Methods of Conducting Business in Malaysia

Update Date:2015-11-16 16:46:19 Source:Tannet (Malaysia) Sdn Bhd Views:842

Malaysia Hotline: +603-2141 8908


The business could conducted in Malaysia as:

1. an individual operating as sole proprietor, mostly provide to the local people

2. two or more (not more than 20) persons in partnership, or

3. a locally incorporated company or a foreign company registered under the provisions of the new CA 2016

All sole proprietorship and partnerships in Malaysia must be registered with the Companies Commission of Malaysia (SSM/CCM) under the Registration of Businesses Act 1956. In the case of partnerships, partners are both jointly and severally liable for the debts and obligations of the partnership should its assets be insufficient. Formal partnership deeds may be drawn up governing the rights and obligations of each partner but this is not obligatory.

Company Structure :

The CA 1965 governs all companies in Malaysia. The Act stipulates that a company must be registered with the SSM in order to engage in any business activity.

There are three (3) types of companies that can be incorporated under the CA 1965:

1. A company limited by shares is a company formed on the principle that the members’ liability is limited by the memorandum of association to the amount, if any, unpaid on the shares taken up by them.

2. In a company limited by guarantee the liability of the members is limited by the Memorandum and Articles of Association to the amount which the members have undertaken to contribute to the assets of the company in the event the company is wound up.

3. An unlimited company is a company formed on the principle of having no limit placed on the liability of its members

Company Limited by Shares :

The most common company structure in Malaysia is a company limited by shares. Such limited companies may be incorporated either as a Private Limited Company (identified through the words “Sendirian Berhad” or “Sdn Bhd” as part of the company’s name) or a Public Limited Company (identified through the words “Berhad” or “Bhd” as part of the company’s name).

A company having a share capital may be incorporated as a private company if its Memorandum and Articles of Association:

- Restricts the right to transfer its shares

- Limits the number of its members to 50, excluding employees in the employment of the company or its subsidiary and some former employees of the company or its subsidiary.

- Prohibits any invitation to the public to subscribe for its shares and debentures

- Prohibits any invitation to the public to deposit money with the company for fixed periods of payable at call, whether interest-bearing or interest-free.

A public company can be formed or, alternatively, a private company can be converted into a public company subject to Section 26 of the Companies Act 1965. Such a company can offer shares to the public provided:

a) It has registered a prospectus with the Securities Commission

b) It has lodged a copy of the prospectus with the SSM on or before the date of its issue.

c) A public company can apply to have its shares quoted on the Bursa Malaysia subject to compliance with the requirements laid down by the exchange. Any subsequent issue of securities (e.g. issue by way of rights or bonus, or issue arising from an acquisition, etc.) requires the approval of the Securities Commission.

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Contact us :

If you have further queries, please contact Tannet

24 hours Malaysia hotline: +603-21418908;

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