Setting Up A Business in Malaysia

SETTING UP A
BUSINESS IN
MALAYSIA
By Kenneth Foo Poh Khean
FCIS, LL. B (Hons.), CLP
COPYRIGHT BY KENNETH FOO
Is This Your Dream?


Or Be an Entrepreneur!
Have a plan, vision, concept
Conduct a survey & research
on your plan or vision
Learn more from others
Put your plan into motion
Set up a vehicle
Types of Business Vehicles
Sole Proprietor
Partnership
Limited Liability
Partnership
Limited Company
Sole Proprietor
A business wholly owned by an
individual using his/her personal name
or trade name.
Example: Zainal Abidin Ali or New
Town Kopitiam or Chong Big Pau
Eligibility requirements :
i. Must be a Malaysian citizen or permanent
resident; and
ii. Must be aged 18 and above.

Procedure to Register Sole Proprietor
1) Filing of an application for approval of the proposed
trade name for the business.
a) If the proposed business is registered under the owners
name, there is no need to obtain prior approval from
SSM.
2) Filing of Borang A (Registration of a New Business).
(a) Form A shall contain the following information:
The name of the business;
The nature of the business;
The date of the commencement of the business;
The address of the place of business;
Branch(es) of the business;
The following documents must be attached
with Form A for submission:
Letter of approval of business name from SSM
(if the trade name is used);
Photocopy of owners IC;
Permit, license, approval or supporting letter
from any other agency (if any)
Fee payable RM30 for personal name,
RM60 for trade name, RM5 for each
branch
Submit search of
trade name. No
necessary if
personal name
used.
After approval of
name, complete
Borang A, get
Commissioner for
Oaths to sign &
submit to SSM
Payment of fee
(RM30/60) to SSM
on submission of
Borang A. Wait for
Borang D.
After Registration Changes & Renewal
After registration, changes will be allowed by submitting:
Borang B1 - Change of Business Address
Borang B2 - Change in Type of Business
Borang B3 - Changes of Particulars on Branches
Borang B4 - Changes of Information of Owner
ROBA requires the registration of changes in the business
particulars to be lodged within 30 days from the date of
such changes.
Fee payable for above RM20.00
Renewal - the owner may register the business for up to
five (5) years. Application for renewal of Borang D must be
made within 30 days before its expiry by filing Borang A1
with SSM or by renewing at the Pejabat Pos
Partnership
A partnership (perkongsian) is a business
owned by two (2) or more persons but not
exceeding 20.
Business includes every form of trade,
commerce, craftsmanship, calling, profession or
other activity carried on for the purpose of gain,
but does not include any office or employment
or any charitable undertaking or any occupation
specified in the Schedule of the Registration of
Businesses Act 1956 (ROBA).

Procedure to Register Partnership
Submit search of
partnership name.
After approval of
name, complete
Borang A, get
Commissioner for
Oaths to sign &
submit to SSM
Payment of fee
(RM30/60) to SSM
on submission of
Borang A. Wait for
Borang D.
TERMINATION OF BUSINESS
Business may be terminated for the following reasons:
Cessation (closure) of the business;
Owner becomes an undischarged bankrupt;
Death of the owner;
Carrying out unlawful activities or activities which are prejudicial
to national security, public order or morality; or
Pursuant to a Court Order.
Procedure file Borang C (Notification of Termination of
Registered Business) with SSM.
Borang C shall contain:
(a) The date of termination; and
(b) Reason(s) for terminating the business.
TERMINATION OF BUSINESS
The completed Borang C must be signed by the
business owner and the following documents
must be attached:
(a) Certificate of Registration of Business (Borang D);
(b) Copy of the Court Order if the termination is by an
Order of the Court;
(c) Copy of the Death Certificate (if applicable) [must
be submitted within 4 months of death of owner]; or
(d) Enclose relevant documents if the owner has
become a bankrupt.
Form C must be filed within 30 days from the
date of termination of the business.
Limited Company
The most common type of company
incorporated for purposes of carrying on
business is a company limited by shares. A
company limited by shares may be incorporated
as a:
Private Limited Company identified through the
words Sendirian Berhad or abbreviation Sdn. Bhd
as part of the companys name.
Public Limited Company identified through the
words Berhad or abbreviation Bhd as part of the
companys name.
Limited Company - Process
The requirements to form a sdn bhd or berhad
company are:
i. A minimum of two (2) subscribers to the shares of the
company (section 14 of the CA);
ii. A minimum of two (2) directors (section of the 122
CA); and
iii. A company secretary
Both the director and company secretary shall
have their principal or only place of residence
within Malaysia (sections 122 and 139 of the CA
respectively).
Submit
Search of
name with fee
of RM30 to
SSM
After name is
approved, to
submit for
registration
Form 48A, Form
6 by Secretary
and
Memorandum &
Articles of
Association
Form 9
Certificate of
Incorporation
issued by SSM.
Can commence
business,
opening of bank
account & apply
for telephone,
electricity,
income tax etc.
Form 48A (Statutory Declaration by a Director or
Promoter before Appointment)
The director or promoter declares under oath that:
he/she is not a bankrupt; and
he/she has not been convicted and imprisoned.
Memorandum & Articles of Association
It defines the business of the company, share capital and the
subscribers. The Articles define the relationship between the
members and directors and constitute the internal rules of the
company.
The first directors and secretaries must be named inside.
The subscribers to the companys shares shall sign the
Memorandum and Articles of Association in front of a witness.
Limited Company - Benefits
Registered paid up capital can be as low as RM2-00
being the shares taken by the initial promoters of the
company
Private limited or public limited companies have all the
powers to hold properties, to enter into contracts and to
do everything within the objects stated in its
Memorandum of Association
Offers limited liability to its directors and shareholders
as outsiders can only sue the company and not the
individuals. Example company sells an electrical item
to a consumer. Item is defective but causes damage to
the consumer. Consumer can only sue the company but
not the directors or shareholders.

Limited Company - Disadvantages
Costly incorporation of companies starts from
RM1,800-00 compared to RM70 for sole
proprietorship & partnership
Legal compliance limited liability companies are
subject to the Companies Act 1965 and are required
to hold an Annual General Meeting, to submit the
audited accounts to SSM, to submit prescribed forms
where there are changes (such as directors or their
particulars) and to appoint a company secretary and
auditor.
It is not easy to close down a limited company as the
process is called a winding up and costly
Winding Up a Company
There are two (2) modes of winding up under section 211
of the CA:
Voluntary winding up; or
Winding up by the Court (also referred to as compulsory
winding up)
Voluntary winding up the company must be solvent i.e.
its liabilities is less than the assets
Winding up by the Court the Court will order the
winding up when the company is unable to pay its debts,
when the directors have acted in their own interests other
than the shareholders, where the company fails to
commence business within 1 year, etc.
Limited Liability Partnership (LLP)
Governed by the Limited Liability Partnerships Act 2012
(Akta Perkongsian Liabiliti Terhad 2012)
A hybrid between company and conventional
partnership offering fundamentally:
the privilege of limited liability accorded to the partners of the
LLP; and
the flexibility of internal management.
Suitable for small businesses, professionals, joint
ventures & venture capitals
The LLP is a body corporate and shall have legal
personality separate from its partners, perpetual
succession and unlimited capacity.

LLP may be formed:
by a minimum of two persons (wholly or partly
individuals or bodies corporate);
for any lawful business with a view of profit; and
in accordance with the terms of the LLP agreement.
LLP formed for professional practice must:
consist of natural person of the same profession;
and
have in force professional indemnity insurance as
approved by the Registrar.
Information required for registration:
proposed name of LLP
nature of business
address of registered office
name and details of partners
name and details of compliance officer
approval letter (in cases of professional practice).
Flexible internal arrangement through:
LLP agreement; or
In the absence of agreement, default provisions
covering the mutual rights and duties of LLP and its
partners.

Liabilities of Partners
Any individual or body corporate can be a partner.
Partner means any person admitted as a partner in
accordance to the LLP agreement and includes salaried
partner.
Any obligation arising from contract or tort will be the
liability of the LLP and not the partners.
A partner however will be jointly and severally liable for
his own wrongful act or omission in the course of the
business of the LLP.
Liabilities of LLP will be borne out of the property of the
LLP.

Cessation of Partner
Automatic cessation:
Upon death/dissolution of a partner; or
in the case of a professional practice, the partner has
been disqualified from carrying out the professional
practice.
Voluntary cessation:
a partner may cease to be a partner in accordance with
the LLP agreement; or
in the absence of such an agreement, by giving a 30
days notice to the other partners.
Bankruptcy of a partner will not cause a partner
to cease being a partner.

Dissolution of LLP
Court Ordered Winding Up
Divisions 2 and 4 of Part X of Companies Act 1965
and the Companies Winding Up Rules 1972 will be
applicable.
Appropriate modifications
Voluntary Winding Up
Application in writing to the Registrar when all assets
and liabilities have been discharged.
Application must be preceded by notice to all partners
and advertisement of the intention to wind up.
Registrar will order dissolution only if there is no
objection received.

Dissolution of LLP
Striking off - the Registrar will strike
LLP off the register on the following
grounds:
No longer carrying on business;
Contravention of the Act;
Prejudicial to national interests; or
No liquidator acting in cases of court ordered
winding up;
Affairs have been fully wound up but no
sufficient assets to obtain court order.

What are you waiting for?
Have a business plan!
Consult a company secretary,
accountant or lawyer for the best
possible business vehicle for you.
Go ahead! The world is out there!
A journey of a thousand li begins
with one step!
THANK YOU!

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