(1) of the companies Act 1965. The minimum requirement for the applicant should be at least Sijil Pelajaran Malaysia (SPM) or equivalent and they must also have working experience that is related to the matters regarding to company law or that of company secretarial practice. So the period for working experience includes if you are an SPM or STPM holder then it should be 5 years, if it is relevant Diploma then it should be 2 years, 3 years if it is non-relevant Diploma, 1 year for relevant Degree and 2 years for non-relevant Degree.



How do I apply for a company secretary license?

If you wish to apply for a company secretary license then you will need to submit your application and other relevant documents to the Registrar of Companies along with the appropriate fees. The application form that you will need is Form 48C and you can obtain that from the Registrar of Companies.

After you have obtained the form just fill it in accordingly, however you will need to make sure that all the forms are typed written. Other documents that you will need include evidence relating to your experience, recent passport sized photograph, a referee’s letter and an application fee of RM5O.

Once you have done that, you will then be required to attend an interview session so that they can assess your knowledge on the company law matters and the company secretarial practices. If you are successful then you will be issued a license, the license fee is RM150 and it is valid for three years. If you want to renew the company’s secretary license then it is best recommended that you do it at least 30 days before the expiration of the license. You are then required to submit a renewal application using Form 48C together with the renewal fee of RM50.

Are there any requirements for the reporting of the company’s financial statements?

It is best recommended that you comply with the International Accounting Standards when you are reporting the company’s financial statements. The financial statements must be audited and it should present a true and fair view of the company’s financial state of affairs, results and of any changes.

For holding companies the balance sheet as well as the profit and loss account of the group must be consolidated. The currency that can be utilized is only in Ringgit Malaysia (RM) but the accounts can either be prepared in English or Malay. While the date for the preparation of the annual financial statements is not specified, the majority of the companies adopt 31st of December as it coincides with the tax year.



  1. Snowny Ng

    i have a question regarding on listing in Main Board of KLSE before they change the board structure. I found that Linear Corporation Berhad is transfered to Main Board but its capital is less than RM 60 million. On what condition a company can be transfer from second board to main board with the amount of issued and paid up capital that is less than RM60million?

  2. Valerie Kam

    In many countries like the US where I currently reside, companies can be formed and owned by only ONE person
    if the company does NOT owe any money
    and does not wish to have partners.
    The company can an LLC (limited liability
    company) or S-corporation or just
    a regular corporation.

    I understand that in Malaysia, you need
    at least 2 person. This seems kind of
    rigid and OBSOLETE/OUTDATED.

    When can Malaysia be more flexible
    in allowing a company to be owned
    solely by ONE person?

    If I want to start a small business, it
    doesn’t matter which country in the
    world, many people just prefer NOT
    to have partners. If one does NOT
    owe any money NOR have any shares
    to the public but still want the benefit
    of separating company assets from
    personal assets rather than sole
    proprietorship, many people choose
    to incorporate.

    Please let me know when Malaysia
    can do something about allowing a
    ONE person company?
    Any chance that this suggestion
    can be placed for voting by authorities
    or the public to see if this can pass?


  3. Kiang

    I like to enquire what is the liability of the directors of Sdn Bhd if they were to register a company . But in operation is run by a foreigner who is the MD or GM. Can he or she get loan on behalf of company or any illegal transaction he do will affect the directors of the company if done without the knowledge of the directors.

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