[fullwidth background_color=”” background_image=”” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_repeat=”no-repeat” background_position=”left top” video_url=”” video_aspect_ratio=”16:9″ video_webm=”” video_mp4=”” video_ogv=”” video_preview_image=”” overlay_color=”” overlay_opacity=”0.5″ video_mute=”yes” video_loop=”yes” fade=”no” border_size=”0px” border_color=”” border_style=”solid” padding_top=”50px” padding_bottom=”50px” padding_left=”” padding_right=”” hundred_percent=”no” equal_height_columns=”no” hide_on_mobile=”no” menu_anchor=”” class=”” id=””][accordian divider_line=”no” class=”” id=””][toggle title=”Q1. What is the difference between a shelf company and a newly formed company?” open=”no”]
A shelf company is an existing company formed with a RM2 paid up share capital, 2 local directors and shareholders, and a RM400,000 authorised share capital (stamp duty paid). Upon purchase of a shelf company, the existing directors resign & blank transfer forms are delivered to transfer the share to the purchasers. Business can commence immediately upon purchase. Most shelf companies have been registered with the following function: General trading; construction; investment.
In order to form a new company, first we have to get approval from the Register of Companies (ROC) to use this proposed name. This process can sometimes take a long time depending on the name chose. Upon approval of use of name, the company secretary then prepares the necessary documents for incorporation for filling. This may take another 1-3 day from the date the entire relevant documents are signed.
Business can only commence after the certificate of incorporation has been issued by the ROC.
[/toggle][toggle title=”Q2. How long does a name search take for the Registrar of Companies to approve?” open=”no”]The result is out normally within 1 working days of submission and you will have a time period of 3 months from the date of the results to register your company. This process can sometimes take a long time depending as the name chosen must be approved by ROC, and rejection can result in long delays.[/toggle][toggle title=”Q3. Is the shelf company free from liability?” open=”no”]Yes. There is a pre-signed indemnity letter from the previous shareholders admitting liability for transactions before the purchase date but also absolving for liabilities after the purchase date.[/toggle][toggle title=”Q4. What is included in the purchase or formation price quoted?” open=”no”]
- Processing of relevant documents for shares transfers or subscriber’s shares. Filing of documents to ROC for relevant changes in directors’ & secretaries.
- RM2 paid up share capital and stamp duty on RM400,000 authorised share capital. Any excess stamp duty to be borne by client.
- 1 year retainer fee, Secretarial books consisting of company kit, 5 copies of memorandum & articles of association & 1 unit of common seal.
[/toggle][toggle title=”Q5.How long does it take to register a new company?” open=”no”]From the submission of all necessary paperwork to the ROC it normally takes 1-2 days for the result to be available but as the ROC’s internal information technology systems do breakdown often, it may take up to 2 weeks for the Business Registration Certificate to be issued.[/toggle][toggle title=”Q6. Who is the company secretary & what responsibility does she have?” open=”no”]According to Section 139 of the Companies Act 1965, all limited companies must have a licensed company secretary who is an officer of the company. Her/his duties are set out in the Act itself and are primarily to ensure the companies are adhering to the procedures set out in the Companies Act. This is why the company secretary charges a retainer fee for his/her expertise in this field.[/toggle][toggle title=”Q7. I am a qualified accountant. Can I be my own company secretary?” open=”no”]Only a Malaysian resident who is licenced by the Companies Commission or is a member of a professional body can be appointed as a company secretary for a private limited company.[/toggle][toggle title=”Q8. Can the secretarial books be kept at the company’s office or anywhere else other that the company secretary’s address?” open=”no”]Yes, the company secretarial books can be kept at another location but this location must be made public by filing a form with the Registrar of Companies.[/toggle][toggle title=”Q9. Can any other company personnel draw up their own resolutions without having to go through the company secretary?” open=”no”]Yes, the company can have anyone draw up the resolution document itself but these documents have to be verified by the company secretary since the company secretary shall be held responsible for the preparation of the documents. In most cases, to minimise risks resolutions are done by the company secretary.[/toggle][toggle title=”Q10. What are the qualifications require becoming a director of a private limited company?” open=”no”]
- He/she must be of age 18 years and above.
- He/she person must not be an un-discharged bankrupt.
- He/she must not have been convicted of an appointment.
- He/she must be a resident of Malaysia or having a permanent residential address in Malaysia. “Having a permanent residential address” is interpreted as “having the right of abode in the country on a long term basis”. A person with a valid work permit will qualify for a permanent residential address status.
[/toggle][toggle title=”Q11. What are the implications of becoming a director of a private limited company?” open=”no”]Directors are responsible for general management of the company and are answerable to the shareholders of the company and the government. Though the private limited status of the company absolve the shareholders and directors from debt to third parties, directors are personally liable for any monies owing to the government bodies’ e.g tax, statutory contributions, late fines & penalties levied by any government body. Shareholders are free from all liabilities except for share capital already paid.[/toggle][toggle title=”Q12. Can a foreigner set up a sole proprietorship or partnership?” open=”no”]Foreigners cannot set up sole proprietorships or partnerships unless in very specific professional industries like medical or engineering whereby there is also culpability for personal indemnities. Only foreigner with permanent residency can set up enterprises and sole proprietorships.[/toggle][toggle title=”Q13. I have come across foreign directors of companies who do not have a work permit nor a long term stay visa of any sort but have been installed as local directors in their companies. The Companies Commission has not rejected the installation.” open=”no”]That it is not ROC duty to check on the immigration status of the director. The onus then would fall on the company secretary to define the clause “permanent residential address” status according to the Immigration law.[/toggle][toggle title=”Q14. Can a non-director be a signatory to the company’s bank account?” open=”no”]
Yes, the bank will follow the instruction that wrote on Resolution from Board of Directors.
Most Banks in Malaysia have recently tightened up the process of opening company’s bank account. As refer to the recent development, a foreigner who would like to be the authorised signatory of the company bank account must possess valid business/working visa/permit, failing so he is not allowed to be the cheque signatory.
[/toggle][toggle title=”Q15. Can foreigners owned shares & what is the maximum shareholding allowed in a local private company & the minimum share capital in a foreign owned company?” open=”no”]There is no restriction on maximum shareholding i.e. foreigners can own 100% of a company. All companies with foreign investment are required to apply for Foreign Investment Committee approval, the process of which takes more than 2 months but approval is normally given. Normally, small businesses will not apply for any FIC approval unless there is business with the government departments. If the company intends to transact with government departments which will require licensing, the minimum local “bumiputra” (ethnic Malay) participation must be 51% and above.[/toggle][toggle title=”Q16. Is it mandatory that all companies with foreign investment to get FIC approval?” open=”no”]Yes. In reality, there are a lot of foreign owned companies that have not applied for the FIC approval. By law, all companies must get the approval and it is normally given. Depending on the size of your investment and business, we leave it up to the directors/shareholders’ discretion to decide on the importance of this approval.[/toggle][toggle title=”Q17. I understand that the minimum share capital for any company to employ an expat under a work permit is RM250,000. Is that true?” open=”no”]
The minimum equity structure for qualification of an expatriate post position is as such:-
- 100% local (Malaysian) owned RM 250,000.00
- Local + Foreign below 49% owned RM 350,000.00.
- 51% Foreign and above owned RM 500,000.00.
- He/she must be a resident of Malaysia or having a permanent residential address in Malaysia. “Having a permanent residential address” is interpreted as “having the right of abode in the country on a long term basis”. A person with a valid work permit will qualify for a permanent residential address status.
[/toggle][toggle title=”Q18. What if I do not have the requisite amount to be banked into the company? Can the RM500,000 capital that put in be used and taken out immediately?” open=”no”]Cash or assets can be pumped in as share capital. If you do not have the cash, assets will also qualify. The minimum share capital requirement for qualification purposes depends on the business activity and the percentage of local shareholding in a company. The company cannot loan money to its shareholders to buy shares from the company i.e. Share capital must be paid into the bank account in cash or into the company’s assets. However, there is no stopping the company withdrawing the same amount immediately after the bank in. The total amount paid into the bank does not have to remain in the account if it is need urgently elsewhere but directors who are also shareholders must not owe the company any monies at year end.[/toggle][toggle title=”Q19. What if the foreigner is a Malaysian spouse? Will the minimum capital be RM500,000?” open=”no”]Any local company can sponsor the Malaysian spouse. No minimum share capital is required.[/toggle][toggle title=”Q20. Can the visa applicant go and apply to the Immigration Dept. instead of going through an agent? What is the advantage of using an agent?” open=”no”]Absolutely possible for the applicant to go through the application process themselves. Just be prepared to make numerous trips, long waiting period each time and dealing with unhelpful immigration officers at the counters. If your time cost is very high, then the agents will go through the same application procedures on your behalf.[/toggle][toggle title=”Q21. What are the cost implications of setting up your own business?” open=”no”]Whether or not you have business or income, the annual statutory maintenance costs for accounts, audit, tax and filing with the ROC would be at least RM2,500 a year depending on how active your company has been.[/toggle][toggle title=”Q22. What do you consider as a dormant company, a semi-active company and an active company?” open=”no”]
- A dormant company is one that has ceased operation.
- A semi-active company is one that is in operation but does not require frequent resolution to be alone e.g. a trading company.
- An active company is one take frequently requires resolutions to be done for purpose of obtaining licences, bank facilities, transactions involving large sums of monies.
[/toggle][toggle title=”Q23. What if at the end of the day we decide to close the company if there is no business? Can we do that and what is the cost?” open=”no”]Yes, you can de-register the company if the company does not have any debts to any third party. If there are debts, you will have to liquidate. The difference between liquidation and de-registering , other than having (or not having) debts to third party is the cost and time. The cost for de-registering is around RM3,000 but the cost for receivership and liquidation will start at RM6,000 onwards depending on how messy the company is.[/toggle][toggle title=”Q24. What is the Requirement for striking off / de-register a company?” open=”no”]
- Must not in operation anymore
- Must get consent for majority of directors and shareholder
- The company has no fixed assets, current asset and liabilities.
- The company current account must be closed before application
- The company has no outstanding to ROC, Tax and any govt bodies (including whatever compound)
- The information of the company with ROC is up to date
- The company is not involved in any legal proceeding within or outside Malaysia
- The company has not made any return of capital to shareholder
- The company is not a holding or subsidiary of another company
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