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Written by Administrator
Thursday, 23 July 2009

In Malaysia, a business may be conducted in the following matter: – 

  • a)    By an individual operating as a sole proprietor, or
  • b)    By two or more (but not more than 20) persons in partnership, or
  • c)    By a locally incorporated company or by a foreign company registered under the provisions of the Malaysian Companies Act 1965. All sole proprietorships and partnership in Malaysia must be registered with the Companies Commission of Malaysia (“SSM”) under the Registration of Businesses Act 1956.

In the case of partnership should its assets be insufficient. Formal partnership deeds may be drawn up governing the rights and obligations of each partner but this is not obligatory. The Malaysian Companies Act 1965 governs all companies in Malaysia. The Act stipulates that a person must register a company with the SSM in order to engage in any business activity. 

It provides three types of companies: –

  • a)    A Company limited by shares where the personal liability of its members is limited to the par value of their shares and the number of shares taken or agreed to be taken by them.
  • b)    A Company limited by guarantee where the members guarantee to meet liability up to an amount nominated in the Memorandum and Articles of Association in the event of the Company being wound up.
  • c)    An unlimited Company, where there is no limit to the members’ liability. However, the most common company structure in Malaysia is a company limited by shares. Such limited companies may be either private (Sendirian Berhad or Sdn. Bhd.) or public (Berhad or Bhd.) companies. 

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

  1. 1)    restrict the right to transfer its shares
  2. 2)    limits the number of its members to 50, excluding employees in the employment of the company or its subsidiary and some former employees of the company of its subsidiary.
  3. 3)    prohibits any invitation to the public to subscribe for its shares and debentures.
  4. 4)    prohibits any invitation to the public to deposit money with the company. A public company can be formed or, alternatively, a private company can be converted into a public company subject to Section 26 of the Malaysian Companies Act 1965.

Such a company can offer shares to the public provided:  

  1. 1)    it has registered a prospectus with the Securities Commission
  2. 2)    it has lodged a copy of the prospectus with the SSM on or before the date of its issue. 

A public company can apply to have its shares quoted on the Kuala Lumpur Stock Exchange (“KLSE”) subject to compliance with the requirements laid down by the exchange. Any subsequent issue of securities (eg; issue by way of rights or bonus, or issue arising from an acquisition, etc) requires the approval of the Securities Commission. 

Requirements for a locally Incorporated Company 

A Company must maintain a registered office in Malaysia where all books and documents required under the provisions of the Act are kept. The name of the company shall appear in legible romanised letters, together with the company number, on its seal and documents. 

A Company cannot deal with its own shares or hold shares in its holding company. Each equity share of a public company carries only one vote at a poll at any general meeting of the company. A private company may, however, provide for varying voting rights for its shareholders. 

The secretary of a company must be a natural person of full age who has his principal or only place of residence of Malaysia. He must be a member of a prescribed body or is licensed by the SSM. The Company must also appoint an approved company auditor to be the company auditor in Malaysia to audit the accounts of the Company annually.

 In addition, the company shall have at least two directors who each has his principal or only place of residence within Malaysia. Directors of public companies or subsidiaries of public companies normally must not exceed 70 years of age. It is not incumbent that a company director also be a shareholder. 

Others Our nominee Directors and Shareholder services are available where the beneficial owner wishes to remain anonymous. We will be pleased to arrange for them to act, if needed. 


#7-2, Jalan 4/93,
Taman Miharja, 55200 Kuala Lumpur.
Phone: 603-9281 1588
Fax: 603-9281 6885


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