Incorporation of a Private Company (Sdn Bhd) in Malaysia

In Malaysia, one of the most common methods of conducting a business is via a company registered under the Companies Act, 2016 (“CA 2016”). Business owners can either incorporate a private company (a ‘Sendirian Berhad’ or ‘Sdn. Bhd.’) or a public company (a ‘Berhad’ or ‘Bhd.’). 

The main distinction between a private and public company is that a private company is limited to a maximum of 50 shareholders. As such, most business owners choose to incorporate private companies, which may then be converted to a public company in the event the company is intended to be listed on Bursa Malaysia, upon which the company then becomes a ‘public listed company’. 

The process to incorporate a private company in Malaysia is governed by the Companies Commission of Malaysia, i.e. the Suruhanjaya Syarikat Malaysia (“SSM”). As a minimum, the proposed private company must have at least one director who ordinarily resides in Malaysia by having a principal place of residence in Malaysia, and a minimum of one promoter (i.e. the person who will be doing the work of the incorporation of the company).

The Name Search

To kickstart the process of incorporating a private company, a Name Search must be made with SSM to ensure that the proposed company name is available. There are 2 ways to apply for a name for the company: 

1. Name Reservation:- The applicant must complete the information for the company name online via the requisite SSM form, and is to pay a RM50.00 fee for each name applied. If the name is approved by SSM, the name is reserved for 30 days (or any longer date up to maximum 180 days as allowed by SSM) from the date of approval. The applicant can then apply for incorporation with a fee of RM1,000.00. 

2. Direct Incorporation:- This process skips the ‘Name Reservation’ process. Upon completion of the necessary SSM forms and payment of the incorporation fee of RM1,000.00, the incorporation will be processed by SSM immediately once the proposed name is approved. 

Particulars Required to Incorporate a Company

 The particulars that are required to incorporate a company are set out in Section 14(3) CA 2016:

i. The name of the proposed company;

ii. The status of whether the company is private or public; 

iii. The nature of business of the proposed company; 

iv. The proposed address of the registered office of the company; 

v. The name, identification, nationality and the ordinary place of residence of every person who is to be a member (i.e. shareholder) of the company and, where any of these persons is a body corporate (for instance, another company), the corporate name, place of incorporation, registration number and the registered office of the body corporate; 

vi. The name, identification, nationality and the principal place of residence of every person who is to be a director; 

vii. The name, identification, nationality and the principal place of residence of the secretary, if any; 

viii. In the case of a company limited by shares, the details of class and number of shares are to be taken by a member; 

ix. In the case of a company limited by guarantee, the amount up to which the member undertakes to contribute to the assets of the company in the event of its being wound up; and

x. Any other information as SSM may require. 

Statement of Consent

Each application to incorporate a company shall also be accompanied by a statement from each promoter or director confirming her consent to act as a promoter or to her appointment as a director (as the case may be), and that she is not disqualified under CA 2016 to act as a promoter or director (as the case may be).

Declaration of Compliance

SSM also appears to require a declaration that the applicant for incorporation has complied with all the requirements of CA 2016. The declaration should be made by the individual who is responsible for incorporation. 

Registration for Incorporation

If the Registrar is satisfied that the requirements of CA 2016 as to the application for incorporation are complied with and upon payment of the prescribed fee, SSM shall:

i. Enter the particulars of the company in the register;

ii. Assign a registration number to the company as its company registration number; 

iii. Issue a notice of approval and registration; and

iv. Issue the certificate of incorporation. 

Post Incorporation

Within 30 days of the company’s incorporation, it must appoint at least one company secretary. The company secretary must be a citizen or permanent resident in Malaysia of age with a principal place of residence in Malaysia, and an approved person under CA 2016. However, there are many corporate secretarial firms in Malaysia which can provide company secretary services at a cost-conscious level. 

After incorporation, the company may also file its constitution. Previously known as the ‘Memorandum and Articles of Association’ or ‘M&A’ of a company, a constitution is essentially the body of ‘laws’ that each shareholder, director, and secretary is required to comply with. A constitution can provide for a myriad of rules and processes which go above and beyond what is provided for in CA 2016. However, the adoption of a constitution is no longer required under CA 2016. Although it is more convenient to go without a constitution, this author is of the view that having a constitution can far better provide for the rights of all parties involved in the incorporation and continued lifespan of the company. 

Finally, prior to commencing business, the business owners must consider if the company has all the necessary licenses, permits, and approvals in place in order to commence business. The licences, permits, and approvals vary depending on the state, local government, and the industry in which the company intends to operate. But for starters, companies in Kuala Lumpur would likely have to apply for what is known as a ‘Business Premise Licence’ prior to commencing operations.

As a dispute resolution-centric firm, Thomas Philip does not normally provide advice on the incorporation of companies. However, as we strive to serve our clients better, we are able to recommend professional corporate secretarial firms to assist in the incorporation process. If you are interested, please email to tp@thomasphilip.com.my or speak to your usual contact in Thomas Philip.