5 ways digitalisation in procurement benefits your company

Procurement is the process where a company sources for and purchases products or services for internal or external uses. Depending on the company’s size and procurement flow setup, the procurement process can be as simple as comparing several stationery shops to decide on which one to buy printing papers from, to buying printing paper in bulk from a manufacturer, which could involve multiple approval stages before the process could be completed. By digitalising the procurement process through the implementation of an e-procurement platform, companies can manage procurement more efficiently.

 

 

Save time with no paperwork – digital documents and software integration

For large companies, manually compiling the purchasing needs of multiple departments and branches via paperwork and Excel sheets can prove extremely time-consuming. This method of handling large quantities of data also makes the procurement process more prone to human errors. Here’s how an e-procurement platform removes the need for paperwork in the procurement process:

  • Each department or branch has access to the same e-procurement account while the company management still maintains control through the approval of purchases on the platform.
  • From purchase orders to invoices, all documents are digitalised and clearly laid out on the e-procurement platform, making it easy for the accounting department to make payment.
  • The integration of an e-procurement platform and accounting software further reduces processing errors and makes data entry redundant since all purchases are automatically recorded into the company’s accounting system.

 

 

Save cost through consolidating purchases – right price with the right suppliers

With multiple departments or branches, there is a high probability where the same products or services are needed such as office supplies, cleaning services, and pantry items. Through consolidating purchases on an e-procurement platform, the company gets negotiation power for making bulk purchases, besides avoiding the accounting disaster of having the same item being bought at different prices for the same company.

It is convenient for the company to have a list of suppliers for different purchases needed so that sourcing does not need to be done over and over again. Moreover, having a good relationship with the suppliers through consistently buying a good volume helps obtain a better offer in the long run as well.

 

 

Get better spending visibility – know what your company is buying

An e-procurement platform provides spending analysis which helps companies to understand procurement patterns in terms of what has been bought, when it was bought, how frequently it was bought, who bought, how much was spent, who was the supplier, etc. This allows the company to:

  • Create reports on the spending patterns of departments or branches for future reference.
  • Identify cost-saving opportunities such as costs to cut and price negotiation.
  • Make better-informed procurement decisions based on data analysis.

 

 

Improve budget and procurement compliance

In order to optimise procurement, compliance is needed to ensure that each purchase made is reasonable and can be fulfilled within the fixed time frame. These are some common rules that can be easily achieved using an e-procurement platform:

  • Pricing comparison – Multiple quotations can be generated with a click to compare pricing of different vendors at a glance.
  • Supplier check – The company can keep an optimal number of suppliers in the e-procurement platform to avoid the risk of shortage and delays which could incur higher costs.
  • Budget control – The decsion-maker of the company can approve or reject each purchase request from departments or branches according to the budget limit and needs.
  • Purchase Order (PO) cycle duration – With digital approval processes, time taken to place a PO is reduced so that the products or services needed can be obtained as soon as possible.

 

 

Manage multiple suppliers on one platform

Through an e-procurement platform, the company can manage suppliers all in one place without having to go to various channels like emails, phone calls, or even fax which can cause ordering errors. Each supplier can be categorised using the Kraljic Matrix as follows:

  • Leverage items – Items that are essential for business with plenty of supplies in the market.
  • Strategic items – Items with high-profit impact with not many suppliers supplying these items.
  • Non-critical items – Items with low-profit impact with many suppliers in the market.
  • Bottleneck items – Items with low-profit impact with not many suppliers supplying these items.

 

With an e-procurement platform that is linked to a marketplace, payment can even be made once without having to pay multiple vendors at the same time, reducing cash payments.

 

Leaving procurement unmanaged can hurt your company’s finances indirectly as it leaches cash unnoticeably over time. Setting up an e-procurement process may seem like a hassle at the beginning, but as soon as the process is set in motion, steps from sourcing to invoicing approval will come together in an organised way that makes procurement efficient in your company.

 

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Special thanks to Supplycart for the content collaboration on this article. Supplycart is an e-procurement platform integrated with a B2B marketplace that simplifies procurement for businesses through a single platform.

How e-KYC systems improve the company incorporation process

Identity verification, also known as the Know Your Customer (KYC) among industries, is an essential process done to ensure that the person who we do business with is the person they claim to be. Traditionally, it is done face-to-face where the person comes to the office and presents his identity document such as IC or passport. This is commonly done when opening a bank account, renewing a driving license, or other official matters that require identity verification to prevent fraud and falsification of identity.

e-KYC: Identity verification done electronically

The e-KYC process may still be new in Malaysia; however, due to the wide adoption of e-wallet in recent years, some of us might have gone through the process of taking front and back photos of our identity document together with a selfie to fulfil the requirement to become an e-wallet user. In fact, e-KYC is a legally recognised identity verification process by many governmental institutes. Bank Negara Malaysia (BNM) has issued a policy document in June 2020 to facilitate the adoption of eKYC technology in the financial sector to make digital onboarding process of new customers possible without requiring new customers to visit the financial services providers in-person.

In light of the pandemic that started in early 2020, in-person identity verification has not been ideal due to restricted movement and social distancing. Hence, e-KYC has proven extremely useful since as it allows for the identity verification process to be done online.

The purpose of e-KYC in the online company incorporation process

The main purpose of carrying out identity verification of directors and shareholders by company secretaries is to ensure that the person submitting the company incorporation form is not an imposter who is misusing another person's identity. There are several ways identity can be forged:

As in the case of preventing loan applications made by a forged identity, this is a necessary step to make sure that there is no misuse of a person's identity as well as that the intention of directors and shareholders in incorporating a company in Malaysia is genuine.

In line with the Anti-Money Laundering & Counter Financing of Terrorism (AML/CFT) framework in Malaysia, company secretaries play an important role as a reporting institution in the effort of combating money laundering and financing of terrorism. Hence, verifying that the directors and shareholders are actually who they claim to be is the crucial first step in ensuring compliance with this regulation.

How eKYC works in identity verification for directors and shareholders

As e-KYC processes are required to meet the same safety standards as traditional KYC, identity verification for directors and shareholders is usually done with the following combination of authentication factors:

Document identification

Directors and shareholders take a photo of the front and back of their IC (for Malaysians) or passport (for foreigners) through the e-KYC system where the data is captured and analysed. The e-KYC system is able to identify if the required document is legit and requests for a re-submission if it is not.

Facial verification

Directors and shareholders take a selfie through the e-KYC system which will match their facial features with the photo on the IC or passport to ensure that they are indeed the same person. The e-KYC system is able to detect if it is a real person taking the selfie or if it is just a photo of the person.

Liveness verification

Directors and shareholders record a video through the e-KYC system according to instructions such as performing simple movements and reading out randomly generated numbers shown on the screen. This ensures that the person performing the e-KYC process is a real person, not an imposter with a face mask or a video recording.

The e-KYC process is usually done through a combination of document identification followed by facial identification or document identification followed by liveness verification. These steps are done directly within the e-KYC system through the directors' or shareholders' device, with a camera. Hence, there is no need to make a photocopy of the IC or passport and send it to the company secretary manually with a risk of having your documents go missing or stolen.

As the directors and shareholders will carry out the e-KYC process on their own, the e-KYC system shows step-by-step guidance to ensure that the process is done properly and the photos are taken clearly without blur and glare. With e-KYC, it usually takes only a few minutes to complete the whole process of identity verification for directors and shareholders in an online company incorporation process.

By implementing e-KYC in the process of company incorporation, directors and shareholders of companies are able to get their identity verified accurately and smoothly without having to meet the company secretary in-person. With a secure and safe e-KYC system, identity verification can facilitate the entire process of company incorporation, reducing the time needed to get your company up and running.

The roles of directors and shareholders in a Sdn Bhd company

Being new to the journey of entrepreneurship means there are many business jargons to get used to, especially if you are incorporating a company for the first time. Besides deciding the amount of paid-up capital and the number of shares for your company, you need to appoint directors and shareholders as well. Who are the directors and shareholders of the company, and how do they contribute to the business in general?

Directors

Directors, also known as the board of the company, are individuals who are directly involved in decision making and the operation of the company. All Sdn Bhd companies in Malaysia are required to have at least 1 director who resides in the country. To become a director of a company, the person must be at least 18 years old and is not disqualified under Section 198 of the Companies Act 2016. A director is not necessarily a shareholder of the company. In the company incorporation process, directors are sometimes known as the promoters.

Responsibilities of directors

Directors are expected to utilise their knowledge and experience when running the company and make well-informed decisions with the best interests of the company in mind. Due to their position as the management of the company, they should avoid any conflict of interest such as by engaging in businesses that compete with the company and should not take advantage of the company for their personal benefits.

These are part of the duties of directors:

The penalties of breaching their duty as a director of a company are imprisonment of up to 5 years, a fine of up to RM3,000,000, or both.

Rights of directors

With great responsibilities directors are holding, they are allowed to seek help from professionals such as lawyers, accountants, business advisors, etc. in gathering information to make decisions or prepare reports for the company.

Similar to employees of a company, directors are paid a director fee, as approved by the board and shareholders. However, the company cannot provide a loan or become a guarantor of the loan to its director or anyone connected to the director, unless it is approved by the shareholders.

Shareholders

Shareholders, also known as members, are the owners of the company. They can be individuals or corporate bodies, such as a Sdn Bhd, who own part of the company through the subscription of shares (buy shares). A private limited company can have up to 50 shareholders. Since they financially back up the company, they have indirect control over the operation of the company. If there is only 1 shareholder in the company, it means that person is the sole owner of the company, holding 100% of the shares. In the company registration process, shareholders are sometimes known as subscribers.

Responsibilities of shareholders

Even though shareholders do not directly manage the company, as owners of the company they hold liabilities too, especially on any amount of the unpaid shares held.

These are part of the duties of shareholders:

Rights of shareholders

Shareholders can request directors to hold shareholder meetings in order to discuss matters related to the business. They can raise concerns and questions regarding the decisions made by directors on behalf of the company.

Unlike directors, shareholders receive a percentage of dividends according to the annual profits of the company. If the company is issuing new shares, existing shareholders have the priority in buying these shares first before they are taken up by third parties.

Update: About beneficial ownership

Beneficial owners are the ultimate owners of the company who have effective control over the entity, even if they are not officially listed as the company's shareholders. There are cases where beneficial owners have agreements with existing shareholders of a company to benefit from shareholding while preventing scrutiny from the authorities. The anonymity that comes with being a beneficial owner, without being a shareholder, can mask conflict of interests and potential fraud conducted by the beneficial owners.

Mandatory to declare beneficial ownership

The SSM issued a guideline in March 2020 to make it mandatory for all companies to declare their ultimate beneficial owners for the sake of transparency in the company management, besides addressing the issues of illegal businesses and shell companies. The responsibilities of such declaration fall on:

For newly incorporated companies, the beneficial ownership information should be collected within 30 days after the appointment of the company secretary. This information should be lodged together with the Annual Return within 30 days from the anniversary of the incorporation date for existing companies. Companies that fail to reveal their beneficial owners are liable to a compound fine of up to RM50,000.

Director and shareholder positions can be held by the same or different persons. They play varying roles in the company to ensure a smooth and profitable business operation. If you are not starting your own business, you may have received an invitation to become a director or shareholder for a company. Hence, it is important to understand the roles and rights of these positions to make sure you are ready to take up responsibility and liability towards the company.

Non-mandatory statutory compliance for startups in Malaysia

Getting started with the journey in entrepreneurship involves learning a whole set of skills, from financial planning, brainstorming marketing strategies and people management, to dealing with laws and regulations that a company needs to follow. While it is convenient to engage with company secretaries and accountants to sort things out, knowing the requirements and exceptions a startup has towards statutory compliance helps set expectations right when looking for help from professionals.

 

The Companies Act 1965

The Companies Act 1965 was the first law established to regulate starting and running a company in Malaysia. As the Companies Act 1965 has been replaced with the Companies Act 2016, there are several key updates that simplify the statutory compliance that a company has to follow. This is applicable to private limited companies incorporated after the Companies Act 2016 came into effect. These are some examples of compliance a company no longer has to adhere to:

 

Memorandum and Articles of Association (M&A)

In the past, M&A was outlined to establish the constitution of how the company is governed, such as responsibilities of directors, allotment of shares, etc. The Companies Act 2016 today can be used as a constitution without having to establish a separate M&A unless there is a need to specify more rules and regulations in managing the company. It is still recommended to adopt a constitution under certain situations.

 

Common seal

The common seal is an impression on melted wax or an indentation on an official document that deems the document officially executed. According to the Companies Act 2016, only signatures of 2 authorised persons are needed where 1 of them should be the director for the execution of documents. In the case where there is only 1 director in the company, signatures of the director and 1 witness are required. Hence, a common seal is no longer needed for newly registered companies.

 

Annual General Meeting (AGM)

AGMs are held annually between the directors and shareholders of a company to analyse the company’s performance and to plan business strategies for the following year. It is no longer mandatory for private limited companies in Malaysia to hold an AGM each year as directors and shareholders of the company can now make decisions by signing a circular resolution with or without holding a physical meeting.

 

Sales and Service Taxes (SST)

If your business provides taxable goods or services to customers, you may wonder when you should start collecting Sales and Service Taxes (SST) from the customers. You only need to register for SST if your annual sale value exceeds RM500,000 in 12 months.

 

Audited financial statement

Each year, your company secretary files the annual returns and financial statements of your company to the SSM. You can provide an unaudited financial statement if your company falls under one of the following categories:

 

Dormant companies

Companies that have no transaction since they have been incorporated.

 

Zero-revenues companies

Companies with no revenue for the current and past 2 financial years, with total asset of less than RM300,000.

 

Threshold-qualified companies

Companies with less than RM100,000 revenue, with a total asset of less than RM300,000, and the number of employees of less than 5, for the current and past 2 financial years.

 

company secretary is the best advisor who can provide advice related to the laws and regulations that a company needs to follow, as well as get you in touch with relevant professionals to provide necessary services. Entrepreneurship is challenging; so don’t let statutory compliance of your company becomes an obstacle to growing your business. Appoint a company secretary who is ready to assist you in making the right decisions when it comes to statutory compliance.

How much do you pay a company secretary in Malaysia?

Venturing into a new business by starting a company is not easy as you will have to juggle limited resources to ensure every penny is well spent. Company secretarial charges may be seen as a mandatory cost to a company, with the Companies Act 2016 requiring all Sdn Bhd to appoint a company secretary, but their value is often not well understood by business owners. Hence, most business owners tend to go for the cheaper option as the company secretary does not seem to play an important role in day-to-day business operations. Let's take a look at how company secretarial fees are charged in Malaysia.

 

Retainer fee versus subscription fee

The monthly retainer fee for company secretarial services in Malaysia ranges from as low as RM60 to as high as RM600 per month. This fee generally does not include any services provided by the company secretary of your company, aside from being compliant to the Companies Act 2016. Any other company secretarial services requested, like the filing of annual returns, would require additional payment to the company secretarial firm.

Another pricing model of a company secretarial firm is based on monthly subscription. A subscription fee is more commonly charged in the Software as a Service (SaaS) industry where you would enjoy a range of services for a fixed fee paid each month. While this pricing model is used in the digital company secretarial industry overseas, it is still relatively new in the Malaysian company secretarial landscape. Business owners in Malaysia are used to paying a low monthly retainer fee to the company secretary and getting invoices on any ad hoc company secretarial services done.

 

The norm of hidden fees

With a low monthly retainer fee, most company secretarial firms have to charge a higher fee for each service provided upon request, such as preparing company resolutions, providing certified true copies of statutory documents for the purposes of loan applications and opening business bank accounts, etc. Most company secretarial firms even include charges for emails, phone calls, and even for each document printed in the invoice issued.

It is true that there is a fee payable to the Companies Commission of Malaysia (SSM) for lodgements made with the SSM. Usually, company secretarial firms have to charge a service fee on top of the fee payable to the SSM, as stated in the official Table of Fees, to cover expenses and make up for the low monthly retainer fee.

 

Comparison of company secretarial fee in a year

Company secretarial services Retainer fee based example Subscription fee based example
Monthly company secretarial fee RM 100 / month RM 200 / month
Annual return filling RM 700 Inclusive
Financial report filling RM 300 Inclusive
Increase paid-up capital RM 600 Inclusive
Change of shareholder / transfer share RM 300 Inclusive
Document printing, dispatch, etc. Charged per document Inclusive
Estimated total RM 3,500 RM 2,400

 

A company secretary should be paid for their liability, not services

Business owners might have gotten used to the pay-per-service type of pricing model from a conventional company secretarial firm, but that might not be the best way to engage with a company secretary. Being an appointed company secretary to your company means they have the liability to ensure compliance to the laws and regulations of Malaysia at all times. They should be available for consultation when you have a question regarding the statutory compliance of your company. Hence, unlike an accountant or a lawyer, a company secretary should not be paid for each ad hoc service they provide, but for their role in providing good corporate governance and ensuring the statutory compliance of your company.

 

At first glance, it might seem expensive to pay a monthly subscription fee of RM200 instead of a retainer fee of RM60 to appoint a company secretary for your company. However, in the long run, this fixed monthly pricing not only allows you to plan your company's financials easily, but it also means that your company is in the safe hands of an experienced company secretary who is liable of ensuring your company's compliance to the laws and regulations under the SSM. Thus, understanding the roles of a company secretary is important for you to make the right choice as the business owner to engage a suitable company secretary for your company.

4 ways F&B businesses can adapt to the new norm

With the Movement Control Order (MCO) having started in March 2020, followed by the Conditional Movement Control Order (CMCO) and the Recovery Movement Control Order (RMCO), food delivery has become part of our daily life. Getting food with just a swipe of finger just feels so natural that now most people opt for food delivery even though we are now free to dine in at restaurants. This has changed how F&B businesses operate as the revenue stream of dine-in today is not as stable as it used to be. Here's how you can adapt your F&B business to the new norm, featuring some real-life examples of what other F&B businesses have done during MCO while adhering to standard operating procedures (SOPs).

 

1. Leverage upon online exposure with partnership

As people spend more time on the internet, yearning for the days when they can finally go out again, promoting your F&B business through social media builds up the craving for good food, especially when there is an existing loyal customer base. This effect can be further amplified by partnering with other online presences which have their own circle of followers. The need for a good meal is always there in spite of the situation a country is in, F&B businesses just need to think out of the box to entice customers.

 

Yamatatsu and social media channels

Yamatatsu has been featured by several food-focused social media channels for its Japanese and Taiwanese cuisines during the RMCO. As F&B businesses that capitalise on their unique selling proposition have the potential to go viral easily, being the topic of conversation among social media users is a good way to cultivate interest which can eventually convert a group audience into customers. Online presence is the storefront of your F&B business on the internet.

 

myBurgerLab and Yellow Brick Road

myBurgerLab has started serving breakfast with pancakes from Yellow Brick Road during the MCO period as they couldn't hit their sales target due to bad weather and short operation hours. This cross-promotion benefits both F&B businesses as they each have their own audience, who can now enjoy food from two different brands at the same time. While there is the concern of competition with other F&B brands by joining forces, it could produce positive results too!

 

2. Digitalise operation with F&B technologies

Whether you are focusing on dine-in or food delivery services for your F&B business, streamlining the operation through digitalisation could save costs in the long run, aside from providing customers with a seamless experience from ordering and making payment, to receiving the food. Besides the food delivery apps that we are familiar with, there are other F&B technologies that can be implemented for contactless dine-in food ordering and online payment.

 

Aliments

Launched in 2019, Aliments provides a POS system for F&B businesses which integrates table QR code ordering, e-wallet payments and food delivery app.

 

Beep Delivery

StoreHub launched Beep Delivery, a POS-integrated food delivery app for F&B businesses, within 24 hours after the MCO was announced in March 2020.

 

Oddle

In 2014, Oddle was started by a group of restaurateurs in Singapore as an all-in-one F&B business management system that is currently being used in more than 10 countries.

 

3. Prioritise customer relationships

Food delivery might be a new revenue stream for many existing F&B businesses that pick it up with the purpose of adapting to the new trend. As there is often a third party delivery partner, things could go wrong due to various reasons. Hence, it is important to prioritise customer relationships by making sure the customers understand the situation to reduce frustration and disappointment when things go awry. Most customers can understand the situation with proper communication.

 

#GonDelivery campaign by BarBQ Plaza Malaysia

BarBQ Plaza launched its food delivery option for the first time during the RMCO under the #GonDelivery campaign in Klang Valley, where customers can have barbeques that they used to have in the restaurant at their own home. Even though there were some hiccups about missing items, they managed to solve these issues by working together with their delivery partner, Aliments, to ensure customer satisfaction.

 

Suki-Ya Delivery

When getting groceries is a hassle during the MCO period due to long queues, Suki-Ya has offered to deliver their hotpot menu to their customers. People are delighted that they can have hotpot at home but at the same time, people's preference in the ingredient choices could be different from what was shown in the menu. Requests to exchange menu items were taken care of to make sure customers have a pleasant experience with the available delivery options.

 

4. Expand revenue channels

Even with the dine-in restriction lifted, social distancing rules have limited the number of customers allowed to dine in at one time, reducing the revenue that a restaurant can earn for a day. Besides exploring food delivery opportunities, there are other revenue channels that are proven to be doable for F&B businesses such as selling vouchers in advance, offering weekly or monthly meal subscriptions, and even frozen ready-to-cook meals.

 

Ready-To-Eat meals by PichaEats

As one of the PichaEats' main revenue streams is food catering, social distancing rules have significantly affected the business. Hence, they have introduced Ready-To-Eat Meals in bundles so that their refugee chefs can continue to cook and provide delicious Arabic food delivered to customers. This helps sustain both the business and the livelihood of their chefs without relying on the option of food delivery alone.

 

Gift Wrap - KGB

KGB - Killer Gourmet Burgers has introduced Gift Wrap where customers can order their loved ones a burger which comes with a preloaded gift card. While food delivery is fairly common these days, ordering food for someone else the way we order flowers is quite new in the F&B industry. This indirectly promotes the gift cards without direct selling, which could slowly become a revenue stream for the F&B business.

 

Compared to other types of businesses, F&B businesses have been quick to adapt to the new norm of bringing the business online. There are many successful case studies of how F&B businesses thrive using good strategies such as those stated above. Plan accordingly and implement wisely, F&B businesses are here to stay for the foreseeable future.

 

4 ways F&B businesses can adapt to the new norm - Infographic

 

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Special thanks to Aliments for the content collaboration on this article. Aliments empowers next-gen F&B businesses with an ultimate dining experience and a revenue-generating system to grow and scale. Foundingbird's clients can enjoy 90 days free when subscribing to Aliments' services.

8 main roles of a company secretary in Malaysia

If you have no experience in starting a company, you may be wondering the purposes of paying a monthly fee to an appointed company secretary for your Sdn Bhd. Even though it is a statutory requirement as stated in the Companies Act 2016 for all companies to appoint a company secretary, the company secretary does not seem to do much in contributing to the operation of the company. However, the company secretary is an officer of the company which is not merely administrative but also advisory in nature, especially in corporate governance matters and boardroom procedures. These are the 8 main roles of a company secretary that helps you with your company’s legal compliance.

 

Advise on the registration and governance of the company

Although you can incorporate your Sdn Bhd through the MyCoID portal on your own, engaging with an experienced company secretary can save you the hassle of deciding on an available company name and preparing the information needed, ensuring a smooth company registration process. A digital company secretarial firm even allows you to register your Sdn Bhd fully online without having to meet up with a company secretary or visit the SSM counter. A company secretary not only helps you with starting a company, but they also provide advice on corporate restructuring, mergers, acquisitions, good corporate governance, and procedures of striking off or winding up a company.

 

Ensure the company is compliant with laws and regulations

The key updates of the Companies Act 2016 simplified compliance with the governance of a Sdn Bhd. However, it is not the only law a Sdn Bhd needs to follow. Nevertheless, a company secretary needs to be appointed within 30 days from your company incorporation date. There are other legal requirements that that should be fulfilled at all times such as taxes, business licenses, employer’s EPF, SOCSO, and EIS contribution, the employment law, etc. A company secretary can advise and get you in touch with relevant professionals to provide the necessary services. You can turn to your company secretary regarding any business-related laws and regulations that you are unsure of.

 

Document meeting minutes and resolutions

Although Annual General Meetings (AGMs) are no longer required for Sdn Bhd, a company secretary is required to attend Board Meeting (meetings of directors) and General Meetings (meetings of shareholders) as requested and prepare the agenda of the meeting and to ensure that the meetings are properly called, constituted and carried out in accordance with the law of meeting. The company secretary prepares the minutes of meetings and also follows up on any decision made during the meeting as instructed. Sometimes, extracts of resolutions that are decisions taken at meetings are prepared and certified as a true extract of the original meeting. If the board decides that a written resolution is sufficient, the company secretary prepares and distributes circular resolutions to the directors to be signed. A written resolution signed off by the directors is considered to be sufficient evidence of the passing of a company decision.

 

Ensure company details are up to date

Company details such as directors, shareholders, paid-up capital, shares, and constitution could change from time to time as the company grows. A company secretary is responsible for notifying the SSM of such changes and update all related company documents that are kept in the registered office. Other documents such as the constitution, minute books, financial statements, meeting minutes, resolutions are also managed and kept at the registered office by the company secretary. Additionally, a company secretary certifies documents as true copies of the originals (CTCs) that are needed for opening a business bank account, loan application, and other official matters.

 

Record the Financial Year End (FYE)

Financial Year End is the date when the company closes the financial accounts. It is usually the last day of a particular month you have decided. You should inform your company secretary of the FYE decided for your company as early as possible.

 

Appoint auditor

Unlike accountants and lawyers, an auditor has to be appointed by providing consent to act before they can provide auditing services to the company. Each year after the FYE, there will be 30 days of vacant period when a new auditor can be appointed. If there is no new auditor appointed during the vacant period, the previous auditor will automatically be appointed for the next financial year. However, if you wish to appoint a new auditor outside the vacant period, the resignation of the existing auditor has to be lodged to the SSM and new auditor can be appointed after the existing auditor provides clearance to the company. However, you don’t have to appoint an auditor if your company falls under one of the following categories:

 

Verify the identity of directors and shareholders and lodge the declaration of beneficial ownership

Identity verification, or more commonly known as the Know Your Customer (KYC), is an important process for the company secretary in ensuring that all directors and shareholders of the company are who they claim to be. It can be done by meeting the directors and shareholders face to face or through e-KYC, before the company is incorporated or when a new director or shareholder is added to the company. Besides, the company secretary will obtain and maintain the records of the declaration of beneficial ownership upon receiving the information from directors and shareholders.

 

Lodge annual reports required by SSM

The SSM requires Sdn Bhd to lodge several mandatory reports each year - an annual return and audited financial statements together with directors’ reports. There are penalties for the company or the directors for failing to adhere to this requirement as stated in the Companies Act 2016. A company secretary ensures strict compliance with these datelines.

 

Annual return

An annual return is a summary of the company with information such as business nature, registered address, directors and shareholders, etc. Even if there are no changes in this information after a year of operating the Sdn Bhd, a statement still has to be lodged to confirm that there are no changes made. The annual return is prepared on the anniversary of the company incorporation date and should be lodged within 30 days thereof.

 

Financial statements with directors’ report

Financial statements are usually prepared by the accountants before being audited by a certified auditor. The auditor will prepare an auditor's report while the directors will prepare the director's report which explains information on the directors, main activities of the company, shares, dividends, business reviews, etc. These documents are then compiled and signed by the commissioner for oaths before being passed to the company secretary for circulation to shareholders and the auditor. Once it is approved by the board, it will be lodged to the SSM within 30 days after the circulation.

 

8 main roles of a company secretary

 

[Company secretaries’] value and worth have to be redefined and due recognition is given to them for the enhanced profile they now have to assume,” said Kulwant Kaur, technical director of MAICSA back in the year 2003. Not everyone can act as a company secretary. Besides fulfilling the requirement as stated under Section 235 of the Companies Act 2016, a company secretary needs to obtain a practising certificate that should be renewed every 3 years. Company secretaries are just like accountants, lawyers, and other professionals that provide essential services to assist your Sdn Bhd so that you can leave the important but time-consuming tasks to them and focus on your business. Hence, don’t hesitate to ask your company secretary for advice if needed.

The foreigner's guide to private limited company incorporation

Private limited companies, otherwise known as Sdn Bhd in Malaysia, are the most common companies among the 8 types of business entities in Malaysia. Since the Companies Act 2016 came into effect, the updated company incorporation regulation allows foreigners to incorporate a private limited company in Malaysia without a Malaysian director and shareholder. Here's how you can incorporate your private limited company with the Companies Commission of Malaysia (SSM) to start running your business in Malaysia.

Eligibility to incorporate a private limited company

You may incorporate a private limited company as the sole director and shareholder, providing the following conditions are fulfilled:

Directors and shareholders have different roles in a company. Hence, it is important to understand your responsibility and liability before incorporating the company.

Information and documents to prepare

Preparing several important information about your company as follows in advance allows the company incorporation process to be done smoothly.

Besides that, there are 2 documents that you need to prepare:

Payment needed

The SSM charges an incorporation fee of RM1,010 (inclusive of tax). There is an additional fee if you engage with a company secretary to incorporate the company on your behalf.

Company incorporation through the MyCoID portal

It is possible to incorporate your company on your own without going through a third party by going through the MyCoID portal.

1. Account registration on the MyCoID portal

Register an account on the MyCoID portal as an individual user.

2. Account activation at the SSM counter

Upon activating the account through email, you will receive another email with instructions to validate your registration at the nearest SSM counter.

3. Login credentials received through email

After the SSM has activated your account, you will receive an email to create login credentials on the MyCoID portal.

4. Proposed company name search

To get started with the company incorporation process, go to the Direct Incorporation Application on the MyCoID portal homepage to carry out the name search by keying in the proposed company name that you want.
*You will not be able to proceed if the proposed company name is taken, reserved by other people or contains prohibited words.

5. Enter other information under name search

To incorporate a private limited company, the following information should be selected under name search:

6. Clarify your proposed company name in the Super Form

Next, you will be redirected to the Super Form where you will have to clarify the meaning behind the proposed company name. If the proposed company name contains names of states, controlled words or trademark, you will have to attach an authorization letter from the respective authority or owner.

7. Business code selection and description

Then, select a business code that is related to your business, and provide the description together with the registered address and business address of the company.

8. Directors and shareholders information

By default, you are automatically listed as a director and shareholder of the company, but you can add directors and shareholders in the next step. Besides that, state whether you have employees in the company under Information To Agency section.

9. Application submission

After reviewing the information on the preview page, submit the application and you will be redirected to the Transaction page.

10. Payment of incorporation fee

Make the payment of RM1,010 as an incorporation fee (inclusive of tax) and get a transaction receipt.

11. Notice of Registration as proof of incorporation received through email

You will receive the Notice of Registration as proof of incorporation through email within 1 business day if your company has been approved by the SSM. A Certificate of Incorporation can be purchased with a prescribed fee if it is required.
* You will be notified through email if the application is queried by the SSM. The application can be edited and resubmitted again.

Extra:

Within 30 days of company registration, a company secretary should be appointed.

Should I incorporate the company myself or get a company secretary to do it for me?

If you are residing in Malaysia, it is possible to go through the entire company incorporation process, from creating a MyCoID account to receiving the Notice of Registration, all by yourself without external help. The SSM has all the necessary information regarding company incorporation on their website and their officers are helpful in answering questions that you might have. That being said, there are several obstacles you may face if you opt to incorporation your company by yourself:

Time and energy-consuming

It will take up a lot of time and energy to register a MyCoID account as you have to visit the SSM counter after activating your account through email for your identity validation. You would need to go through the SSM guidelines on naming your company and figure out the right business nature your company falls under. With a company secretary, you do not have to create a MyCoID account. Furthermore, they can advise you on selecting a company name and other information related to your company.

If you are not available in-person for the identity validation, it is advisable to engage with a digital company secretarial firm that can carry out e-KYC for the identity verification of directors and shareholders, allowing for the company incorporation process to be done fully online.

Lack of information about starting a company

Entrepreneurs starting their company for the first time go through a whole new learning process, encumbered by a lack of information on the internet. You might have questions about deciding on initial paid-up capital of the company, adding directors or shareholders later on, and mandatory compliance to follow. A company secretary can clear up your doubts through a phone call or an in-person meeting. Besides, a foreign director has a stricter requirement to fulfil compared to a Malaysian director. Hence, it is advisable to seek professional consultation to make sure the company incorporation process is smooth.

Mandatory requirement to appoint a company secretary

It is a requirement for all private limited companies in Malaysia to appoint a company secretary within 30 days of successful company registration. Hence, it is recommended to engage with a company secretary from the beginning of the company incorporation process to save yourself the hassle of validating your MyCoID account by yourself. For foreign directors who are not familiar with statutory compliance in Malaysia, a company secretary can help set expectations right and make sure you are eligible to incorporate a company in Malaysia.

Company incorporation through Foundingbird

You can incorporate your company with the SSM fully online through Foundingbird. Here's how it can be done.

1. Create a Foundingbird account.

Create a secure Foundingbird account at onboarding.foundingbird.com to protects your data and gives you access to the information you have submitted.

2. Fill in and submit the incorporation form.

Provide the information about your business and company, such as:

You can consult the company secretary if you are unsure of any information needed.

3. Make payment.

Foundingbird charges an incorporation fee of RM1,499, inclusive of the SSM fee worth RM1,010. Besides, our monthly company secretary fee is RM200 that covers all your company secretarial needs.

4. Receive an email to verify your identity.

All directors and shareholders will receive an email to carry out e-KYC for identity verification purposes. This is done by accessing the unique verification link sent to you and taking photos of your passport and a selfie. Once all directors and shareholders have verified their identity, the company secretary will review your incorporation form and advise accordingly if changes are needed.

5. Receive an email to sign S201 declaration and letter of incorporation.

All directors will receive an email to sign 2 documents electronically:

6. Wait for the SSM approval of your company incorporation.

Your company incorporation application will be submitted to the SSM. It usually takes 2 to 3 working days for your company to get incorporated, subject to the SSM approval. You will receive the Notice of Registration and Certificate of Incorporation once your company is incorporated.

8 types of business entities to register in Malaysia

Registering a business entity with the Companies Commission of Malaysia (SSM) is the first requirement to run a business legally in Malaysia. There are 3 categories of business entity registration, namely Registration of Business (ROB), Registration of Company (ROC), and Limited Liability of Partnership (LLP). These are regulated by different laws respectively, with a total of 8 business entities to choose from.

8 business entities in Malaysia - Infographic

Comparison between different business entity registration categories

Business entity registration categoryLawBusiness entityLiabilityCapital contributionTaxes
Registration of Business (ROB)Registration of Business Act 1956 (only applicable for West Malaysia)– Sole Proprietorship
– Partnership
Not a separate legal entity, unlimited liabilities at the personal capacity of business owners.Own / partner contributionPersonal income tax
Registration of Company (ROC)Companies Act 2016– Private Limited Company (Sdn Bhd)
– Company Limited by Guarantee (CLG)
– Unlimited Company (Sdn)
– Public Limited Company (Bhd)
– Foreign Company
A separate legal entity with the company’s liabilities separated from the directors’ and shareholders’.
(except for Sdn and CLG)
Share capital
(except for CLG)
Corporate tax
(except for CLG)
Limited Liability of Partnership (LLP)Limited Liability Partnerships Act 2012– Limited Liability Partnership (LLP)A combination of partnership and private limited company.Partner contributionCorporate tax

1. Sole Proprietorship

A Sole Proprietorship is the simplest business entity to get started with if you are running your business alone at a small scale. You can register a Sole Proprietorship using your personal name at only RM30 or a trade name at RM60. The process of Sole Proprietorship registration has to be done on your own without going through a third party. As you are the only business owner, you bear all liabilities towards the business in your personal capacity and pays taxes through your personal income tax.

If you are considering converting your Sole Proprietorship into a Sdn Bhd in the future, request for this free guide on converting your enterprise into a Sdn Bhd. This guide covers most of your concerns about the requirements of company incorporation and its subsequent compliance with various laws and regulations, since Sdn Bhd companies are regulated more strictly by the Companies Commission of Malaysia (SSM) than other enterprises.

Who should register their business as a Sole Proprietorship?

Malaysians or permanent residents of Malaysia who want to start a small business alone.

Advantages of a Sole Proprietorship

Disadvantages of a Sole Proprietorship

2. Partnership

A Partnership is a business entity that consists of at least 2 partners, with a limit of 20 partners. Similar to a sole proprietorship, partners of the partnership share the liabilities towards the business and pay taxes through personal income taxes. If your Partnership is sued by a customer, you and your partner(s) will be personally liable to any damages awarded by the court. This is a common business entity for professionals such as lawyers, accountants, company secretaries, doctors, etc.

If you are considering converting your Partnership into a Sdn Bhd in the future, request for this free guide on converting your enterprise into a Sdn Bhd. This guide covers most of your concerns about the requirements of company incorporation and its subsequent compliance with various laws and regulations, since Sdn Bhd companies are regulated more strictly by the Companies Commission of Malaysia (SSM) than other enterprises.

Who should register their business as a Partnership?

Malaysians or permanent residents of Malaysia who want to start a small business with business partners.

Advantages of a Partnership

Disadvantages of a Partnership

Comparison of business entities under ROB

Business EntityNo. of business ownersPersonal liabilitiesTaxes
Sole Proprietorship1Not a separate legal entity, unlimited liabilities at personal capacity of business owners.Personal income tax
Partnership2 – 20
(except for Partnership in professional practice)
Not a separate legal entity, unlimited liabilities at personal capacity shared among all the partners.Personal income tax, shared among the partners

3. Sendirian Berhad (Sdn Bhd) / Private Limited Company

A Sdn Bhd company is a private company limited by shares. It is a separate legal entity which is capable of earning incomes, owning properties, signing contracts, suing another entity, and getting sued on its own name, separating your liabilities from the company itself. Since the updates of the Companies Act 2016 came into effect, you can incorporate a Sdn Bhd as the only director and shareholder of the company without other business partners.

Who should incorporate their company as a Sdn Bhd?

Anyone who wants to run a SME business in Malaysia. The only restriction is, at least 1 director has to reside in the country.

Advantages of a Sdn Bhd

Disadvantages of a Sdn Bhd

4. Company Limited by Guarantee (CLG)

A Company Limited by Guarantee is a public company without share capital for non-profit purposes. There are no shareholders, only members who act as guarantors to run the operation. You and other members do not contribute capital to the company but are responsible to pay debts if it closes down, according to the amount of guarantee as promised. Hence, it is unable to use its profits for purposes other than those stated as objectives in the constitution.

Who should register their company as a CLG?

Non-profit organisations.

Advantages of a CLG

Disadvantages of a CLG

5. Sendirian (Sdn) / Unlimited Company

All companies limit the liability of its shareholders towards the company, except for a Sdn company. You can register a Sdn company to form a mutual fund that holds assets for investment purposes, rather than to carry out business. Since it has unlimited liability among its shareholders, it is similar to a Partnership with more flexibility in the ownership of shares where shareholders are free to sell their shares back to the company.

Who should register their company as a Sdn?

Mutual funds.

Advantages of a Sdn

Disadvantages of a Sdn

6. Berhad (Bhd) / Public Limited Company

Similar to a Sdn Bhd company, a Bhd company is a company limited by shares with a few differences - it can offer shares to the public without a limit on the number of shareholders, requires at least 2 directors and is governed by Bursa Malaysia Securities Berhad and the Security Commission of Malaysia. The registration of this business entity can be time-consuming and expensive due to strict compliance requirements. However, funding for the company would be easier to obtain since it is publicly listed on the market.

Who should register their company as a Bhd?

Entrepreneurs with large business models.

Advantages of a Bhd

Disadvantages of a Bhd

7. Foreign Company

A Foreign Company is for non-Malaysians who have established businesses in other countries and want to set up a company branch in Malaysia for operation or customer service purposes. This allows foreigners to run businesses in Malaysia without having a director that resides in the country. Non-Malaysians who are not permanent residents have limited options in registering a business entity in Malaysia. You can only opt for either a Sdn Bhd company or a Foreign Company.

Who should register their company as a Foreign Company?

Foreigners with established businesses in other countries who want to start a branch in Malaysia.

Advantages of a Foreign Company

Non-Malaysians can operate a business in Malaysia without a local director.

Disadvantages of a Foreign Company

Comparison of business entities under ROC

Business entityNo. of business ownerPersonal liabilities
Sdn Bhd (Private Limited Company)1 – 50 shareholdersCompany’s liabilities separated from the directors’ and shareholders’.
Company Limited by Guarantee (CLG)Only membersMembers are liable according to the amount of guarantee as promised.
Sdn (Unlimited Company)1 – 50 shareholdersShareholders have unlimited liabilities at personal capactiy.
Bhd (Public Limited Company)Unlimited shareholdersCompany’s liabilities separated from the directors’ and shareholders’.
Foreign Company1 – 50 shareholdersCompany’s liabilities separated from the directors’ and shareholders’.

8. Perkongsian Liabiliti Terhad (PLT) / Limited Liability Partnership (LLP)

Unlike other business entities, a LLP is governed under the Limited Liability Partnerships Act 2012 which was newly introduced in Malaysia in 2012. It is a combination of a Sdn Bhd company and a Partnership with some differences such as there must be at least 2 partners, with no maximum number of partners you can have in the business. Because LLP is still relatively new, it is not commonly registered in Malaysia.

Who should register their company as a LLP?

Malaysians or permanent residents of Malaysia who want to start a small business with business partners.

Advantages of a LLP

Disadvantages of a LLP

Comparison of LLP and partnership

Business EntityNo. of Business OwnersPersonal LiabilitiesTaxes
LLPMinimum 2, with no maximum limitA separate legal entity, with company’s liabilities separated from the directors’ and shareholders’.Corporate Tax
Partnership2 – 20 partners
(except for Partnership in professional practice)
Not a separate legal entity, unlimited liabilities at personal capacity among all the partners.Personal income tax, shared among the partners

Deciding on the most suitable business entity to register gives you an upper hand in getting started with businesses legally in Malaysia. Bear in mind even though you may enjoy more financial security when running your business as a company, all companies incorporated are required to fulfil mandatory obligations, such as getting a company secretary (in place of a company secretary, an agent for Foreign Companies and a compliance officer for PLT companies), lodging annual returns, and filing taxes. Hence, it is crucial to weight the pros and cons of each business entity in advance to make the most out of the process.

The Malaysian's guide to company incorporation of Sdn Bhd

Sdn Bhd is the most commonly incorporated type of company among the 8 types of business entities available in Malaysia, where an average of 3,900 local companies was registered each month in 2019. Since the implementation of the Companies Act 2016, the company incorporation requirement has been simplified according to several key updates. Here's how you can incorporate your company with the Companies Commission of Malaysia (SSM) as a Malaysian to start running your business in this country.

Eligibility to incorporate a Sdn Bhd company

It takes a minimum of 1 director and 1 shareholder to incorporate a company in Malaysia where the director and shareholder can be the same person. You need to fulfill the following criteria to be a director for a company:

Before incorporating a company, it is important to understand the roles of directors and shareholders to ensure that you carry out your responsibilities and protect your rights in the company.

Information and documents to prepare

There are several important information about your company that should be prepared in advance so that the company incorporation process can be smooth without missing information.

Besides that, there are 2 documents that you need to prepare:

Payment needed

The SSM charges an incorporation fee of RM1,010 (inclusive of tax). There is an additional fee if you engage with a company secretary to incorporate the company on your behalf.

Company incorporation through the MyCoID portal

It is possible to incorporate your company on your own without going through a third party by going through the MyCoID portal.

1. Account registration on the MyCoID portal

Register an account on the MyCoID portal as an individual user.

2. Account activation at the SSM counter

Upon activating the account through email, you will receive another email with instructions to validate your registration at the nearest SSM counter.

3. Login credentials received through email

After the SSM has activated your account, you will receive an email to create login credentials on the MyCoID portal.

4. Proposed company name search

To get started with the company incorporation process, go to the Direct Incorporation Application on the MyCoID portal homepage to carry out the name search by keying in the proposed company name that you want. * You will not be able to proceed if the proposed company name is taken, reserved by other people or contains prohibited words.

5. Enter other information under name search

To incorporate a Sdn Bhd, the following information should be selected under name search:

6. Clarify your proposed company name in the Super Form

Next, you will be redirected to the Super Form where you will have to clarify the meaning behind the proposed company name. If the proposed company name contains names of states, controlled words or trademark, you will have to attach an authorization letter from the respective authority or owner.

7. Business code selection and description

Then, select a business code that is related to your business, and provide the description together with the registered address and business address of the company.

8. Directors and shareholders information

By default, you are automatically listed as a director and shareholder of the company, but you can add directors and shareholders in the next step. Besides that, state whether you have employees in the company under Information To Agency section.

9. Application submission

After reviewing the information on the preview page, submit the application and you will be redirected to the Transaction page.

10. Payment of incorporation fee

Pay the incorporation fee of RM1,010 (inclusive of tax) and get a transaction receipt.

11. Notice of Registration as proof of incorporation received through email

You will receive the Notice of Registration as proof of incorporation through email within 1 business day if your company has been approved by the SSM. A Certificate of Incorporation can be purchased with a prescribed fee if it is required. * You will be notified through email if the application is queried by the SSM. The application can be edited and resubmitted again.

Extra:

Within 30 days of receiving the Notice of Registration, a company secretary should be appointed.

Should I incorporate the company myself or get a company secretary to do it for me?

It is possible to go through the entire company incorporation process, from creating a MyCoID account to receiving the Notice of Registration, all by yourself without external help. The SSM has all the necessary information regarding company incorporation on their website and their officers are helpful in answering questions that you might have. That being said, there are several obstacles you may face if you opt to incorporate your company by yourself:

Time and energy-consuming

It will take up a lot of time and energy to register a MyCoID account as you have to visit the SSM counter after activating your account through email for your identity validation. You would need to go through the SSM guidelines on naming your company and figure out the right business nature your company falls under. With a company secretary, you do not have to create a MyCoID account. Furthermore, they can advise you on selecting a company name and other information related to your company.

Lack of information about starting a company

Entrepreneurs starting their company for the first time go through a whole new learning process, encumbered by a lack of information on the internet. You might have questions about deciding on the initial paid-up capital of the company, adding directors or shareholders later on, and mandatory compliance to follow. A company secretary can clear up your doubts through a phone call or an in-person meeting. Hence, it is advisable to seek professional consultation to make sure the company incorporation process is smooth.

Mandatory requirement to appoint a company secretary

It is a requirement for all Sdn Bhd company to appoint a company secretary within 30 days of successful company incorporation. Hence, it is recommended to engage with a company secretary from the beginning of the company incorporation process to save yourself the hassle of validating your MyCoID account by yourself. Company secretaries in Malaysia normally charge a service fee of between RM500 to RM2,000 for Malaysian directors and shareholders, exclusive of the SSM's incorporation fee.

Company incorporation through Foundingbird

You can incorporate your company with the SSM fully online through Foundingbird. Here's how it can be done.

1. Create a Foundingbird account.

Create a secure Foundingbird account at onboarding.foundingbird.com to protects your data and gives you access to the information you have submitted.

2. Fill in and submit the incorporation form.

Provide the information about your business and company, such as:

You can consult the company secretary if you are unsure of any information needed.

3. Make payment.

Foundingbird charges an incorporation fee of RM1,499, inclusive of the SSM fee worth RM1,010. Besides, our monthly company secretary fee is RM200 that covers all your company secretarial needs.

4. Receive an email to verify your identity.

All directors and shareholders will receive an email to carry out e-KYC for identity verification purposes. This is done by accessing the unique verification link sent to you and taking photos of your IC (front & back) and a selfie. Once all directors and shareholders have verified their identity, the company secretary will review your incorporation form and advise accordingly if changes are needed.

5. Receive an email to sign S201 declaration and letter of incorporation.

All directors will receive an email to sign 2 documents electronically:

6. Wait for the SSM approval of your company incorporation.

Your company incorporation application will be submitted to the SSM. It usually takes 2 to 3 working days for your company to get incorporated, subject to the SSM approval. You will receive the Notice of Registration and Certificate of Incorporation once your company is incorporated.