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Companies incorporated in Malaysia are regulated by the Malaysian Companies Act, 1965. As stated in the act any company doing business or wishing to do business in Malaysia must register with the Companies Commission of Malaysia (CCM) under the Companies Act 1965.
A company is a corporate body and has its own legal personality which is distinct from its members. It can sue and be sued, own property, enter into contracts and be a shareholder of another company or partner in a partnership. It cannot, however, act as auditor, liquidator, secretary or director.
Incorporating your business is a method for creating a legal wall between your personal assets and business. Any judgment against your business will not impact your personal assets.
PROCEDURE FOR INCORPORATION
To incorporate a company, a person must apply to the Company Commission of Malaysia (CCM) to determine if the proposed name of the intended company is available. Normally, a name search result is made known within one week after submission to the CCM. A reservation period of three months will be granted if the name is available, during which time the company must submit the relevant documents together with relevant registration fees with CCM.
Upon payment of the registration fee, which depends on the amount of the company’s authorised share capital, a Certificate of Incorporation will be issued by CCM. This Certificate is conclusive evidence of the existence of the company. The whole incorporation procedure of a company generally takes three to six weeks.
Scale of Registration Fees:
|Authorised capital (RM)||Registration fee (RM)|
|0 – 100,000||1,000|
|100,001 – 500,000||3,000|
|500,001 – 1,000,000||5,000|
|1,000,001 – 5,000,000||8,000|
|5,000,001 – 10,000,000||10,000|
|10,000,001 – 25,000,000||20,000|
|25,000,001 – 50,000,000||40,000|
|50,000,001 – 100,000,000||50,000|
A company must have a minimum of two directors, being natural persons of full age and having their principal or only place of residence in Malaysia. Directors need not be shareholders of the company. A director has onerous duties under the Companies Act as in common law. The duties of directors stipulated in the Companies Act are not exhaustive and generally directors are imposed with statutory duties, duty of care and fiduciary duties. In addition, directors are also governed by a Code of Ethics.
A company must have at least one secretary, being a natural person of full age who has his or her principal or only place of residence in Malaysia. No person shall act as a secretary of a company unless he or she is qualified as prescribed under the Companies Act. Similar to directors, company secretaries are also governed by a Code of Ethics. A register of the company secretary or secretaries is kept at the registered office of the company.
A company must maintain a registered office in Malaysia where all books and documents required under the provisions of the Companies Act 1965 are kept.
The following registers have to be kept and changes thereto have to be filed with the Companies Commission of Malaysia:
- Register of members
- Register of directors, managers and secretaries
- Register of charge (if applicable)
- Register of interest holders (if applicable)
The Companies Act requires a company to appoint a qualified and approved external auditor to audit its books. The main statutory duty of the auditors is to report to the members of the company on the accounts or consolidated accounts to be laid before the company at the Annual General Meeting. The Companies Act specifically provides for the disclosures to be made in the auditor’s report and the auditor must form an opinion on the accounts.
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