Accountancy in Malaysia

>> Choice of Legal Form in Malaysia

The main forms of commercial organizations are the limited company (public and private) formed under the Companies Act 1965, the partnership regulated by the Partnership Act 1961 and Limited Liability Partnership regulated under the Limited Liability Partnerships  Act 2012.

Any person intending to carry on a business or maintain a place of business in Malaysia must register a business entity with the Companies Commissions of Malaysia or the Registrar of Businesses.

A business may be carried on in any one  of the following forms:

  • By an individual operating as a sole proprietorship registered under the Registrar of Businesses.
  • By two or more (but not more than 20) persons in partnership registered under the Registrar of Businesses.
  • By a locally incorporated company or a foreign company registered under the provision of the Companies Act 1965 with the Companies Commissions of Malaysia.
  • By Limited Liability Partnership

(LLP) registered with the Companies Commissions of Malaysia which combines the characteristics of a company and a conventional partnership.

Business firm

A business firm can be registered as a sole-proprietorship firm or a partnership under the Business Registration Act. It is considered as an incorporated body, not a legal entity. A foreign individual or corporation may register a business firm as such, provided that a local manager or agent is appointed. The local manager or agent should be a Malaysian, a permanent resident or an employment pass holder.

A partnership may consist of two or more partners but not more than 20. If it exceeds 20, the partnership must be registered as an incorporated company.

Incorporated company

The Companies Act 1965 is the principal legislation governing companies in Malaysia. The Act provides for three types of companies:

  • A company limited by shares, where the personal liability of its members is limited to the par value of their shares.
  • A company limited by guarantee, where the members guarantee to meet liability up to a nominated amount if the company is wound up.
  • An unlimited company, where there is no limit to the members’ liability.

Company limited by shares

The most commonly incorporated company registered in Malaysia is a company limited by shares. The liability of its shareholders is limited to the nominal value of the amount of the shares held by them. Such a company may either be a private or public limited company.

A company having a share capital may be incorporated as a private company if its Memorandum or Articles of Association:

  1. restricts the right to transfer its shares;
  2. limits the number of its members to 50,

excluding employees and some former employees;

  1. prohibits any invitation to the public

to subscribe for its shares and debentures; and

  1. prohibits any invitation to the public to deposit money with the company.

A public limited company may have more than 50 shareholders. Its shares can be offered to the public for subscription and are freely transferable. Such a company must register a prospectus with the Companies Commissions of Malaysia before offering its shares to the public. A company seeking to list on the stock exchange is required to obtain the necessary approval from Bursa Malaysia.

Branch of foreign corporation / representative office

A foreign corporation may opt to establish a branch in Malaysia to conduct its business operations. Before doing so, the foreign corporation must register as a foreign company under the Companies Act 1965 with two or more local resident persons to act as agents.

A foreign corporation may also operate in Malaysia by establishing a representative office. Such a representative office has no legal corporate status. It cannot engage in any profit making or trading activities nor is it permitted to conclude contracts or open and receive letters of credit.

Principally, it merely serves as a promotional and liaison office of its parent company. Its activities are therefore confined to promotions, market research, liaison and coordination of activities on behalf of its parent company.

Limited liability partnership (LLP)

Limited liability partnership (LLP) is an alternative business set up which combines the characteristics of a private company and a conventional partnership.

LLPs provide limited liability status to their partners and offer the flexibility of internal arrangement through an agreement between the partners. This combination will give entrepreneurs and businesspeople more structure compared to a sole proprietorship or a conventional partnership.

LLPs may be formed by a minimum of two persons (wholly or partly individual or corporate bodies) or any business group to carry on any lawful business with the view to make profit. However, the main targeted groups are:

  • Professionals
  • Small and medium sized businesses
  • Joint ventures
  • Venture capitals

Latest version updated 1st November 2017

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Malaysian Ringgit


$ 296.4