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Company Incorporation

Incorporate Your Company With us in 3 Fast & Easy Steps

  • Complete the online company setup form ‘HERE’
  • Make the payment to our bank
  • Schedules a time and sign the documents at our office (Alternative way can be arranged)

You company will be incorporated in next 2 days

The requirements to form a new company or opening a new company are as follow:

  • Minimum of one (1) Shareholder with minimum 1 Ordinary Share Capital
  • Minimum of one (1) Director
  • Qualified Company Secretary (An individual who is a member of a professional body prescribed by the Minister of Domestic Trade Cooperative and Consumerism; or An individual licensed by the Companies Commission of Malaysia (SSM))

Both the director and company secretary shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia.

Private limited company (popular known as ‘Sendirian Berhad’ or ‘Sdn. Bhd.’) is the most common type of business vehicle for doing business in Malaysia. Sdn Bhd provides limited liability protection to shareholders (i.e. business owners). The limited liability protection protects the entrepreneurs against trading losses, especially when working within an unstable and ever-changing economic climate.

Advantages of Forming a Company:-

  • Limited liability protection.
  • Shareholders/Owners’ personal assets are not put at risk should the business fail.
  • Shareholder’s liability is limited to the amount of shares subscribed.
  • Easy transfer of ownership (Ownership is easily transferable through the sale of shares)
  • Unlimited life. (When a Sdn Bhd’s owner incurs a disabling illness or dies, the company does not cease to exist)
  • Raise capital more easily, additional capital can be raised by selling shares to new investors (not allowed to sell shares to the public).
  • Sdn Bhd may be perceived as a more professional/legitimate entity than a sole proprietorship, conventional partnership or limited liability partnership.
  • Customer / Commercial partners will have more confidences in dealing with your Company.
  • Easier Access to Funding. (Forming a company will add to your business creditability, this makes it easier to secure finance for your business with less personal risk)
  • Greater Tax Advantages. (More business expenses may be tax-deductible. more tax deductible expenses, tax incentives and lower tax rates)
  • Conversion into Public Listed Company. (Should the Company grows to a level that need access significant funding from public, then Sdn Bhd can be converted into a Public Listed Company)

The Companies Act 1965 (the Act) provides that before a company or its change of name is registered, the Minister of Domestic Trade and Consumer Affairs or the Registrar of Companies must first approve the name or the new name of the company respectively accordingly.

The statutory provisions the Act provides that, except with the consent of the Minister, a company shall not be registered by a name (or Malaysia company name change) that, in the opinion of the Registrar, is undesirable (Malaysia company name restrictions) or is a name, or a kind of name, that the Minister has directed the Registrar not to accept for registration.

General principles to company names:-

  • Malaysia Company Name Format shall use the correct language and spelling;
  • If a name contains words other than the Malay or English Languages, the meaning of such words must be given;
  • Names which are not blasphemous or likely to be offensive to members of the public;
  • Names which do not resemble elements of religion;
  • Certain names which are not too general, for example, “Attempt Bhd.” or “Beautiful Sdn. Bhd.”;
  • The usage of individual names shall be from the names of the directors to be named in the Memorandum or Articles. However, individual names can be considered if such names are from the names of immediate family members of the director or promoter, for example, the names of children, father, wife, grandfather or grandmother. Proof of family relationship must be given. If the name of the company is from the individual name of a group of companies in existence, consent letter must be obtained from the group of companies which have such individual names;
  • State the meaning of the created words;
  • Company name is not an acronym that can be used to mislead as the name of a multi-national company such as PNB, ICI, IBM;

There are several options on types of business entities available in Malaysia. Every business type has its own compliance requirements, tax structure, legal status etc.

For local businessman, you may decide to register your company as a Sole Proprietorship, or Limited Liability Partnership (LLP), or General Partnership, or Company.

For foreign businessman who intends to start a business in Malaysia, the common business entities are locally incorporated company or foreign-owned company.  Foreign investors can setup a sole proprietorship or partnerships in Malaysia with the condition that they have permanent residency (“PR”) in Malaysia. Apart from the options above, foreign investors can also choose to register their business as either Private Limited Company, or a Labuan Company, or a Representative Office.

Company Secretary

In short, the requirements to strike off a company name from the Register of SSM are as follow, where a company:

  • must be dormant or not in operation.
  • must get consent from the majority of shareholders.
  • has no assets and liabilities.
  • has no bank account.
  • has no outstanding tax or other liabilities including compound with any government bodies such as EPF, SOCSO etc.
  • has no outstanding penalties or compound due to SSM under CA 2016.
  • has filed and updated the latest information with SSM.
  • is not involved in any legal proceedings within or outside Malaysia.
  • does not have any charges in the Register of Charges.
  • has not made any return of capital to shareholders.
  • is not a holding company or subsidiary of another corporate body.
  • is not a Guarantor Corporation.

Directors are responsible to ensure the compliance with the following requirements:

  • Holding of corporate meetings
  • Registration of certain resolutions and agreements
  • Recording minutes of all meetings
  • Making the annual return and lodgement with the Companies Commissioner of Malaysia
  • Keeping proper accounting records
  • Tabling accounts, balance sheet and directors’ report at AGM
  • Circulation of accounts, balance sheet, directors report etc to members
  • Appointment of first auditors
  • Comply with restriction, limitation or prohibition of private company
  • Appointment of qualified persons as secretaries
  • Maintaining registered office
  • Registration of transfer of shares
  • Making declaration of solvency in the case of voluntary winding up by member
  • Ensuring that payment of dividends is from profits only
  • Registration of charges

A company secretary assists the company in achieving compliance with various statutory requirement, including the preparing and submitting of statutory returns with the companies commission of Malaysia. He or she also assists in the preparing and filling of Annual Returns of a company to the Companies Commission of Malaysia (SSM).

Here are the responsibilities of the Company Secretary at one glance:

  • The primary duties of a Company Secretary is to safeguard and protect the interest of the company in matters pertaining to all legal, statutory, administrative and other policy matters of the company.
  • A company secretary ensures that there is compliance when appointing directors by ensuring proper compliance to procedure for the appointment of directors. He also assists the induction of the directors and including assessing the precise training needed by directors and the executive management. He also gives comprehensive practical support and guidance to directors and non- executive directors.
  • A company secretary ensures the company is always compliant with all relevant statutory and regulatory requirements as they change and how the impact matters pertaining to the specific business interests of the company.
  • The company secretary assists in making compliant decision making and crafting of corporate strategies by ensuring that the board’s decisions and instructions are appropriately communicated to the relevant staff and all shareholders of the company.
  • A Company Secretary is the primary point of contact for institutional like the Companies Commission of Malaysia, as well as other shareholders.
  • A company secretary ensures that a company’s interests are protected when there are undertakings like corporate acquisitions, disposals and mergers. The company secretary ensures there is effective documentation, due diligence disclosures, proper commercial evaluation prior to completion of a transaction, and the timely execution of documentation etc.

 

It’s clearly stated in the Companies Acts 1965 Section 139A (a) & (b) that the following persons can be company secretary:

Malaysia company incorporation requirements outlined in the Companies Act 2016 states that every company must have at least one Company Secretary. This individual must be a member of a professional body prescribed by the Ministry of Domestic Trade Cooperative and Consumerism, or someone licensed by the SSM.  

Audit & Assurance

An audit is the examination of the financial report of an organisation – as presented in the annual report – by someone independent of that organisation. The financial report includes a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and notes comprising a summary of significant accounting policies and other explanatory notes.

The purpose of an audit is to form a view on whether the information presented in the financial report, taken as a whole, reflects the financial position of the organisation at a given date, for example:

  • Are details of what is owned and what the organisation owes properly recorded in the balance sheet?
  • Are profits or losses properly assessed?

When examining the financial report, auditors must follow auditing standards which are set by a government body. Once auditors have completed their work, they write an audit report, explaining what they have done and giving an opinion drawn from their work.

Subsection 267(1) of the Companies Act 2016 requires every private company to appoint an auditor for each financial year of the company for purposes of auditing its financial statements, except for private companies who are exempted from audit that meets the following criteria:

  • Dormant companies
  • Zero-Revenue Companies
  • Threshold-Qualified Companies

Auditor’s main duties are as follows:

  • To examine and form an opinion as to whether the financial statements have been drawn up in accordance with the financial reporting standards of Malaysia and the Companies Act 1965.
  • To examine and form an opinion as to whether the financial statements give a true and fair view of the financial position of the Company as of the financial year end and of its financial performance and cash flows of the year end.
  • To obtain reasonable assurance that the financial statements are free from material misstatements.
  • To report that the accounting and other records and the registers required by the Companies Act to be kept by the company have been properly kept in accordance with the provisions of the Act.

Here’s what you can gain from audited financial statements.

  • Audited financial statements can provide an extra layer of confidence, allowing management to make specific changes that can promote positive corporate growth and development with the knowledge that the key numbers they are using are correct.
  • Providing audited results to investors can increase your odds of receiving crucial investments, helping your business to avoid cash flow issues, and better plan for the future.
  • An audit can provide the verifiable records banks and other lenders like to see, increasing your odds of receiving a loan – and better terms and interest rates.
  • Providing employees access to audited financial statements can build confidence in your legitimacy as an employer.
  • Consumers are far more likely to have confidence in your capabilities, building loyalty and boosting customer retention.

 

The laws in Malaysia require that a company’s annual audit must be performed by an approved company auditor or audit firm. An approved auditor in Malaysia is a person approved by the Ministry of Finance.

The Ministry may, if he is satisfied that the person is of good character and competent to perform his duties as a company auditor, approve the person as company auditor in Malaysia. The Ministry will grant an audit license for approved auditors in Malaysia, which is renewable every 2 years.

The applicant to be an approved company auditor in Malaysia is required to be a member of Malaysian Institute of Accountants (MIA), obtained with recognized academic or professional qualification and has relevant professional practical experience.

Corporate Income Tax
  • Advising on records to be maintained;
  • Assisting in completing tax returns;
  • Impress upon the clients on their obligation to pay their dues as required under the law;
  • Attendance at Field Audit at clients’ premises;
  • Attendance at investigation, interviews, negotiations and proceedings; and
  • Filing of appeals and attendance at negotiation hearings and further appeals.

According to MAICSA, an individual can become a qualified tax agent in Malaysia and provide relating services by obtaining tax agent’s license which subject to following requirements:

  • MAICSA members with 5 years practical experience in taxation works after admission as MAICSA members, either in the public or private sector (Section 153(3)(c) of the ITA) (Lampiran A);
  • Attended the most recent Annual Budget seminar organised by IRB or CTIM or MATA; and
  • Acquired 40 CPE/CPD within the preceding one year (Lampiran B).

A tax audit is an examination of a tax return by the LHDN to verify that your income and deductions are accurate.

There are two types of tax audits: desk audit and field audit.

desk audit involves simpler issues or tax adjustments that can be dealt with via correspondence at the LHDN office. It generally involves checking all information on income and expenses, as well as various types of claims made by a taxpayer in his income tax returns.

field audit is more complicated. It typically takes place at a taxpayer’s premise and involves the examination of all the taxpayer’s business records through a tax agent or officer. If a field audit is required, you’ll receive a letter notifying you of the visit at least 14 days in advance – if LHDN requires a shorter notice, it can be arranged upon your agreement.

Entities generally are required to prepare their financial statements according to Malaysian Financial Reporting Standards (MFRS) equivalent to IFRS, except for private entities that continue to follow Private Entity Reporting Standards (PERS) for financial statements with annual periods beginning before 1 January 2016 and the Malaysian Private Entities Reporting Standard (MPERS – nearly identical to IFRS for SMEs) for financial statements with annual periods beginning on or after 1 January 2016.

Taxpayers are allowed to file an income tax appeal if they are not satisfied with the income tax assessment, personal reliefs have not been appropriately given, forgotten to claim certain expenses / reliefs or an error made during assessment issued by the IRB office.

If taxpayers receive a notice of assessment and disagree with it, they allow to make an appeal. The appeal must be made within 30 days from the date of the notice. Taxpayers have to write the appeal to the IRBM branch which issued the assessment.

Taxpayers then required to fill in Q Form, and the appeal will be forwarded to the Special Commissioners of Income Tax.

If taxpayers have a valid reason and require more than 30 days to file an appeal, taxpayers require to apply for an extension of time by using N Form. The form is to be forwarded for decision by the Special Commissioners of Income Tax.

Both N and Q form are available at IRB office.

 

Accounting & GST

Any person who makes a taxable supply for business purposes and the taxable turnover of that supply exceeds the threshold of RM500,000 is required to be registered for GST.

However, business with taxable turnover of RM500,000 and below may apply for voluntary registration.

A taxable supply is a supply with consideration and it includes standard-rated and zero-rated supply. Supply without consideration can also be deemed to be a supply. However, certain taxable supplies are not regarded as supplies for GST purposes.

  • Complete registration form GST-01. GST-01 registration form is available at the nearest Customs office or you may download from the GST website, i.e. www.gst.customs.gov.my.
  • Documents relating to business or company registration are required to be submitted only upon request by Customs.

Upon successful application, you will receive an approval letter which informs you of your GST registration number and effective date of GST registration. A license in the form of hard copy will not be issued.

International Financial Reporting Standards (IFRS) is a set of accounting standards developed by the International Accounting Standards Board (IASB) that is becoming the global standard for the preparation of general purpose financial statements, being financial statements that are intended to meet the needs of users who are not in a position to require an entity to prepare reports tailored to their particular information needs.

The IASB is an independent accounting standard-setting body of the IFRS Foundation. The principal objectives of the IFRS Foundation are:

  • to develop a single set of high quality, understandable, enforceable and globally accepted international financial reporting standards (IFRSs) through its standard-setting body, the IASB;
  • to promote the use and rigorous application of those standards;
  • to take account of the financial reporting needs of emerging economies and small and medium-sized entities (SMEs); and
  • to bring about convergence of national accounting standards and IFRSs to high quality solutions.

The IASB, based in London, consists of 15 members. It began operations in 2001 when it succeeded the International Accounting Standards Committee.

In fulfilling its standard-setting duties the IASB follows a thorough, open and transparent due process of which the publication of consultative documents, such as discussion papers and exposure drafts, for public comment is an important component. The IASB engages closely with stakeholders around the world, including investors, analysts, regulators, business leaders, accounting standard-setters and the accountancy profession.

The governance and oversight of the activities undertaken by the IFRS Foundation and its standard-setting body rests with its Trustees, who are also responsible for safeguarding the independence of the IASB and ensuring the financing of the organisation. The Trustees are publicly accountable to a Monitoring Board of public authorities. For more information about the IASB and IFRS Foundation, please visit www.ifrs.org.

 

In Malaysia, the accountancy profession is regulated by the Audit Oversight Board (AOB), the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia or SSM), the Malaysian Institute of Accountants (MIA), and the Malaysian Institute of Certified Public Accountants (MICPA).

Payroll & Management Services

Employees Provident Fund (EPF):

  • According to Section 43(1) of the EPF Act, every employee (aged from 14 years old and up to 75 years old) and employer within the meaning of this Act shall be liable to pay monthly contributions on the amount of wages at the rate respectively set out on HERE (‘EPF‘).

Social Security Organization (SOCSO)

  • All employees shall be insured against certain contingencies via the Social Security Organization as provided under Section 5 of the Employees’ Social Security Act 1969 (‘SOCSO Act’).
  • The contributions payable to the organization in respect of an employee shall comprise of a contribution payable by the employer as well as a contribution payable by the employee, both at the rates as specified in the Schedule of the SOCSO Acts.

EMPLOYEE INSURANCE SYSTEM (EIS) SCHEME

  • According to Section 16 of the Employment Insurance System Act 2017 (Act 800) (‘EIS Act’), all employees between the age of 18 and 60 years old and their employers must make the statutory contribution under the EIS Act, except for those employees who have reached the age of 57 before the coming into operation of the EIS Act. Failure on the part of the employers to contribute their part or to contribute on behalf of the employees will result in the employer being fined a maximum of RM10,000.00, or up to 2 years of imprisonment, or both.

SCHEDULAR TAX DEDUCTION or ‘POTONGAN CUKAI BERJADUAL’ (‘PCB’)

  • This is a monthly deduction from the employee’s salary by the employer to account for the employee’s annual income tax to the Inland Revenue Board (‘IRB‘).
  • Upon finalization of the income tax payable by said employee by year-end, the IRB will inform the employee accordingly if there is any shortfall or excessive payment.
  • In other words, PCB is a system of tax recovery where the employer makes a deduction from the employee’s salary every month under a schedule according to section 107 of the Income Tax Act 1967 (Act 53). The said schedule can be found here.

According to Employment Act 1955, every employer shall pay to each of his employees not later than the seventh day after the last day of any wage period the wages, less lawful deductions, earned by such employee during such wage period:

Provided that if the Director General is satisfied that payment within such time is not reasonably practicable, he may, on the application of the employer, extend the time of payment by such number of days as he thinks fit.

Here are the paid leaves that an employee is entitled to in Malaysia:

Public Holidays

Maternity Leave

  • Citing Part IX (Maternity Protection) of the Employment Act 1955, every female employee is entitled to not less than 60 consecutive days of paid maternity leave if she has worked at least 90 days for her current employer within the 4 months leading up to her confinement period.

  • During this period, the expecting mother is entitled to maternity allowance (same amount as ordinary monthly salary) that must be paid no later than 7th day of the month.

Annual Leave

  • An employee is entitled to a certain number of paid annual leave days in addition to rest days and paid holidays. Citing Section 60E(1) from the Employment Act 1955, they are entitled to paid annual leave as stated below:

    1. Employed less than 2 years: Not less than 8 days per year.

    2. Employed between 2-5 years: Not less than 12 days per year.

    3. Employed for more than 5 years: Not less than 16 days per year.

    If an employee has just joined a company for less than a year, their number of leave days will be allocated according to the number of months they’ve been working with the company.

Sick Leave

  • With a medical certificate (MC) from a registered medical practitioner or officer, an employee is entitled to a certain number of paid sick leaves depending on how long they’ve been working for the company.

    1. Employed less than 2 years: 14 days per year.

    2. Employed between 2-5 years: 18 days per year.

    3. Employed for more than 5 years: 22 days per year.

  • Additionally, Section 60F(1)(bb) states that an employee is entitled to 60 days of paid sick leave in total per calendar year if they need hospitalisation.
  • payment into an account at a bank or a finance company licensed under the Banking and Financial Institutions Act 1989 in any part of Malaysia being an account in the name of the employee or an account in the name of the employee jointly with one or more other persons;
  • payment by cheque made payable to or to the order of the employee.

The length of such notice shall be the same for both employer and employee and shall be determined by a provision made in writing for such notice in the terms of the contract of service, or, in the absence of such provision in writing, shall not be less than —

  • (a) four weeks’ notice if the employee has been so employed for less than two years on the date on which the notice is given;
  • (b) six weeks’ notice if he has been so employed for two years or more but less than five years on such date;
  • (c) eight weeks’ notice if he has been so employed for five years or more on such date:

Provided that this section shall not be taken to prevent either party from waiving his right to a notice under this subsection.