Understanding Business Entities for Foreign Ownership
As a foreign investor planning to establish a company in Malaysia, it’s crucial to explore the various business entity options that allow foreign ownership. Not all structures are equally suitable, so choose wisely based on your specific needs and goals.
Options for Foreign Company Set Up
a. Branch Office
- Definition: A branch office serves as an extension of a foreign parent company within Malaysia.
- Function: It conducts business operations locally while maintaining financial ties to the parent company.
- Requirements: At least one Malaysian resident must be involved in setting up the branch office.
- Activities: The branch office should align with the parent company’s activities.
b. Representative Office
- Similarity to Branch Office: Like a branch office, a representative office lacks independent legal standing in Malaysia.
- Focus: It primarily engages in liaison, promotional activities, market research, and coordination tasks.
- Liabilities: All liabilities and debts remain the responsibility of the foreign parent company.
c. Subsidiary Company
- Independence: A subsidiary company operates as a separate legal entity from the parent company.
- Business Autonomy: It conducts business activities independently and assumes its own liabilities.
- Suitability: Ideal for foreign companies expanding into Malaysia.
- Naming: The subsidiary company can have a distinct name from the parent company.
d. Private Limited Company (Sdn Bhd)
- Preferred Choice: Foreign investors often opt for a Private Limited Company (Sdn Bhd).
- Ownership: Allows up to 100% foreign ownership.
- Malaysian Co-ownership: In certain sectors (e.g., banking, agriculture, oil and gas, education), at least 30% of the capital must be held by Malaysians.
e. Labuan Offshore Company
- Definition: Registered under the Labuan Companies Act of 1990.
- Foreign Ownership: Can be 100% foreign-owned.
- Minimum Capital Requirement: Low minimum capital requirement (as low as 1 USD).
Company Registration Process
To establish your foreign company in Malaysia, follow these steps:
- Choose a business entity: Select the most suitable structure based on your business objectives.
- Meet registration requirements: Ensure compliance with legal prerequisites.
- Complete necessary forms: Fill out the required forms accurately.
- Digital submission: Digitally sign and submit documents to the Companies Commission of Malaysia (SSM).
- Obtain Certificate of Incorporation: Once approved, you’ll receive the Certificate of Incorporation.
To gain additional information or seek any help, contact us at Zentrusted.
This content is for informational purposes only and does not constitute professional advice. Always refer to the official websites/guidelines/regulations of the relevant authorities for detailed information and consult with a professional for personalized guidance.