Tax Investigation

1. What is tax investigation?
Tax investigation normally begins with a surprise visit to the taxpayer's business premises, personal residences, agent/representatives and various third parties' premises to take possession of the required documents and books of accounts for investigation purposes.

2. What is the aim of tax investigations?
The aim of tax investigations is to investigate taxpayers who are suspected to be involved in fraud, willful defraud or negligence in reporting their income.

3. What is the difference between tax audit and tax investigation?

Tax audit is just a normal routine inspection on a taxpayer's operation, financial records and other supporting documents which substantiate the position taken in the tax return without any suspicion. Tax investigation is an investigation carried out on a taxpayer suspected to be involved in fraud, willful defraud or negligence in reporting their income and there are certain proofs to prove it.

4. What happens if IRB finds out if there is fraud, willful defraud or negligence in reporting my business's income?

In cases where fraud, willful defraud or negligence is detected, the IRB is empowered to revise the tax computations, taking into account tax lost beyond the 6 years of investigation notwithstanding that the taxpayer may not have records for those periods. Additional assessment will be issued to recover the tax lost, coupled with penalties, which can be up to 300%. In serious cases, or for repeated offenders, the taxpayer may be prosecuted and if he is found guilty, imprisonment of up to 3 years can be imposed.

5. What is considered willful evasion of tax?

Willful evasion of tax means any action or deed deliberately performed or done with the purpose or intention of evading or assisting any other person to evade tax and would include any of the following:

• Deliberate omission of any income from a return;
• Making a false statement or entry in a return;
• Giving a false answer(orally or in writing) to a question asked or to a request for information made for the purpose of the Act;
• Preparing or maintaining false books of account or other records, or authorizing the preparation or maintenance of false books of accounts or other records;
• Falsifying books of accounts or other records, or authorizing the falsification of books of accounts or other records; and
• Making use of any fraud, art or contrivance, or authorizing the use of any fraud, art, or contrivance.

6. Where can I obtain more information on tax investigation?

The IRB has issued a framework for tax investigation to ensure that the tax investigation is carried out in a fair, transparent and impartial manner. This framework outlines the rights and responsibilities of the taxpayers, tax agents and investigation officers. For more information, please read the "Framework for Tax Investigation" published in the IRBM website ( http://www.hasil.org.my/ ) or consult a tax consultant.

Please contact me at comsecretarial@gmail.com if you need professional assistance on this topic. I am more than willing to assist you.

Tax Audit

1. What is tax audit?Tax audits involve a visit by the Inland Revenue Board (IRB) officer to business owners ("tax payer") corporate premises to review tax payer's operation, financial records and other supporting documents which substantiate the position taken in the tax return.

2. What is the aim of tax audit?

Tax audit is required to ensure that tax payers report the correct amount of income and pay the right amount of tax which is computed in accordance with the tax laws and regulations. For the government, it works as an enforcement tool ensuring that the Self Assessment System is strictly complied with to prevent any loss of revenue of the government.

3. What is the Self Assessment System?

The Self Assessment System is a process requiring tax payers to compute, report and pay the right amount of tax by themselves or with the help of a tax consultant.

4. What if IRB finds out that I understated or omitted my company's income?

If that happens, you are subjected to a penalty equal to the amount of tax undercharged (100%) or equal to triple the amount of tax payable (300%).

5. How to avoid the penalty?

There is actually no way to avoid the penalty but Director General of Inland Revenue (DGIR) has the discretionary power to abate the penalty. It is recommended to keep a full set of records and accounts to avoid any misunderstanding in the tax audit process.

6. Where can I obtain information on tax audit?

You can obtain further information by reading the "Framework for Tax audit" published in the IRBM website ( http://www.hasil.org.my/ ), or consult a tax consultant.

7. What is included in the guide?

The main areas covered in the guideline are as follows:

(i) The main objectives of audit.

(ii) The basic procedures involved in a tax audit.

(iii) The rights and responsibilities of IRBM, taxpayers and tax agents.

(iv) Complaints and appeal procedures.

(v) Penalty and offence.

Please contact me at comsecretarial@gmail.com if you need professional assistance on this topic. I am more than willing to assist you.

Corporate Meetings for Private Limited Companies (Sdn Bhd)

Companies in Malaysia are required to hold corporate meetings which is the shareholders and directors meetings. Minutes should be maintained for each of these meetings. The Company Secretary of the company is normally responsible to document these meetings.

It is important that key decision making process of the company is documented. There is no need to document small routine decisions made by the company BUT there should be written minutes or consent resolutions for decisions or events that require formal approval by the board of directors or shareholders.

What are directors' meetings?

The directors are elected to run and manage the affairs of the company. It is important that major decisions made by directors are documented at meetings. In some cases, one of the directors may be delegated to transact certain businesses and this should be done by way of convening a board meeting or by directors' circular resolution.

What are matters discussed at directors' meetings?

The Articles of Association regulates the proceedings of directors meetings. There should be at least two directors present for the meeting to proceed.

The following are common matters discussed at directors' meetings:

1. Recommending dividends
2. Transfer of shares
3. Appointment or resignation of directors
4. Direction of company such as developing a new product or additional capital required
5. Performance of company
6. Others

What are shareholders meeting?

There are three types of shareholders meetings:

1. Annual General Meeting (AGM)
2. Extraordinary General Meeting (EGM)
3. Class Meeting

What is an annual general meeting?

Shareholders are required to have at least an annual general meeting.

The Companies Act, 1965 requires the following:

1. The first AGM of the company must be held within 18 months of its incorporation
2. An AGM must be held in each calendar year
3. An must not be held more than 15 months after the last AGM

However, as the financial statements of the company needs to be presented within a period of 6 months before the AGM, the company would have to hold its AGM within 6 months from its financial year.

The authority to convene an AGM is usually with the board of directors. Shareholders must receive written notification of this meeting and 14 clear days notice is sufficient unless the M&A (byelaws) of the company require a longer period. However, if there are any special resolutions (special business) to be passed, then 21 clear days notice must be given.

What is the purpose of an AGM?

The Companies Act, 1965 prescribes certain matters to be conducted at the AGM. This include:

1. The audited accounts of the company must be laid before the company at the AGM. The Companies Act does not require the members to approve or adopt the accounts BUT to consider the accounts. The purpose for the audited accounts to be laid before the AGM is to enable shareholders to seek clarification from directors on any questions regarding the performance and affairs of the company.
2. Consider the report of directors.
3. The appointment of auditors and fixing of auditors fees. The shareholders may allow the directors of the company to fix the auditors fees.
4. Election of directors in place of those retiring.
5. Declaration of a final dividend (if any) recommended by the directors.

Other matters can also be discussed at the AGM, however prior notice needs to be given and these other businesses are normally classified as special businesses.

What is an EGM?

An extraordinary general meeting is convened to transact special business that is too urgent to wait until the next AGM.

The Memorandum and Articles of a company may allow the directors to convene an EGM. The members of the company may also convene an EGM on requisition provided that the member calling for the EGM holds not less than 10% of the paid-up capital that has the right to vote at the general meeting. The directors of the company upon receiving the requisition should give notice to convene the EGM. However, if the board fails to convene the EGM, the members themselves representing more than half of the total voting rights may themselves convene the EGM.

What is a class meeting?

Class meetings are meetings held for holders of a class of shares for companies that issues different classes of shares. Class meetings may be held for situations concerning variation of rights and privileges attached to the class of shares.

Appointment Of Auditor

Under the Companies Act Malaysia, companies that are doing business in Malaysia and registered under the Companies Commissioner of Malaysia are required to appoint an approved auditor to audit the accounts of the company.

In another words, all public listed companies, private limited companies and branch offices in Malaysia are required to appoint an approved auditor to audit the accounts. The directors are required to present an audited set of accounts at the annual general meeting once in every calendar year.

Who is an approved auditor?

An approved auditor is a person approved as an auditor by the Minister of Finance. Normally the appointment of auditors is in the name of the firm. The directors of the company must ensure that the proposed auditor that they are appointing is an approved auditor.

What are the duties of auditors?

Auditors' main duties are as follows:

- To examine and form an opinion as to whether the financial statements have been drawn up in accordance with the financial reporting standards of Malaysia and the Companies Act 1965.

- To examine and form an opinion as to whether the financial statements give a true and fair view of the financial position of the Company as of the financial year end and of its financial performance and cash flows of the year end.

- To obtain reasonable assurance that the financial statements are free from material misstatements.

- To report that the accounting and other records and the registers required by the Companies Act to be kept by the company have been properly kept in accordance with the provisions of the Act.

Who are the auditors to report to?

The duties of the auditors are to report to the members (shareholders) of a company.

Are auditors responsible for the preparation and fair presentation of financial statements of a company?

No. The responsibility of preparation and fair presentation of financial statements of a company lies with directors of a company. Auditors are responsible to express an opinion on the financial statements.

What is the process of appointing an auditor?

If your company is newly incorporated, the directors of a company must at any time before the first AGM appoint the first auditors. Shareholders may appoint the first auditors at a general meeting if directors fail to make the appointment.

The proposed auditor must give consent to act as auditor before the appointment.

What is the term of office of an auditor?

The term of office of an auditor is until the conclusion of the next AGM. The Company must at every AGM appoint or reappoint an auditor until the conclusion of the next AGM.

How can we appoint another auditor if our company's existing auditor resigns?

An auditor can resign at a general meeting of the company. Normally the auditor gives notice in writing to the directors that he desires to resign. The directors of the company must call for a general meeting for the purpose of appointing an auditor in place of the resigning auditor. The resignation of the existing auditor is only effective on the appointment of another auditor. Notice of nomination of new auditor must be sent out to the auditor and all persons entitled to receive notice at the prescribed number of days before the AGM.

Do the auditors have the rights to access the company records?

Your appointed company auditor has the right of access at all reasonable times to the accounting records or books, vouchers and other records such as agreements or registers of the company.

What are the other rights of the auditors?

Your appointed company auditor has the right to require information from any officer of the company as he desires for the purpose of carrying out his duty.

Your auditor is entitled to attend any annual general meeting and to speak on any part of the business of the meeting that concerns him as his capacity as auditor.

If your company is a holding company, your auditor has the right to require any officer or auditor of the subsidiary to provide information and explanation to him for the purpose of reporting on the consolidated accounts.

Your auditor has the right to receive any notices or communication relating to any general meeting which a member is entitled to receive.

Accounts and Bookkeeping

Accounts and bookkeeping is one aspect of businesses that so many people dread. Many people do not understand the importance of accounts and think that they must keep books because the government requires them to. Indeed, in Malaysia, it is a government requirement that books are kept but more importantly, the financial information captured in the accounts is essential for decision-making purposes.

Why keep records?

Good records help directors of a business understand the business such as which products are selling the best, which items cost the business the most, what products are most profitable. Without accurate financial information it is hard to know exactly how the business is doing. Decisions such as, should the company purchase a new equipment to increase the manufacturing capacity of the company or should a new marketing campaign be launched to improve sales should be considered after reviewing the financial information available.

Who is responsible for producing accounts?

Under the Companies Act (Malaysia) the directors and managers of every company are responsible to ensure that accounting and other relevant records relating to the transactions and financial position of the company are properly kept. The books of accounts must give a true and fair view of the state of affairs of the company and the accounting entries must be made to the books of the company within 60 days of the completion of the transaction.

Any director of the company who fails to take all reasonable steps to ensure compliance of the company with the above requirements will be liable upon conviction to an imprisonment for a term of 3 years or RM10,000.

When must accounts be presented?

The directors are required to present an audited set of accounts at the annual general meeting once in every calendar year. The audited set of accounts is to be made up to a date not later than 6 months from the date of the meeting.

How long must we retain the accounting records for?

According to the Companies Act (Malaysia), every company and its directors and managers must keep sufficient accounting and other records to explain transactions, and the financial position for 7 years after the completion of the transactions or operations.

Getting help from an accountant?

For directors who are already so tied up with the operational aspects of the business, they would need the help of bookkeepers to enter the transactions into the accounts and accountants to help them interpret the data captured in the accounts.

Lets start with accountants. Accounting services may vary from hiring a full-time accountant or to meet with an outside accountant once a year to discuss accounts prior to audit and submission for tax. The amount a company use an accountant would depend on the size of the business and the extent of the directors' accounting knowledge.

For larger companies, accountants are mostly employed on a full-time basis. Their roles may include:

• To oversee accounts that is updated by the bookkeeper
• To prepare budgets and forecasts for the company
• To assist directors on by giving proper advise
• To oversee the financial and cash position of the company
• To plan and implement systems and controls for the company
• To give advises on tax issues

Salaries of accountants in Malaysia: may range from RM4,000-RM7,000 per month (depending on the level of experience)

Smaller companies may choose to either employ a full-time bookkeeper or to hire a part time bookkeeper to enter the transactions of the company into accounting software. Some accounting firms in Malaysia also provide bookkeeping services to their customers.

Salaries of bookkeepers in Malaysia : may range from RM2,000-3,000 per month.

Appointing Company Secretary in Malaysia

Every company is required by statute to have at least one company secretary in Malaysia. The company secretary must be of full age (18 years old) with his principal or only place of residence in Malaysia.

The secretary is to be appointed by the board of directors and either himself or his agent or clerk is required to be present at the registered office of the company on the days and at the hours which the registered office is to be accessible to the public.

In most cases it is not practical for most small medium enterprises to engage full time secretaries. Instead, the service of an external secretary of a professional secretarial firm is engaged.

What are the general duties and responsibilities of company secretaries?

The duties and responsibilities of company secretaries depend mainly on the expectations of the board of directors. In most cases, the company secretary is responsible to ensure compliance with the disclosure and information requirements of the Companies Act.

These are some of the main duties of a company secretary:

1. Organise meetings
2. Send out notices for meetings
3. Take down minutes of board and general meetings
4. File statutory returns (in the prescribed forms) required by the Companies Act 1965 with the Companies Commision of Malaysia
5. Keep and maintain the various registers at the registered office of the company.

What are the qualifications of company secretaries?

The company secretary must be a member of a professional body or licensed by the Companies Commission of Malaysia pursuant to section 139 of the Companies Act.

The Minister has approved the following professional bodies as the prescribed professional bodies:

1. The Malaysian Association of The Institute of Chartered Secretaries and Administrators (MAICSA)
2. Malaysian Association of Company Secretaries
3. The Malaysian Bar
4. The Malaysian Institute of Accountants (MIA)
5. Malaysian Association of Certified Public Accountants (MACPA)
6. The Sabah Law Association
7. The Advocates' Association of Sarawak

Duties Of Directors For Private Limited Companies

A company is a separate legal entity, separate and distinct from its individual members/shareholders. Members of the company will appoint directors who will be entrusted with the power and authority to make decisions for the running of the company and manage the company's affairs.

For many small businesses, members of the company who have come up with their own capital to fund their businesses are often involved in the day-to-day management of the company. These members usually appoint themselves to be the directors of the company.

For larger businesses such as public listed companies, it is practically impossible for the shareholders to manage the company's affairs and therefore directors are empowered to operate the company.

What are the requirements of directors of a company?

There must be at least 2 directors who each have his/her principal or only place of residence within Malaysia. To qualify to become a director of a company, he must be:

1. A natural person
2. Of full age (18 years old and above)
3. Of sound mind
4. Not disqualified under the Companies Act 1965

Directors are not required by law to have special knowledge, or experience to act in that capacity.

How to appoint directors?

For a newly incorporated company, the shareholders of the company have before or upon incorporation of the company decided who they want to be the directors of the company to manage the affairs of the company. The first directors are named in the Memorandum of Association or Articles of Association (the incorporation documents) and they will hold office until the first annual general meeting where they will retire. A first director must lodge with the Companies Commissioner of Malaysia a Form 48A, which is a statutory declaration the director is not an undischarged bankrupt and has not been convicted of an offence.

Rules governing the subsequent appointment of directors are stated in the Articles of Association of a company. The Table A of the Companies Act provides that directors may appoint directors to fill casual vacancies as well as to appoint additional directors, as long as the number of directors does not exceed the number fixed by members and as stated in the Articles of Association of the company. For any changes in directors, the company must submit a Form 49 to the Companies Commission of Malaysia.

Who has the power to remove directors?

The removal of directors is also governed by the Articles of Association of a company. Usually, the removal of directors requires only an ordinary resolution. If there is no such provision, a director can be 'removed' by not re-electing him at the Annual General Meeting when he retires by rotation, provided that the articles require directors to retire by rotation.

What is the difference between executive and non-executive director?

An executive director is a salaried director who is full-time working and delegated with managerial or executive powers by the board to carry out day-to day management of the company's business.

Non-executive director is a director who does not work for the company on a full time capacity and receive a relatively smaller director's fees. The function of a non-executive director is to determine the overall policy of the company.

What is a managing director?

The managing director is the chief executive officer of the company. He is appointed by the board and is an executive director.

What are the duties and responsibilities of directors?

Directors who act as agents of a company have fiduciary duties towards the company. Their fiduciary duties include:

1. Act bona fine in the interest for the company.
2. Not to place himself/herself in a position where there is a conflict between their duty to the company and his personal interest or duties of others.
3. Not to make any secret profit out of the position as director.

The statutory duties of the directors include:

1. Act honestly at all times and use reasonable diligence in the discharge of duties.
2. Not to make improper use of information obtained by virtue of office to gain advantage personally or to cause detriment to company.
3. Not to make improper use of unpublished price-sensitive information to gain personal benefit.
4. Seek approval of the company in general meeting before dispose of or execute any transaction for the disposal of a substantial portion of the company's undertaking or property.
5. Disclose/give notice to the company disclosing his shareholdings and any changes thereof.
6. Disclose interest in any contract or proposed contract made by the company.
7. Make sure registers and statutory books are kept updated.

The directors are also responsible to ensure the following requirements are complied with:

1. Holding of Corporate Meetings (you may refer to corporate meetings for private limimted companies)
2. Registration of certain resolutions and agreements
3. Recording minutes of all meetings
4. Making the annual return and lodgement with the Companies Commissioner of Malaysia
5. Keeping proper accounting records
6. Tabling accounts, balance sheet and directors' report at AGM
7. Circulation of accounts, balance sheet, directors report etc to members
8. Appointment of first auditors
9. Comply with restriction, limitation or prohibition of private company
10. Appointment of qualified persons as secretaries
11. Maintaining registered office
12. Registration of transfer of shares
13. Making declaration of solvency in the case of voluntary winding up by member
14. Ensuring that payment of dividends is from profits only
15. Registration of charges

Start Up Business in Malaysia- Matters to Consider

Do we need to set up a company to start up business in Malaysia?

Businesses in Malaysia are required to be carried out by either these two types of business organisations:

1. Business firms (governed under Registrar of Business Act 1956)
2. Registered companies (governed under Companies Act 1965)

Start up Business in Malaysia - What is a business firm?

Business firms can be either of these two types:

1. Sole proprietor/ Sole trader - Sole proprietor is a business carried out in the name of an individual.
2. Partnerships (governed by Partnership Act 1961) - Partnership is a business owned by two or more individuals.

Both these types of business firms have no separate legal existence apart from the persons who owns the business and properties cannot be held under the name of the business firms. All contracts are signed in the name of the individuals who own the business and their liability is unlimited.

Start up Business in Malaysia - What is a registered company?

A registered company is an artificial person created by the law. It is legally independent of the owners. The most common type of registered company in Malaysia is a company limited by shares or known as "SDN BHD" (translated as - private limited).

We can recognise that a company is a registered company limited by shares if the name of the company ends with "SDN BHD". For example a company with name - ABC Sdn Bhd, is a company limited by shares.

A sole proprietor or a partnership is not entitled to end with "SDN BHD" as it is not a registered company. Most often, sole proprietor or partnership is named ABC Enterprise or ABC & Co. A company has its own legal rights similar to a natural person under the law.

Start up Business in Malaysia - Is a company legally independent from the owners?

The law provides that a registered company is legally independant from it's owners. A company can perform these activities using the name of the company:

1. buy or sell property
2. may sign contracts by using its common seal
3. can sue or be sued in its own name

Start up Business in Malaysia - Some statistics:

• There are more than 600,000 registered companies in Malaysia and approximately 4000 foreign companies, majority of them are companies limited by shares. (Source: Data obtained from the Companies Commission of Malaysia)
• These companies range from small family business where the directors and shareholders are family members, SMEs as well as large businesses with high business volumes and assets.
• There are over 1,000 companies listed on Bursa Malaysia Securities Berhad. The companies are publicly traded and public investors can buy and sell shares on the Malaysia stock exchange.

Start up Business in Malaysia - What is the difference between a business firm and a company limited by shares?

To consider which one is better, you may have to consider the following before deciding on the most appropriate business form to start up business in Malaysia:

		Business firm	Company limited by shares
1.	Legal standing	- Not separated from individual/ individuals who own the business	- Legally separated from owners and individuals who run business
2.	Liability	- Not limited	- Limited to remaining unpaid amount on the members' shares
3.	Succession	- Once identity of individual participants change (eg partners die, resign or new partners or sole proprietor dies or become bankrupt) the sole proprietor is dissolved or the partnership is dissolved	- There is perpetual succession - Company continues to exist unless it is liquidated or deregistered - Can transfer interest to other parties by executing share transfer forms
4.	Formation	- Register with Registrar of Business - Some partnerships may have partnership agreements Fee: less than RM100	- Incorporate under the Companies Act 1965 - Lodge statutory forms and memorandum of association and articles of association with the Companies Commission of Malaysia ("CCM") otherwise known as Suruhanjaya Malaysia Fee: RM2,600-2,800 or more
5.	Owner	- 1 for sole proprietor - 2 to 20 max for partnership	- 2 to 50 max (no limit for PLCs)
6.	Ownership of properties	- Jointly owned by the individual/ individuals who owns business	- Owned by the company not the shareholders
7.	Management	- Managed by individual/ individuals who owns business. - All partners are entitled to participate in management of partnership	- Managed by the Board of Directors. Every company must have at least 2 directors who are principally residing in Malaysia. Directors may or may not be a shareholder of the company. - There must be at least 1 company secretary.
8.	Annual returns	- Not required to submit any report to the Registrar of Business	- Lodge with Companies Commission of Malaysia returns - Lodge annually an Annual Return and audited accounts
9.	Taxation	- Profits made are added to the individual/ individuals personal income and are individually liable for the profit under personal income tax.	- Company is subject to income tax at the rate applicable. - The corporate tax rate is currently 25%.

Please contact me via email comsecretarial@gmail.com if you need professional assistance on this topic. I am more than willing to assist you!

Start Up Business in Malaysia- Forming a Company

1. ESTABLISHING A SOLE PROPRIETORSHIP OR PARTNERSHIP FIRMS
(MALAYSIAN CITIZENS ONLY)

The law permits the establishment of a sole proprietorship and partnership (for 2 or more persons but not more than 20 persons) for Malaysian citizens only.
The individual who wishes to practice a business activity may apply to the Companies Commission of Malaysia on the specified form (PNA.42) with the following documents and information:

a. Photocopy of Identity Card
b. Address of individual (to be filled in specified form)
c. Type of business (to be filled in specified form)
d. Partnership agreement (if any)

Estimated charges by management companies/ company secretarial firms:

Sole Proprietorship	: RM200-300
Partnership	: RM200-300

2. ESTABLISHING BRANCH OFFICE OF FOREIGN FIRMS.
The foreign company that chooses to open a branch in Malaysia to carry on business within Malaysia shall register with the Companies Commission of Malaysia.
The reason foreign companies are required to register with the Companies Commission of Malaysia is to exert some degree of control over the affairs of the foreign company in Malaysia. The foreign company that is registered has power to hold immovable property in Malaysia.
The application shall be submitted to the Companies Commission of Malaysia (applications can be submitted via management companies that offer incorporation and company secretarial services) and should include the following:

A. Name search

Lodge Form 13A for approval to use the foreign company's name. Filing fee of RM30 and a copy of the Certificate of Incorporation (or document of a similar effect) must be included.

B. Registration documents

If the name of the foreign company is available for registration, the company must lodge with the Companies Commission of Malaysia the following documents within a period of 3 months from the date of approval:

i. A certified copy of the certificate of incorporation or registration in its place of origin or a document of a similar effect.
ii. A certified copy of the company's Charter, Statute or Memorandum and Articles of Association (or any documents defining constitution).

Certified copy means a copy of document that has been certified within a period of 3 months by:

- a Notary Public
- Registrar of Companies of the place of origin
- Director, manager or secretary of the foreign company by affidavit or, in the case of foreign company formed in a Commonwealth company, by statutory declaration.

If the Certificate of Incorporation and the company's Charter are not in English, a translation in English must be done. The translation must be duly certified by:

If translation is performed outside Malaysia:
- notary public
- registrar of companies of the place of origin
- a Malaysian consular officer in the place of origin of the foreign company

If translation is performed within Malaysia:
- a person approved by Companies Commission of Malaysia

iii. A list of directors of the foreign company and their particulars (Form 79).

iv. A Memorandum of Appointment or Power of Attorney (under seal of foreign company or executed in a manner binding on the company) authorizing one or more persons resident in Malaysia to accept on behalf of the company, service of process and any notices require to be served on the company.

v. A statutory declaration by agent of foreign company (Form 80).

vi. Fees payable (in the form of a bankers cheque) to the Companies Commission of Malaysia, depending of the authorized share capital of the foreign company.

The following is the scale of fees payable:

Amount of nominal authorized share capital (RM)	Registration Fees (RM)
Not exceeding 100,000	1,000
100,001-500,000	3,000
500,001 - 1.0million	5,000
1,000,001 - 5.0 million	8,000
5,000,001 - 10.0 million	10,000
10,000,001 - 25.0 million	20,000
25,000,001 - 50.0 million	40,000
50,000,001 - 100.0 million	50,000
Exceeding RM100.0 million	70,000

Estimated charges by management companies/ company secretarial firms:
- RM1600-1,800 for services rendered (Not including fees paid to the companies commission of Malaysia 5% service tax)

Example of charges if authorized share capital is less than RM100,000:

	RM
Payment to Companies Commission of Malaysia	1,000
Payment to Management Firms for services rendered	1,800
Total fees	2,800

C. Approval of registration

The Companies Commission of Malaysia upon receipt of the above information and payment shall issue an approval of registration document - Form 83.

The foreign company must establish a registered office within Malaysia after it established a place of business or commences to carry on business.


D. Other obligations

i. File a copy of the annual return each year within one month of the foreign company's annual general meeting.

ii. File a copy of the balance sheet of the head office, a duly audited statement of assets used and liabilities arising out of its operations in Malaysia, and a duly audited profit and loss account within two months of its annual general meeting.

3. INCORPORATING COMPANIES LIMITED BY SHARES
Companies limited by shares (Sendirian Berhad or Sdn. Bhd) is the most common company structure in Malaysia. A company limited by shares is formed on the principle that the members' liability is limited to the amount of unpaid on the shares taken up by members.
This form of company can have foreign directors but at least 2 of the directors need to be principally residing in Malaysia; and it can be 100% foreign owned for industries such as the manufacturing, trading, and information technology sector.
The application shall be submitted to the Companies Commission of Malaysia (applications can be submitted via management companies that offer incorporation and company secretarial services) and should include the following:

A. Name search

Lodge form 13A together with a payment of RM30 for approval to use the proposed name of the intended company. If the application is approved, the proposed name will be reserved for the applicant for 3 months.

B. Incorporation documents

Lodge the following documents with the CCM within the three months to secure the use of the proposed name:

i. Memorandum and Articles of Association. The Memorandum of Association documents the company's name, objects, amount of authorized capital 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.
ii. Declaration of Compliance Form (Form 6)
iii. Statutory Declaration by a person before appointment as a director




C. Estimated fees

Fees payable (in the form of a bankers cheque) to the Companies Commission of Malaysia is depending of the proposed authorized share capital of the company.

The following is the scale of fees payable:

Amount of nominal authorized share capital (RM)	Registration Fees (RM)
Not exceeding 100,000	1,000
100,001-500,000	3,000
500,001 - 1.0million	5,000
1,000,001 - 5.0 million	8,000
5,000,001 - 10.0 million	10,000
10,000,001 - 25.0 million	20,000
25,000,001 - 50.0 million	40,000
50,000,001 - 100.0 million	50,000
Exceeding RM100.0 million	70,000

Estimated charges by management companies/ company secretarial firms:
- RM 1600 - 1800 for services rendered (not including fees paid to the companies commission of Malaysia and 5% service tax)
An example of the charges if the company's authorized share capital is less than RM100,000 is as follows:
Example of charges if authorized share capital is less than RM100,000:

	RM
Payment to Companies Commission of Malaysia	1,000
Payment to Management Firms for services rendered	1,800
Total fees	1,800

D. Certificate of Incorporation

A Certificate of Incorporation will be issued by the CCM as proof of registration.

Information on Doing Business in Malaysia

Doing business in Malaysia today comes with many challenges. In today's increasingly complex business environment, business owners are faced with not only the operational aspects but also the non-operational factors such as:

1. tax compliance and planning
2. company regulations
3. licensing requirements
4. compliance to local authorities' requirements
5. financial and cash flow management
6. budgeting
7. risk management and controls
8. strategic planning
9. technology and innovation
10. business process outsourcing
11. and much much more......

Hence, finding good advisors to assist you will save you time and money. We as a group of professional accountants, tax specialists, business advisors and consultants from Kuala Lumpur are able to offer you valuable advice and assistance.

Through contacts with business owners in Malaysia, we realized that many do not have adequate access to information on doing business in Malaysia. To address this gap, we have put up plenty of information on this blog that will be useful to your business.

About Us

We are a group of professional accountants, tax specialists and business consultants dedicated to advise and assist Malaysian businesses grow. Our office is in the heart of town - Brickfields, Kuala Lumpur the capital of Malaysia.