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:

• Forged documents - IC or passport with illegally altered information.
• Counterfeit documents - IC or passport reproduced using a template according to the original copy of the document.
• Blank stolen documents - Blank IC or passport that was stolen from the manufacturing supply chain to insert false information.
• Fraudulently obtained genuine documents - Original documents issued by the authorities according to an application made by fraudsters.
• Fantasy documents - Documents issued by authorities that do not exist or are not allowed to issue documents.
• Imposter documents - Original documents taken or stolen from someone else.
• Compromised documents - Images of documents issued by the authorities that are publicly available / shown on news or presentations.

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.

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:

• Execute official documents such as partnership agreements, business contracts, etc. with their signatures, in replacement of a common seal.
• Prepare director reports that explain the business operation and profits earned for the financial year, which will be submitted together with the financial statements.
• Issue shares upon approval of shareholders.

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:

• Authorise the directors to increase the paid-up capital or to issue shares.
• Establish and amend a constitution, if there is any.
• Approve the disposal or acquiring of properties under the company name.
• Approve the financial statements prepared by the directors.
• Approve transactions of more than RM250,000, or between RM50,000 and RM250,000 if it is more than 10% of net assets owned by the company.

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:

• Directors
  ?Ensure that the company obtains the beneficial ownership information by issuing company notices.
• Shareholders
  ?Upon receiving the company notice, inform the company whether they are indeed the beneficial owners of the company as described in the Companies Act 2016 and in the guideline. If the shareholders are holding the shares on behalf of another person, they must provide the particulars of that person.
• Company secretaries
  ?Ensure that the beneficial ownership information is collected and lodged to the SSM.

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.

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.

 

A 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.

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

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.

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:

• Dormant companies
• Zero-revenues companies
• Threshold-qualified companies

 

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.

 

 

“[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.

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:

• 18 years old and above
• residing in Malaysia
• not disqualified under Section 198 of the Companies Act 2016

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.

• Proposed company name(s)
• Business nature and description
• Business address and registered address
• Information of directors and shareholders
• Paid-up capital

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

• Passport for identity verification purposes.
• Authorization letter if your proposed company name contains controlled words or trademark.

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:

• Purpose: N - NEW INCORPORATION
• Type: S - LIMITED BY SHARES
• Company SubType: SDN. BHD.

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:

• Proposed company name(s)
• Business nature
• Contact details
• Paid-up capital
• Directors and shareholders information

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:

• S201 declaration - to declare your eligibility as a director.
• Letter of incorporation - to confirm that all information provided is accurate.

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.

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.

Comparison between different business entity registration categories

Business entity registration category	Law	Business entity	Liability	Capital contribution	Taxes
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 contribution	Personal 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 contribution	Corporate 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

• It is cheap to register.
• It has a simple registration process.
• It has simple compliance to follow.

Disadvantages of a Sole Proprietorship

• It has to be renewed annually.
• You bear all liabilities towards the business in your personal capacity.
• Your personal income tax can be expensive.
• It is difficult to scale since you are not able to issue shares to get investments.

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

• It is cheap to register.
• It has a simple registration process.
• It has simple compliance to follow.
• You can share the liabilities towards the business with your partners.

Disadvantages of a Partnership

• It has to be renewed annually.
• Your personal income tax can be expensive.
• It is difficult to scale since you are not able to issue shares to get investments.

Comparison of business entities under ROB

Business Entity	No. of business owners	Personal liabilities	Taxes
Sole Proprietorship	1	Not a separate legal entity, unlimited liabilities at personal capacity of business owners.	Personal income tax
Partnership	2 – 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

• It is relatively cheap to register.
• It has relatively simple compliance to follow.
• It separates your personal liabilities from the company itself.
• It is able to scale by increasing paid-up capital and issuing shares to investors.
• It can be 100% foreign-owned.

Disadvantages of a Sdn Bhd

• It is unable to expand beyond 50 shareholders.
• It is unable to raise funds from the public.
• The transfer of shares is restricted.

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

• It requires no upfront capital contribution from members.
• It is the only business entity that can promote art, science, religion, charity and pension schemes.
• It can apply to get exempted from paying corporate taxes.

Disadvantages of a CLG

• It is costly and difficult to register.
• It has strict compliance to follow.
• All profits are used for the purpose of the organisation only.
• It is not allowed to release or own any property rights.
• It is unable to convert to other business entity.
• Members are still liable towards company debt if the company closes down within one year after they have left the company.

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

• It has flexible ownership of shares.
• It can either be a private or public company.

Disadvantages of a Sdn

• It is costly and difficult to register.
• It has strict compliance to follow.
• Shareholders have full liability towards the company debts.
• Shareholders are still liable towards company debt if the company closes down within one year after they have left the company.

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

• It is easier to raise funds as the company is listed.
• It is able to raise funds from the public by issuing shares.
• It has flexible ownership of shares.

Disadvantages of a Bhd

• It is costly and difficult to register.
• It has strict compliance to follow.

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

• It is costly and difficult to register.
• It has strict compliance to follow.
• It is unable to raise funds from the public.

Comparison of business entities under ROC

Business entity	No. of business owner	Personal liabilities
Sdn Bhd (Private Limited Company)	1 – 50 shareholders	Company’s liabilities separated from the directors’ and shareholders’.
Company Limited by Guarantee (CLG)	Only members	Members are liable according to the amount of guarantee as promised.
Sdn (Unlimited Company)	1 – 50 shareholders	Shareholders have unlimited liabilities at personal capactiy.
Bhd (Public Limited Company)	Unlimited shareholders	Company’s liabilities separated from the directors’ and shareholders’.
Foreign Company	1 – 50 shareholders	Company’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

• It has no maximum limit on the number of partners.
• It is relatively cheap to set up.
• It has flexible agreement among partners.

Disadvantages of a LLP

• It is unable to raise funds from the public.
• It is governed by a relatively new law, which could be confusing.

Comparison of LLP and partnership

Business Entity	No. of Business Owners	Personal Liabilities	Taxes
LLP	Minimum 2, with no maximum limit	A separate legal entity, with company’s liabilities separated from the directors’ and shareholders’.	Corporate Tax
Partnership	2 – 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.

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:

• 18 years old and above
• residing in Malaysia
• not disqualified under Section 198 of the Companies Act 2016

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.

• Proposed company name(s)
• Business nature and description
• Business address and registered address
• Information of directors and shareholders
• Paid-up capital

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

• IC for identity verification purposes.
• Authorization letter if your proposed company name contains controlled words or trademark.

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:

• Purpose: N - NEW INCORPORATION
• Type: S - LIMITED BY SHARES
• Company SubType: SDN. BHD.

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:

• Proposed company name(s)
• Business nature
• Contact details
• Paid-up capital
• Directors and shareholders information

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:

• S201 declaration - to declare your eligibility as a director.
• Letter of incorporation - to confirm that all information provided is accurate.

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.

Company incorporation is a significant step towards the launching of a business. Understanding the legal requirements and information needed for the incorporation of your Sdn Bhd in advance not only saves you the considerable hassle many associates with filling out the incorporation form; it also allows you to fully channel your focus into making those major decisions that truly matter to your company. Here’s a list of details that should be figured out prior to submitting the incorporation form to help you in the process of successfully incorporating your Sdn Bhd in Malaysia.

 

Company and business information

Proposed company names

According to the guidelines for naming a company issued by the Companies Commission of Malaysia (SSM), it's imperative that your proposed company name:

• Does not suggest connections with the Royal families or governmental bodies and authorities with words like ‘royal’, ‘federal’, and ‘ASEAN’.
• Is not misleading regarding the nature of business.
• Is not blasphemous or likely to be offensive.
• Does not resembling or may be mistaken for another registered company.
• Does not suggest connections with activities controlled by other laws such as ‘insurance’, ‘estate agent’, and ‘takaful’ unless written approval from the relevant agency is obtained.
• Does not suggest connections with activities regulated by government agencies or professional bodies with words like ‘architect’, ‘co-op’ and ‘engineer’ unless written approval from the relevant agency is obtained.

 

Complete intelligibility is important in naming your company. If the proposed company name contains words outside of the Malay and English language, you need to explain the meaning of such words when filling in the company incorporation form.

 

Business nature and description

It is important to clarify the type of business your Sdn Bhd will be undertaking. All businesses in Malaysia are classified using the MSIC code. If you are unsure of which category your company falls into, it’s best to consult a company secretary on this matter by providing a detailed description of your business purposes.

 

Business address and registered address

Your business address and registered address do not have to be the same. While a business address is where your business operations and activities are conducted, a registered address is usually the company secretary office where all communications and notices may be addressed and should be accessible to the public during normal business hours.

In the case that you do not have a physical office or shop, a business address is not required.

 

Your eligibility as the company director and shareholder

Directors and shareholders play different roles where directors are the management of the company and shareholders are the owners of the company.

 

Director

Both Malaysians and foreigners may incorporate a Sdn Bhd as the sole director and shareholder, providing the following conditions are fulfilled:

• 18 years old and above
• residing in Malaysia
• not disqualified under Section 198 of Companies Act 2016

 

However, if you are a foreigner who does not reside in Malaysia, you need at least 1 resident director to incorporate a Sdn Bhd. It is advisable to have a business partner based in Malaysia.

 

Shareholder

A Sdn Bhd can have up to 50 shareholders. During the company incorporation process, each shareholder will declare how many shares they hold. The value of each share is then determined where the total value of shares is equal to the total paid-up capital of the company. Once the company is incorporated and a business bank account is opened, each shareholder needs to transfer the amount into the business bank account according to the number of shares they hold.

 

Paid-up capital

The minimum paid-up capital to incorporate a Sdn Bhd is RM1. This paid-up capital declared during company registration can be changed later. Hence, it is advisable to cap the paid-up capital at RM10,000 and increase it when you have the fund after the company is incorporated. It is illegal to declare a paid-up capital amount that you do not have yet.

 

Documents needed

MyKad / Passport

A requisite document in the process of incorporating a Sdn Bhd, the MyKad / Passport needs to be presented for identity validation purposes. If you decide to incorporate your company through the MyCoID portal, you are required to present your MyKad / Passport at the SSM counter when first creating an account on the portal. Otherwise, incorporating your company through a digital company secretarial firm like Foundingbird will require the validation of your MyKad / Passport via the e-KYC process for all directors and shareholders, without the need to present the document physically.

 

Authorisation letter for controlled words or trademark

In certain cases where the proposed company name contains controlled words or trademark, an authorisation letter from the respective authority or owner.

 

Payment needed

Charges by SSM

The SSM charges RM1,010 (inclusive of tax) of incorporation fee.

 

Charges by company secretary

If you engage with a company secretary to incorporate your Sdn Bhd, a service fee is charged for filling the application. Besides, a monthly fee is required to appoint a company secretary for your Sdn Bhd as required by the Companies Act 2016 to have a company secretary within 30 days of company incorporation. These charges can vary according to the pricing methods of different company secretarial firms.

 

 

Out of 8 types of business entities in Malaysia, Sdn Bhd is the most commonly registered company for entrepreneurs who want to start a business, especially when the Companies Act 2016 came into effect to simplify the mandatory compliances to form a private limited company. As the Malaysian government has taken initiatives to make company incorporation as easy as possible, entrepreneurs should not get bogged down by the traditional way of dealing with a company secretary which involves lots of paperwork and lengthy in-person appointments. Incorporating your Sdn Bhd should be a stepping stone to start your business, not a burden that costs you time and energy.

Taking effect on 31st January 2017, the Companies Act 2016 was established by the Companies Commission of Malaysia (SSM) to replace the Companies Act 1965, with several key updates to benefit SMEs greatly such as lowering the minimum requirements for the company incorporation of a Sdn Bhd and simplifying the mandatory compliances that a Sdn Bhd has to follow. These are the 8 key updates you need to know as an entrepreneur planning to incorporate and run a Sdn Bhd in Malaysia.

Digitalized application process for company incorporation

Instead of manually filling in the required forms downloaded from the SSM website, entrepreneurs can now incorporate their Sdn Bhd online by filling in the Super Form on the MyCoID 2016 portal. Here's the Malaysian's guide to Sdn Bhd company incorporation using the MyCoID portal for your reference.

Reduced number of directors required

Prior to the Companies Act 2016, a Sdn Bhd required at least 2 directors to register. Today, only 1 director, regardless of his or her nationality, who is residing in Malaysia that fulfils the requirement is needed to incorporate a Sdn Bhd. The director can also act as the sole shareholder that owns 100% shares of the Sdn Bhd.

Changed document for evidence of incorporation

Instead of a Certificate of Incorporation, a Notice of Registration will be issued as soon as the Sdn Bhd incorporation is approved by the SSM. You can still purchase the Certificate of Incorporation for the purpose of opening a business bank account, applying for business loans and other processes that require the certificate.

Simplified process for the execution of documents

As it is no longer mandatory for Sdn Bhd to have a common seal in the Companies Act 2016, the execution of documents can be done by either one of the options below:

• Affixing of the common seal as outlined in the Act.
• Signatures of 2 authorised persons, 1 of them should be the director.
• Signatures of the sole director and 1 witness.

No par or nominal value for shares

All shares will no longer be tied with a par or nominal value; hence, the Sdn Bhd can decide the appropriate value for the shares for issuance. The Companies Act 2016 has also abolished the share premium account and capital redemption reserve account which have been merged with the company's share capital.

Not mandatory to adopt a constitution

The Companies Act 2016 can be used as a constitution for Sdn Bhd incorporated under this new Act, which means it is not mandatory for the Sdn Bhd to have a memorandum and articles of association (M&A). The company, directors, and shareholders have the rights, powers, duties and obligations as stated in this Act. However, it is recommended to adopt a constitution under certain situations.

Not mandatory to hold an Annual General Meeting

Sdn Bhd no longer has to hold an Annual General Meeting (AGM) each year. All decisions of the company can be made through circular resolutions which are signed by all directors with or without without holding a physical meeting. This is where electronic signatures can come in handy for businesses.

Changed requirements on lodging annual returns

Instead of lodging the annual return 1 month from the date of AGM, it should be lodged 30 days from the anniversary date of incorporation, without having to lodge the financial statement at the same time. The financial statement should be lodged no later than 6 months from the financial year-end of the company and within 30 days from the time it is circulated among the shareholders.

With the implementation of the Companies Act 2016 and the Budget 2020 that favours the growth of entrepreneurship and SMEs, this is a good time to start a business in Malaysia with the support of the Malaysian government towards SMEs. Understanding the information needed to incorporate a Sdn Bhd in advance and incorporate your company online makes starting a Sdn Bhd in 1 working day possible!