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Learn more about company incorporation and formation
Getting Started: Company incorporation and formation
How to incorporate a local company?
To incorporate local company, the applicant has two options:
Direct incorporation – the applicant needs to complete the application for company’s name and incorporation through MyCoID 2016 system and the its fee is RM999; or
Name reservation – the applicant needs to complete the information for application company’s name through MyCoID 2016 system and its fee of RM50 for each many applied.
If the proposed company’s name is approved by SSM:
Direct incorporation – the application to incorporate the company would be directly forward via system to the officer for further verification; or
Name reservation – the approved company’s name is reserved for 30 days from the date of approval. The applicant then could further apply for incorporation with a fee of RM1010
How long does it take to process the application for incorporation for a company?
Once submitted, the application is processed within one (1) working day. If the application complies with all requirements, which then approved, the applicant will receive notice and approval of registration via their emails.
The certificate is provided upon request with prescribed fee.
What information is available in company and business information complete printouts?
Details of information contained in the computer printouts are as follows:
A. Printout of Company Information
- Company Details
- Name of company
- Company number and ‘check digit’
- Old name of company
- Date of name change
- Type of company
- Date of incorporation
- Status of company
- Registered address
- Nature of business
- Capital Details
- Authorised capital
- Issued capital
- Director and Officer Details
- Name and address
- IC or passport number
- Position
- Date of appointment
- Shareholder Details
- IC, passport or company number
- Name
- Number of shares
B. Printout of Business Information
- Business Details
- Name of business
- Main business address
- Business registration number and “check digit”
- Date of commencement of business
- Date of registration
- Date of termination of business
- Date of change (details)
- Expiry date of current Business Registration Certificate
- Nature of business
- Branch Details
- Number of branch offices
- Address of branch offices
- Current Owner Details
- Name
- Residential address
- IC number
- Date of birth
- Race
- Sex
- Position
- Nationality
- Date of entry
- Past Owner Details
- Same as Current Owner Details and additional:
- Date of withdrawal
- Reason for withdrawal
What condition must be met if a foreigner wishes to form a company?
Once submitted, the application is processed within one (1) working day. If the application complies with all requirements, which then approved, the applicant will receive notice and approval of registration via their emails.
The certificate is provided upon request with prescribed fee.
What is the necessary action to be taken by a company if the company wish to appoint more than one company secretary?
A company secretary or more than one company secretaries may be appointed within 30 days after the company incorporated. Their appointment should be done via MyCoID 2016 system provided that they must be the registered professional user.
What are the requirements to register a sole proprietorship or partnership?
- Owner/partner must be a Malaysian Citizen or Permanent Resident of Malaysia.
- Aged 18 years and above.
- Business must be carried out in Peninsular Malaysia or Federal Territory of Labuan.
Annual Return is a return required to be lodged under s68 (local company) and s576 (foreign company)
What is an Annual General Meeting?
Annual General Meeting is a meeting that is required to be held as per s340 of the Companies Act 2016.
Private company may or may not choose to hold its Annual General Meeting.
A private company that choose not hold its Annual General Meeting, must circulate its financial statement and reports to its members, within 6 months from its financial year end, before it is lodged to the Registrar.
Can a company apply for an extension of time for holding Annual General Meeting?
Yes. A company may apply for an extension of time to the Registrar as specified under s340(4) Companies Act 2016.
Application for extension of time shall be made as per s259(2) Companies Act 2016.
What comes next after incorporation?
Appointment of Company secretary
Every company require the appointment of a minimum of one Company Secretary within thirty days from the date of incorporation of a company.
Business License
Before a Company can legally start operating, Companies are required to comply with some form of licensing, which could be a general trading license, an industry/sector specific license or activity specific license.
Opening of Bank Account
Different banks will have different requirements as to the opening of the corporate bank account. We will always advise you to visit your preferred bank to confirm on the requirements.
Register for Employees Provident Fund (EPF)
- Employers will need to register at EPF within 7 days from the date the employer is first responsible for contributing, that is, once an employee is employed for the job.
- The employer is responsible for registering its employees who have not registered with EPF before the first contribution can be made.
Register for Social Security Organization (SOCSO) And Employee Insurance Scheme (EIS) with PERKESO
- Malaysian law requires that new employer and employee must be registered with SOCSO & EIS.
- Late in Registration of Employees will result in following compounds:
i. Exceeds 1 month but less than 1 year = RM 500 (a worker)
ii. Exceeds 1 year but less than 2 years = RM 1,000 (a worker)
iii. Exceeds 2 years but less than 5 years = RM 1,500 (a worker)
iv. Exceeds 5 years = RM 3,000 (a worker)
Register with Inland Revenue Board (IRB)
- Companies who have started their business need to submit a corporate tax reference number application.
- A company with employees must register an employer’s tax file for the purpose of implementing the Scheduled Tax Deduction (STD).
- An employer who first hires an individual who is or may be liable to income tax shall notify the nearest Assessment Branch of the IRB for the employee concerned within one month from the date of commencement of his / her employment.
A private company shall appoint an auditor for each financial year of the company.
- All Companies are strongly advised to appoint a licensed Tax Agent to prepare the tax file to the Inland Revenue Board of Malaysia (IRB) because penalties relating to non-compliance can be very costly.
- Under the Income Tax Act (ITA) 1967, the tax return must be submitted within seven (7) months from the date of the closing of the Company’s financial year.
Proper keeping of the accounts
All documents and records:
- must be sufficient to explain the transactions and financial position of the company;
- ensure that the appropriate accounting entries be made within 60 days of the completion of the transactions;
- must be kept for 7 years after the completion of the transactions.
What are the Directors’ Duties and Liabilities?
The directors are responsible for ensuring the Company’s Annual Return is lodged with SSM for each calendar year within 30 days of the anniversary of a company’s incorporation date.
Example:
Company’s Incorporation Date : 31st March 2019
AR Filing Deadline : 30th April 2020 and every subsequent calendar year
In general, an Annual Return is a summary of a company profile. In details, an Annual Return will include the following information:
- Registered office address
- Business office address
- Branch office address (if any)
- Principal business activities
- Total paid-up capital
- Charges registered with SSM (i.e. company assets pledged)
- Company directors
- Appointed company secretary
- Appointed Auditor
- Shareholders
Is there any penalty if the Company fails to Lodge Annual Return?
Yes, the company and every officer shall be liable to a fine not exceeding RM50,000 and, in the case of a continuing offence, to a further fine not exceeding RM1,000 for each day during which the offence continues after conviction.
When should the Company’s first financial year be set?
The first financial year must be within 18 months from the incorporation date.
Example:
Company’s Incorporation Date : 1st January 2020
1st Financial Year End : Any date until 30th June 2021
What are some factors to consider when choosing the financial year end?
- Least busy season
- Lowest Inventory time
- Synchronize the Financial Year End with Holding Company or business partners
- Avoiding peak periods (i.e. March, June, September & December)
When should the subsequent audited financial statement be prepared?
The subsequent Financial Statements must be prepared within 6 months after its financial year end.
Example:
Financial Year End : 31st December 2019
Preparation of financial statement : 30th June 2020
The directors are required to:
- Circulation date of FS (Section 258)
The FS must be circulated to the members within 6 months from the end of its financial year - Lodgment of Financial Statement (Section 259)
FS must lodge within 30 days from the Circulation date of FS
Example:
Company Year End : 31st December 2019
Circulation of FS to members : 30th June 2020
Lodgment of FS to SSM : 30th July 2020
Is there any penalty if the Company fails to lodge the company financial statement with the Registrar of Companies (SSM)?
Yes, every director is liable to a fine not exceeding RM50,000 and, in the case of a continuing offence, to a further fine not exceeding RM1,000 for each day during which the offence continues after conviction.
Is it mandatory that Company’s financial statement be audited annually by an approved Auditor?
Yes, the Companies Act 2016 requires all companies to prepare and audit their annual financial statements before lodging it with the Registrar of Companies (SSM). However, under section 267(2) of the Companies Act 2016, SSM can exempt selected categories of private companies from having to appoint an auditor and to impose the criteria and conditions accordingly.
Is it mandatory for a Company to appoint a Company Secretary?
Yes, every company being registered as Private Limited (Sdn.Bhd.) requires the appointment of a minimum of one Company Secretary. The appointment of the first secretary shall be made within thirty days from the date of incorporation of a company.
Publication of Company’s name and registration number
Company name & number must be displayed at registered office, every place of business, official printed publications, and all electronic medium & website.
Financial Statement of Companies
When must a company prepare its Financial Statement and who is responsible?
As per s248(1) of the Companies Act 2016: –
First Financial Statement – within eighteen months from the date of its incorporation.
Subsequent Financial Statement – within six months of its financial year end.
Preparation of Financial Statement is responsibility of the directors of company.
The Financial statement need to be sent to who and what is the time for sending Financial Statement to the person?
As per s257(1) of the Companies Act 2016: –
The company need to send approved Financial Statement to:
- Every member of the company;
- Every person who is entitled to receive notice of general meetings;
- Every auditor of the company; and
- Every debenture holder of the company on a request being made to the company.
That Financial Statement must be approved by the Board and accompanied with statutory declaration by a director.
As per s258(1) of the Companies Act 2016: –
The circulation time of approved Financial Statement to the above are as follow:
Private Company – within six months of its financial year end.
Public Company – at least twenty-one days before the date of its annual general meeting.
When must a company lodge its Financial Statement to the Registrar?
As per s259(1) of the Companies Act 2016: -
Private Company– within 30 days from the financial statements and reports are circulated to its members
Public Company– within 30 days from its Annual General Meeting
Incentives for Investment (MIDA)
What are the main incentives for the manufacturing and services sectors?
There are two major tax incentives for the manufacturing and services sectors:
- Pioneer Status (PS) – Income tax exemption of 70% – 100% of statutory income for 5 to 10 years. Unabsorbed capital allowances and accumulated losses incurred during the pioneer period can be carried forward and deducted from the post pioneer status of the company.
- Investment Tax Allowance (ITA) – An allowance of 60% – 100% on qualifying capital expenditure (factory, plant, machinery or other equipment used for the approved project) incurred within 5 to 10 years from the date the first qualifying capital expenditure is incurred.
What is the difference between Pioneer Status and Investment Tax Allowance?
A company approved with a Pioneer Status certificate can enjoy income tax exemption between 70% – 100% of statutory income for 5 to 10 years, whereas, for Investment Tax Allowance, a company can get allowances between 60% – 100% on qualifying capital expenditure incurred within a period of 5 to 10 years.
For projects with a longer gestation period and high capital expenditure, it would be more beneficial to opt for Investment Tax Allowance. Companies should study the options before applying either for Pioneer Status or Investment Tax Allowance.
How does a company apply for Pioneer Status / Investment Tax Allowance?
A company can apply for the incentives by filling up the relevant forms (ICA1 – 7) that are available on MIDA’s website ( http://www.mida.gov.my/home/forms-&-guidelines/posts/) or request at MIDA’s Business Information Centre or the nearest MIDA office.
If my company does not have a Manufacturing Licence, can I apply for Pioneer Status/ Investment Tax Allowance?
A company exempted from Manufacturing Licence is eligible to apply for Pioneer Status/ Investment Tax Allowance if the products/activities are promoted and the project has fulfilled other related criteria.
How can I confirm that my products/activities are eligible to apply for the incentives?
You may check from the list of promoted activities & products available in our websites or through our publication ‘Malaysia: Investment in the Manufacturing Sector – Policies, Incentives and Facilities’.
How long does it take to consider the application for the incentives?
The incentives will be processed, and the decision will be made within six weeks from the date of complete information received.
How can I find out the status of my company’s application for the incentive?
All applications received will be issued acknowledgement letters which will state the names of the Officer/Deputy Director/Director of the relevant Industry Division. Applicants are advised to contact the respective officers on the application status.
Common Mistake
The common offences under Registration Of Businesses Act 1956 (ROBA 1956) and Registration Of Businesses Rules 1957 (ROBR 1957) is as follows:
- Section 12(1)(a) ROBA 1956
- Section 12(1)(b) ROBA 1956
- Section 12(2) ROBA 1956
- Rule 17A(2) ROBR 1957
- Rule 13(2) ROBR 1957
- Rule 17A(1)(b) ROBR 1957
and for common offences under the Companies Acts 2016 are as follows:
- Section 30(1)(b) CA 2016
- Section 30(2)(e) CA 2016
Have more questions?
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