Malaysia Companies Act
Companies are regulated by the Malaysian Companies Act 1965 ("Companies Act"). Most businesses carried on in Malaysia take the form of a company. The types of companies which may be formed in Malaysia are companies limited by shares (private or public), companies limited by guarantee and unlimited companies. Most foreign businesses in Malaysia operate as private companies limited by shares.
Incorporation
The Portcullis TrustNet Group has shelf companies immediately available. Alternatively, a company may be incorporated. It takes approximately 15 days to incorporate a company.
Prior to incorporating a company in Malaysia, approval must be sought from the Companies Commission of Malaysia for the use of the proposed name.
Name
Private companies are denoted as "Sendirian Berhad" or "Berhad" or the abbreviated form i.e. "Sdn. Bhd." and "Bhd.".
Memorandum and Articles of Association
Memorandum and Articles of Association are provided. The standard form is designed for a straight forward corporate structure. This may be amended after incorporation. Alternatively, special form Memorandum and Articles of Association can be tailored to meet a client's requirements prior to incorporation. However, the Companies Commission of Malaysia allows 3 main object clauses. Additional object clauses, other than the 3 main object clauses are provided in the Companies Act, 1965.
Share Capital
The minimum authorized capital is RM25,000.00. The standard authorized capital for a shelf company is RM100,000.00. Separate classes of shares may be created with differing rights to dividends or otherwise.
Shareholders
A minimum of two shareholders are required to establish a company. Shareholders can be individuals or corporations. Shareholders need not be Malaysian residents.
Directors
Companies require a minimum of two directors both of whom must be natural persons and resident in Malaysia. The particulars of directors must be filed with the Companies Commission of Malaysia.
Secretary
There must be a qualified secretary as prescribed under the Companies Act who is a natural person and resident in Malaysia. The secretary may also be a director. The particulars of the secretary must be filed with the Companies Commission of Malaysia.
Registered Office
Every company must have a registered office in Malaysia where all statutory books of the company must be kept.
Annual Audit
Audited accounts must be prepared by a quailed and approved external auditor appointed at any time before the annual general meeting is held and submitted to regulatory authorities.
Annual General Meeting
The Annual General Meeting ("AGM") of the company must be convened no later than 18 months from the date of incorporation and within 6 months of each financial year end. It is a requirement under the Companies Act that the audited Profit and Loss accounts must be laid at the AGM at least once every calendar year at internals of not more than 15 months. An annual return must be filed with the audited accounts and a Directors' Report made up to the date of the AGM or a date not later than 14 days from the date of the AGM.
Tax Return
The tax year is the financial year as determined by the company and income is subject to tax on a current year basis. Companies are subject to a self assessment scheme in the form of an annual return which must be submitted together with the audited financial reports within 6 month of the financial year end.
Taxation
Generally, all income of companies and individuals accrued in or derived from Malaysia are taxable. Foreign sourced income remitted to Malaysia (other than by companies carrying on the business of banking, insurance, air and sea transportation) are exempted from tax.
Sources of income which are liable to income tax are as follows:
A company, whether resident or not, is liable for corporate income tax currently at the rate of 28%. A company is considered resident in Malaysia if the control and management of its affairs are exercised in Malaysia. This is assessable on income accrued in or derived from Malaysia. In relation to companies in the business of banking, insurance, air and sea transportation, also on income remitted to Malaysia.
Indirect Taxation
Malaysia derives significant revenue from Indirect taxes.
There is currently no Value Added Tax (VAT) in Malaysia. It is however expected that a consumption tax similar to VAT will be introduced by integrating the existing sales tax and service tax into a single base tax to be called Sales and Service Tax (SST).
Current indirect taxes comprise the following:
Royalties are also collected by State Governments from grants in respect of mining and logging concessions as well as from oil and gas.
Double Taxation Agreements
Malaysian has concluded double taxation agreements with many countries. The terms of the agreements vary from country to country.
