1. By an individual operating as a sole proprietor. This only applies to Malaysian who are resident in Malaysia or foreigners who are permanent residents in Malaysia.
   
   
2. By two (2) or more (but not more than 20) persons in a partnership. This applies only to Malaysian who are resident in Malaysia or foreigners who are permanent residents in Malaysia unless in very specific professional capacity such as solicitors.
   
   
3. By a locally incorporated company or by a foreign company (i.e. branch office) registered under the provisions of the Companies Act, 1965.

2. Sole Proprietorship and Partnership

All sole proprietorships and partnership must be registered with the Companies Commission of Malaysia (CCM) under the Registration of Business Act, 1956.

While the case of a sole proprietorship, the owner is liable for the debts and obligations of the sole proprietorship. The case of partnership is of the same nature, where the partners are both jointly and severally liable for the debts and obligations of the partnership, should there be an incident where its assets are insufficient. A formal partnership deeds may be drawn up to govern and protect the rights and obligations of each partner, but this is only optional choice of the partners.

However in the event of death of any partner, the partnership shall dissolve unless the partnership agreement specifically provides otherwise.

Both the Sole proprietorship and partnership are not required to file its financial statements in any public registry or to publish them in any other way. Only Malaysians who are resident in Malaysia or foreigners who are permanent residents in Malaysia are eligible to register a proprietorship or a partnership.

3. Locally Incorporated Company in Malaysia

3.1  Company Structure

The Companies Act, 1965 governs all companies in Malaysia. The Act stipulates that a person must register a company with CCM prior to engaging in any business activities. There exist three (3) types of companies:-
 

1. A company limited by shares where the personal liability of its share holder is limited to the par value of their shares and the number of shares taken or agreed to be taken by them.



2. A company limited by guarantee where the shareholders guarantee to meet liabilities of up to the amount nominated in the company’s Memorandum and Articles of Association in the event of the company being wound up.



3. An unlimited company where there is no limit to the shareholders’ liability.


3.2 Company Limited by Shares

The most common structure in Malaysia is a company limited by shares. Such limited companies may be privately- held (Sendirian Berhad or Sdn. Bhd.), or public listed (Berhad or Bhd.) companies.

3.2.1 Private company


A private company having a share capital may be incorporated with the provision that it’s Memorandum and Articles of Association:-


1. Restricts the right to transfer its shares


2. Limits the number of its owners to not more than 50, excluding the employees


3. Prohibits the invitation to the public to subscribe for its shares and debentures


4. Prohibits any invitation to the public to deposit money with the company
   
   
3.2.2 Public Listed company


A public company may be formed or, alternatively, a private company may be converted into a public company subject to Section 26 of the Companies Act, 1965. Such a company can offer to the public provided:-


1. It has registered a prospectus with the Securities Commission


2. It has lodged a copy of the prospectus with the CCM on or before the date of its issue

A public company can apply to have it shares quoted on Bursa Malaysia Berhad subject to its compliance with the requirements laid down by the exchange. Any subsequent issue of securities requires the approval of the Securities Commission.

3.3 Procedure for Incorporation of Local company

The very first thing to do in proposing a name for incorporation of a company is to conduct a name search to determine whether the name can be used to register the company. To do so we must complete the Form 13A together with a payment of RM30 for each name applied.

To secure the use of a proposed name, we must then lodge the following documents with CCM within three (3) months:-


1. Memorandum and Articles of Association (M&A);


• Original copy stamped at any stamp office with a RM100 stamp in the Memorandum and another RM100 in the Articles.
• The first Directors and Secretaries are named in the M&A.
• At least two Directors or more promoters shall sign the M&A.
2. Form 6 – Statutory Declaration of compliance
.
3. Form 48A – Statutory declaration by a Director or promoter before appointment. The Director and promoter declared under oath that:
   • Original copy stamped at any stamp office with a RM100 stamp in the Memorandum and another RM100 in the Articles.
   • The first Directors and Secretaries are named in the M&A.
   • At least two Directors or more promoters shall sign the M&A.
4. Original copy of 13A
5. A copy of letter approving the name issued by CCM
6. A copy of Identity Card of each Director and company secretary

When all the documents for registration are in order, a Certificate of Incorporation will be issued. Form 8 will be issued in the case of a public company while form 9 will be issued in the case of a private company.

3.4 Requirements of a Locally Incorporated Company

Upon registration, CCM will issue a certificate of incorporation of the company. It is the company’s responsibility to maintain a registered office in Malaysia where all books and documents required under the provisions of the Companies Act 1965 are kept.

3.5 Establishment of Foreign Company

A foreign company cannot carry on business in Malaysia unless it incorporates a local company or registers the company in Malaysia. Foreign companies incorporated outside Malaysia that intends to establish a company must register with CCM.

The same procedures pertaining to the registration of a locally incorporated company apply. The application for a company name search must be submitted in Form 13A to the CCM with a payment of RM30. The foreign company should use the same name as the one registered in its country of origin. If the intended name of the foreign company is available, the application will be approved and the name will be reserved for three (3) months.

Upon the approval, applicants must lodge the following documents with the CCM for registration (as per Section 332 of the Companies Act 1965):-  
1. A certified copy of its Certificate of Incorporation (or a document of similar effect) from the country of origin.
2. A certified copy of its Charter, Statute, or M&A, or any other instrument that constitutes or defines its constitution.
3. Form 79 – A list and particulars of its directors of the foreign company;
• If the list includes directors resident in Malaysia who are members of a local board of directors include a memorandum stating their powers.
4. A Memorandum of Appointment or Power of Attorney, authorizing one or more persons resident in Malaysia to accept on behalf of the company the service of process and any notices that may be served to the company.
5. Form 80 – A statutory declaration in the prescribed form made by the agent of the company.
6. Original copy of Form 13A.
7. A copy of the letter approving the name issued by CCM.

The appointed agent will agree to undertake all acts that are required to be carried out by the company under the Companies Act 1965. Any change of agents must be reported to the CCM within one month from the date of change together with the appropriate fees.

Registration fees are payable in accordance with a graduated scale set by the CCM based on the authorized capital of the parent company. For the registration of a foreign company, the fee payable to Company Commission of Malaysia as per payment schedule for authorized share capital for local company.

Every foreign company shall, within a month of establishing a place of business or commencing business within Malaysia, lodge with the CCM the registration notice of the location of its registered office in Malaysia, by using the prescribed form.

A foreign incorporated company must file a copy of its annual return each year within one (1) month of its annual general meeting. The company must also file a copy of the balance sheet of its headquarters, a duly audited statement of assets used, and liabilities arising out of, its operation in Malaysia, as well as a duly audited profit and loss account within two (2) months of its annual general meeting.

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