Incorporation procedure in Malaysia

All companies in Malaysia are regulated by the Companies Act of 1965 (CA). The law stipulates that all companies must register with the Malaysian Business Council (SSM) to conduct business in any form. The corporation is designated as “Sendirian Berhard;Sdn.Bhd”, Listed companies are referred to as “Berhard”.

Advantages of Malaysian subsidiary

Tax reduction or benefits The parent company is not liable for the activities of the local subsidiary. It is advantageous for financial transactions. Since the transaction with the parent company is recognized as a tax transaction, the scope of deductible deduction is wide. The parent company can adjust the dividend timing and minimize the burden on the dividend. Strategically located in Asia. Low start-up cost compared to Singapore and other Asian countries. The rent is lower than Singapore (and other Asian countries) as the average monthly rent in Malaysia is $17 USD per m2. Wages are $3.24 per hour, where the average wage is much less than the Singapore dollar ($2.31 USD). Malaysia has 68 double tax treaties with other countries, so there is no double taxation. This means that by having a business base in Malaysia, you benefit from the difference in tax amounts with other countries. There is a withholding tax on repatriation of capital, profits, dividends and royalties, but there are no restrictions on Malaysian companies.

Hiring locals in Malaysia

Two shareholders including one Malaysian local and one secretary must be included, and the secretary must also include at least one Malaysian local. At this time, if you hire Malay Malays as shareholders, there is a convenience to avoid many restrictions and sanctions on foreign businesses of the Malaysian government.

Malaysia corporation establishment procedure

1. Corporate name application First of all, the application for the company name along with the application for incorporation must take precedence. At this time, if the company name is already in use or cannot be used for other reasons, approval may be rejected, and the appropriate corporate name must be searched in the database of the Malaysian Corporation (Suruhanjaya Syarikat Malaysia) to check for duplicates, and then approved.

2. Submission of documents Memorandum and Articles of Association Declaration of Compliance (Form 6) Statutory Declaration (Form 48A) written by the prospective director or the promoter if the company was not established Additional documents required for the following: Original Form 13A, copy of company name approval issued by Malaysian Enterprise Committee (SSM), copy of ID card of each director and company secretary, copy of passport if foreign director is appointed

After obtaining approval for the use of the company name, the relevant documents must be submitted to SSM within 3 months, and the related documents are as follows. Memorandum and Articles of Association Company articles of incorporation with company name, purpose of establishment, authorized capital, etc. The articles of incorporation attached to the company stating the regulations governing the company’s internal management and business operation Form 24 List of Shareholders Form 24 Capital Stock Statement Form 49 Corporate Form Directors/ Officers The company articles of incorporation specify the name of the company, the purpose of establishment, the amount of authorized capital (if any), and the division of the amount into fixed-rate shares, and the articles of association of the company include regulations governing the internal management and business operation of the company.

Declaration of Compliance (Form 6) Legal compliance pledge and legal report prepared by the prospective directors and the promoters of the establishment Additional Required Documents Form 13A original, A copy of the company name approval letter issued by the Malaysian Enterprise Committee (SSM), A copy of the ID card of each director and company secretary, and a copy of the passport if a foreign director is appointed Original incorporation application form, copy of company name approval, copy of director’s ID card and passport The documents to be submitted at the agency are as follows. Corporation name Business type/category Registered director/shareholder’s passport copy (photo side)-2 people Registered director/shareholder’s passport copy (photo side)-2 people Delivery of capital contents (500,000/100 million ringgit) Share distribution%

Appointment of legal counsel

All legal entities in Malaysia must appoint a certified legal counsel, who will keep and manage all the company’s official documents. In the case of establishing a Malaysian subsidiary business through the above procedure, it depends on various conditions such as the nature of the business and the composition of capital, but it usually takes about 1 to 2 weeks to establish the corporation. In addition, in the case of the cost of incorporation, it is possible to establish a company with at least RMB 2 paid-in capital, but practically different costs are required depending on the size of the business and the composition of capital.

Duration of company establishment (time required to proceed: 15 business days)

SSM MyCoID corporate name search (takes about 1 day) After approval of the corporate name, document preparation period (takes about 1 day) Registered director/shareholder document signature (approximately 1 day+ required) M&A stamping (By LHDN & Submission to SSM MyCoID) (takes about 5 business days) Digital business registration certificate (takes about 1 day)

Registered data to be received after the establishment of a corporation

Application of Registration of Company (Section 14) Notification Appointment of the First Secretary (Section 58 & 236(2)) Certificate of Incorporation (COI)(Section 17) When the certificate of incorporation is issued, the company shall exercise the functions of a company corporation and have a legal personality that can be sued or sued.As stipulated by the Company Act (CA) of 1965, the company corporation shall retain land with permanence with the seal of the corporation. In the case of authority and liquidation, each responsible employee is responsible for contributing to the company’s assets.

Report on foreign direct investment

In accordance with the Foreign Exchange Management Act of Korea, a report is required when a person with Korean nationality establishes a foreign corporation or acquires a stake. The time of reporting must be prior to the remittance of the Malaysian subsidiary’s capital, and sanctions related to foreign exchange remittance and deposit are possible due to violation of the Foreign Exchange Management Act if not reported Consultation is required with an accountant, tax accountant in Korea, or the overseas direct investment team of the main Korean bank.

Precautions

If the registered director/shareholder does not visit and sign in person, it must be notarized at the notary office and submitted. Capital increase is possible after the establishment of a corporation and after opening a bank account. After the capital increase, you can apply for a working permit (after December).

In this way, the general procedure described above exists for incorporation in Malaysia, but it is desirable to seek the help of a skilled and experienced expert as each case has greatly different details.

6. Malaysia corporation establishment procedure

Malaysian local banks are limited in opening corporate accounts of foreign investment corporations, so it is better to open them through banks that have a well-implemented online system and stability. Among the leading banks in Malaysia, there is Public Bank, and by supporting online banking, you can make financial transactions regardless of location. To open an account, you need to conduct an interview with the person in charge of the bank, and it takes an average of 5 business days to confirm the result of opening an account based on the time the documents are submitted after the interview.

Prerequisites

Before opening a corporate account, the bank performs Customer Due Diligence (CDD) to determine the customer’s business background.

Bank submission information and documents Purpose and reason for opening a corporate account in Malaysia Sectors Source of Funds Resume of Registered Director Proof of business (e.g. homepage address, invoice, sales contract, etc.) Certificate of address of registered director, signatory authority, and major ruler Copy of passport of registered director, signatory, and major ruler Certificate of incorporation Company profile Articles of association Account opening board resolution

Additional check points Registered directors and signatories must visit Malaysia for a bank interview. Account opening is subject to bank approval (average 5 business days required for evaluation period)

Additional inquiries may be made by the bank according to the following: Nationality of registered director/shareholder/major manager Corporate structure Industry and transaction characteristics In this way, the general procedure described above exists for incorporation in Malaysia, but it is desirable to seek the help of a skilled and experienced expert as each case has greatly different details.