Incorporation FAQ

Company Registration FAQ

1. What are the basic documentations and information to incorporate Sdn Bhd?

a) Three proposed company names with its meaning to perform a name search to check availability before reserving it;

b) Copy of all partners identity card (I/C) or passport (for foreign partner)

c) Proposed business nature

d) Shareholding percentage of each shareholder

e) All Shareholders and Director’s email addresses, contact number and occupations.

2. What condition(s) must be met if a foreigner wishes to form a company in Malaysia?

The requirement for foreign director/member:

a) must be above 18 years old.

b) Those who are named as the director of the company should have a principal or only place of residence within Malaysia (Section 196 (4) (a) of the Companies Act 2016), supporting with proof of address, e.g., tenancy agreement copy or utility bills.

3. Is it compulsory for Sdn Bhd to open a bank account ?

No. It isn’t compulsory, but we would like to recommend the clients to open their bank account where it will be used for daily transactions and for deposit of share capital.

4. What is different of Company vs Sole Proprietor vs General Partnership and LLP in Malaysia?

Company (Sdn Bhd)Limited Liability Partnership (LLP)PartnershipSole Proprietorship
Capital ContributionShare CapitalPartners ContributionPartners ContributionOwner Contribution
Legal Owner of EntityShareholdersPartnersPartnersSole Proprietor
Max no. of OwnerNo maximum number, unless private company (50 persons)More than 2 persons and no maximum limitMore than 2 persons(but not more than 20 persons)Single person
Legal StatusSeparate legal entitySeparate legal entityPartnersSole Proprietor
Law and RegulationCompanies Act 2016Limited Liability Partnership Act 2012Registration of Business Act 1956Registration of Business Act 1956
Responsible person to business managementBoard of DirectorsPartnersPartnersSole Proprietor
Statutory Audit RequirementYesNo compulsoryNoNo
Company Secretary/Compliance officerYes, Company SecretaryYes, Compliance OfficerNoNo
Income tax statusTax on CompanyTax on LLPTax on PersonalTax on Personal
Income tax rateOn 17% on 1st RM600,000 and 24% on next RM600,000 onwardsOn 17% on 1st RM600,000 and 24% on next RM600,000 onwardsScale rate from 0% to 30%Scale rate from 0% to 30 %

5. What are the compulsory documents need to be lodged annually to SSM?

  1. Annual return as accordance under Section 68 (local company) and Section 576 (foreign company); and
  2. Financial statement as accordance under Section 259 (1) of the Companies Act 2016

 

6. When must a company lodge its Annual return?

As per s68 and s576 of the Companies Act 2016:- Annual Return need to be lodged within 30 days from the anniversary of its registration date in Malaysia within such further period as the Registrar in special circumstances allow.

7. When must a company lodge its financial statement to the Registrar?

As per s259(1) of the Companies Act 2016:- Private Company- within 30 days from the financial statements and reports are circulated to its members
Public Company- within 30 days from its Annual General Meeting

8. What is the penalty if a company fails to lodge the Annual Return to SSM?

As per s68(9) of the Companies Act 2016:-
A company and every officer who contravene this section commit an offence.
On conviction, be liable to a fine not exceeding RM 50,000.
In the case of a continuing offence, a further fine not exceeding RM1,000.00 for each day during which the offence continues after conviction.

9. What is the penalty if a company fails to lodge its Financial Statements?

As per s259(3) of the Companies Act 2016:-
Every officer who contravene this section commit an offence and shall,
On conviction, be liable to a fine not exceeding RM 50,000.
In the case of a continuing offence, a further fine not exceeding RM1,000.00 for each day during which the offence continues after conviction.

10. Can company be exempted from audit?

As per Practice Directive No. 3/2017, they highlight that if dormant, zero-revenue and threshold-qualified private companies are eligible to elect for audit exemption.
A dormant company qualifies for audit exemption if it has been inactive from its incorporation or dormant throughout the current financial year and in the immediate preceding financial year.
A zero-revenue company is qualified for audit exemption if it does not have any revenue during the current financial year; it does not have any revenue in the immediate past two financial years; and its total assets in the current Statement of Financial Position (FS) does not exceed RM300,000 as well as in the FS of the immediate past two financial years.
A threshold-qualified company is qualified for an audit exemption if it fulfills the following criteria-

  1. It has revenue not exceeding RM100,000 during the current financial year and in the immediate past two (2) financial years;
  2. Its total assets in the current Statement of Financial Position does not exceed RM300,000 and in the immediate past two (2) financial years; and
  3. It has, at the end of its current financial year and in each of its immediate past two (2) financial years’ end, not more than five (5) employees

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