Are You Eligible to Set Up a Company in Malaysia?

Everybody has the right to build their dream business.

But unfortunately, not everyone has the right to build their dream business in Malaysia.

Fingers crossed you qualify.

Today, we’ll talk about the eligibility criteria to set up a company in Malaysia.

Without further ado, let’s answer this burning question:

Are you eligible to set up a Sdn Bhd in Malaysia?

What is a Sdn Bhd?

Let’s start with the big question. What is a Sdn Bhd?

For the sake of this conversation, we’ll talk about your two main options when it comes to the legal identity of your business.

You can register your business as either a:

• Sole proprietorship, or

• A Sdn Bhd

  
  

What is a sole proprietorship?

Sole Proprietorship = Wearing a mask

It's still YOU running the business under a different name. Everything that happens to the business happens to you personally.

This means that:

• Lower tax burden for small profits

• Simple setup and low compliance costs

• Business liability is your personal liability

• Business debts become your personal debts

• All business profit = your personal income (higher tax brackets)

  
  

What is a Sdn Bhd?

Sdn Bhd = Giving birth to a child

You create a separate legal entity - a "person" that exists independently from you. The business succeeds or fails on its own.

What this means:

• Business operates as its own entity

• Your personal assets stay protected

• More complex administration and paperwork

• The company pays separate tax (17% on first RM600k) You control withdrawals = you control your personal tax

• Higher compliance costs (audit, secretary, accounting fees)

Think of it this way:

Sole Proprietor = You ARE the business = Easy but exposed

Sdn Bhd = Separate entity = Secure but demanding

Everything we just said, but in video form:

Want a more in-depth analysis of which vehicle suits you better? Complete our free Sole Prop vs Sdn Bhd Quiz: https://douglasloh-associates.kit.com/soleprop-vs-sdnbhd

Or if you prefer a chat, WhatsApp us now...

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So are you eligible to set up company in Malaysia? (The six eligibility criteria)

Just to be clear, a Sdn Bhd is a company.

A sole prop isn’t.

So when we say “register a company”, we automatically mean a Sdn Bhd.

Here are the six criteria to register a company in Malaysia:

1. Be at least 18 years old

Sorry, all thriving 16-year-old tech founders.

2. Have a Malaysian resident director

This can be a…

• Malaysian citizen

• Permanent resident

• Foreigner with a valid work permit

Pro tip: Many foreign investors use a local nominee director while keeping full shareholder control (smart)

3. Directors must be clean

No bankruptcy or criminal record.

Sorry, Sergio Marquina. (Please google if you don’t get the reference)

4. Get a registered Malaysian address

This can be a physical or virtual office address.

5. Minimum RM1 paid-up capital

Paid-up capital is the sum of money paid to a company by its shareholders for shares in the company.

The general requirement is RM1, but some industries need more. The figure is based on licensing requirements.

6. Appoint a company secretary within 30 days

This part is important.

Click here for a crash course on everything you need to know about hiring a company secretary in Malaysia.

How to register a company in Malaysia

There are two main methods:

1. Self-registration via MyCOID (DIY incorporation)

2. Using a company incorporation specialist

We’ll run through both options you can choose what works best for your business.

Method 1: DIY Company Registration via MyCOID

This approach is perfect if you prefer handling things yourself. It's cost-effective and gives you complete control over the process. Just be prepared to navigate some bureaucracy along the way.

Here are the four essential steps:

Step 1: Conduct Your Business Name Search

Start by logging into SSM's MyCOID portal.

This is where you'll test potential business names. Get creative with your options, but make sure they comply with SSM's naming guidelines.

Avoid prohibited or sensitive words as outlined in their official guideline.

Each name search costs RM50 and remains valid for 30 days, so choose wisely.

Step 2: Prepare Your Registration Documents

Gather these essential documents and information:

• Company constitution - You can use SSM's standard template

• Directors and shareholder details - Include full names, NRIC/passport numbers, addresses, and shareholding percentages

• Completed Declaration of Compliance (Form 6) 

• Registered business address and MSIC code - This indicates your business nature 

  
  

Step 3: Submit Your Incorporation Application

Return to the MyCOID portal to submit your application. Fill in all required details carefully and upload your prepared documents.

The incorporation fees start from RM1,010.

Step 4: Receive Your Registration Certificate

Once approved, you'll receive a Notice of Registration (Section 15) as official proof of incorporation.

If you need additional documentation for licenses or legal requirements, you can request a Certificate of Incorporation (Section 17) for an additional fee.

Here's a helpful video walkthrough of the entire process:

Method 2: Professional Company Incorporation Services

The main advantage of hiring specialists is simple: you save valuable time and energy.

Instead of navigating bureaucracy, you can focus on what really matters - building and growing your business.

That’s right. You can focus on your business while we do the boring, grunt work.

We’ll collect the information from you and handle the entire registration process.

Furthermore, we’ll help you with the hard part that comes after that: The post-incorporation process.

Ready to get started? Book your free consultancy call now.

Click here if you're Malaysian.

Click here if you're non-Malaysian.

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