Friday, September 26, 2008
THE PROCESS OF INCORPORATION
INCORPORATION OF COMPANY IN MALAYSIA
The law relating to incorporation of a company in Malaysia is governed by the Malaysian Companies Act, 1965. As per the Act any company doing business or wishing to do business in Malaysia must register with the Companies Commission of Malaysia (CCM) under the Companies Act 1965.
PROCEDURE FOR INCORPORATION
To incorporate a company, a person must apply to the Company Commission of Malaysia (CCM) using Form 13A together with a payment of RM30 in order to determine if the proposed name of the intended company is available. If the name applied for is available, the application will be approved and the proposed name reserved for the applicant for three months.
However, a reservation period of three months will be granted if the name is available, during which time the company must submit copies of documents like Memorandum and Articles of Association, Statutory Declaration of Compliance and Statutory Declaration, plus relevant fees.
A person must then lodge the following documents with the CCM within the three months to secure the use of the proposed name:
Memorandum and Articles of Association
Declaration of Compliance (Form 6)
Statutory declaration by a person before appointment as a director, or by a promoter before incorporation of a company (Form 48A).
The Memorandum of Association shall describe the company's name, the objects,
the amount of its authorized capital (if any) proposed for registration and
its division into shares of a fixed amount.
The Articles of Association describes the regulations governing the internal management of the affairs of the company and the conduct of its business.
A certificate of incorporation will be bestowed by the Registrar of Companies once registration procedures are completed and approved.
Once the Certificate of Incorporation is issued, the subscribers to the Memorandum together with such other persons as may from time to time become members of the company shall be a body corporate, capable of exercising the functions of an incorporated company and of suing and being sued. It has a perpetual succession under common seal with power to hold land, but with such liability on the part of the members to contribute to its assets in the event of it being wound up, as provided for in the Companies Act.
REQUIREMENTS OF 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 romanized letters, together with the company number, on its seal and documents.
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 in Malaysia. He must be a member of a prescribed body or is licensed by the Registrar of Companies. The company must also appoint an approved company auditor to be the company auditor in Malaysia.
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 should also be a shareholder.
REGISTRATION OF FOREIGN COMPANIES
A foreign company desiring to conduct business or establish a place for one in Malaysia must register with the CCM. The same registration procedure applies whereby an application must be submitted on Form 13A to the CCM in Kuala Lumpur or any of its branch offices in Malaysia, with a payment of RM30. If the intended name of the foreign company is available, the application will be approved and the name reserved for three months.
Upon approval, applicants must lodge the following documents with the CCM:
A certified copy of its Certificate of Incorporation (or a document of similar effect) from the country of origin
A certified copy of its Charter, Statute or Memorandum and Articles of Association or other instrument constituting or defining its constitution.
A list of its directors and certain statutory particulars regarding them (Form 79)
Where there are local directors, a memorandum stating the powers of those directors
A memorandum of appointment or power of attorney authorizing one or more persons resident in Malaysia to accept on behalf of the company, service of process and any notices required to be served on the company.
A statutory declaration in the prescribed form made by the agent of the company (Form 80)
The appointed agent undertakes all acts required to be done by the company under the Companies Act, 1965. Any change in agents must be reported to the CCM.
Every foreign company shall, within a month of establishing a place of business or commencing business within Malaysia, lodge with the CCM for Registration notice of the situation of its registered office in Malaysia using the prescribed form.
A foreign incorporated company must file a copy of the annual return each year within one month of its annual general meeting. Within two months of its annual general meeting, the company must file a copy of the balance sheet of the head office, a duly audited statement of assets used in and liabilities arising out of its operations in Malaysia, and a duly audited profit and loss account.
Any documents in a language other than Bahasa Malaysia or English must have an accompanying certified translation. The Registrar of Companies will bestow upon the applying company the status of a foreign company operating in Malaysia once all procedures are completed and approved.
FEES TO BE PAID TO COMPANIES COMMISSION OF MALAYSIA (CCM)
Main Fees to be Paid to the Companies Commission of Malaysia
Reservation of a name 30
For registration of a company, fees range according to nominal share capital, e.g.:
Not exceeding RM100,000 (US$26,316)
Exceeds RM500,000 (US$131,579) but does not exceed RM1 million (US$263,158)
Exceeds RM5 million (US$1.3 million) but does not exceed RM10 million (US$2.6 million)
Exceeds RM50 million (US$13.2 million) but does not exceed RM100 million (US$26.3 million)
Exceeding RM100 million (US$26.3 million)
Recommended Fees for Company Secretarial Services
Incorporation of a Sdn. Bhd. (private limited company)
Incorporation of a Bhd. (limited company)
Monthly Fees: Professional Fees Retainer Fees
Private Company :
Public Company :
Consultancy and advisory fee (minimum, per hour)
Source: Malaysian Association of the Institute of Chartered Secretaries & Administrators