Running a successful business needs proper planning and perfect execution. When you are going to start your business in the competitive Malaysian business market, you have to research the current condition of the business industry. You should also include legal essentials in your research list. It will keep you ahead of others who don’t know about these factors.
To assist you with that, we have done the research. We will inform you about the legal essentials foreign investors should know before starting a business in Malaysia. This is going to be more than helpful for the investors thinking about company registration in Malaysia for foreigners. You can make informed decisions based on those legal essentials.
Foreign Investment Restrictions For Starting A Business in Malaysia
- General Stance
Malaysia has the lowest restrictions on foreign investment compared to other Asian countries. It is widely open for foreigners to make investments. You can own 100% foreign equity for a new business. Also, you can own the entire business as the expansion of existing businesses. This is not applicable to all types of businesses.
- Government Regulations
In some specific sectors, rules and regulations are different from the general business regulations. Some sectors limit foreign ownership of the business. On that note, you can think about shared companies. Also, you may require additional approvals before starting a business for some sectors. SFM Consulting Firm is available for assistance.
- Foreign Ownership Limits
Oil, gas, banking, and education sectors have some restrictions for foreign businesses. Ownership of oil and gas businesses is limited for foreign owners. They can own between 30% and 100% depending on the business types. You can increase your ownership limit by getting PR for Malaysia. Also, you can share the ownership with Malaysian citizens.
4 Important Legal Essentials Foreign Investors Should Know Before Starting a Business
1. Secure A Business Name
2. Business Registration
3. Get Required Licenses
4. Tax Identification
1. Secure A Business Name
First of all, you should know the rules for picking a business name. The business name should be unique and not too similar to any existing business. The business name should follow the rules provided by the Companies Commission of Malaysia (SSM). After submitting your business name, you need to wait for around 30 days to get approval from the Companies Commission of Malaysia.
2. Business Registration
After getting approval for the business name, you should have the business registration license and some other legal documents to start the proceedings. Then, you have to submit those documents to the SSM. Other required documents are a business plan, passport, visa, Memorandum, Articles of Association, and documents of the business ownership. You may need some additional documents considering the specific business sector.
3. Get Required Licenses
Foreign investors who are going to start their businesses in Malaysia should get all the required licenses. Several government organizations are involved with giving permits for the licenses. You must obtain all required permits to avoid any legal issues. For example, you should get permission from the Ministry of Trade and Industry or the local council. To avoid any unwanted issues, you should consult with SFM Consulting Firm for company registration in Malaysia.
4. Tax Identification
You should register your business following the government laws to get the tax identification number for your business. The Inland Revenue Board (LHDN) is involved with providing the tax identification number. You should follow the rules and regulations mentioned in the tax files. Yearly tax returns, handling corporate taxes, and maintaining transparency are some of the notable rules to register a company in Malaysia. Violating any of those rules will put your business in trouble.
Final Thoughts
At this point, you are well aware of the legal essentials foreign investors should know before starting a business in Malaysia. Now, you can take the next step based on those legal essentials. Getting a consultation from Malaysian business registration experts could be another important step that you can consider. SFM Consulting Firm is the most reliable option for that.
They have more than 8 years of experience in company registration in Malaysia. They have already registered lots of businesses successfully. So, they have the real-life experience of probable challenges that a new business may face. Get their assistance for company registration in Malaysia to stay ahead in the competitive market.
FAQ
What license is needed to start a business in Malaysia?
A. A valid business license is needed to start a business in Malaysia. You can choose SFM Consulting Firm to get assistance for starting your business in Malaysia. They will assist you in getting the license and all other required documents.
Can foreigners start a Malaysia Sdn Bhd company in Malaysia?
A. Foreigners can start a Malaysia Sdn Bhd company in Malaysia. They have to register a private limited company by shares. Sole proprietors, enterprises, or LLP companies are not allowed for foreigners.
Can a foreigner own a sole proprietorship in Malaysia?
A. Yes, a foreigner can own a sole proprietorship company in Malaysia. The person needs to have permanent resident permission to own the company. In fact, this is a convenient option for foreigners to own a sole proprietorship business in Malaysia.
What is the foreign investment policy in Malaysia?
A. The foreign investment policy is observed by the sector-specific regulations issued by the Malaysian Government. There are fewer restrictions for foreign investors. In some sectors, they can own 100% of the equity in all investments.
How much to invest in Malaysia to get PR?
A. According to the laws of Malaysia, a foreigner has to deposit a total of at least USD2 million as a Fixed Deposit (FD) account. The deposit is acceptable for any bank in Malaysia. You can withdraw the amount after 5 years. These are the investment requirements to get PR in Malaysia.
Sources:
https://www.ssm.com.my/Pages/Legal_Framework/GUIDELINES/1.-Guidelines-For-Naming-A-Company.pdf
https://law.nus.edu.sg/sjls/wp-content/uploads/sites/14/2024/07/1428-1992-sjls-dec-629.pdf
Author Bio:
Writer:
Content Is Written By:
Mia Biajid – Business & Finance Content Writer
Mia Biajid is a professional content writer with six years of experience in writing informative content in the business sector. He has a deep understanding of market trends, entrepreneurship, and financial strategies. Mia specializes in delivering insightful articles that help businesses to grow. His expertise covers business development, investment insights, and corporate strategies. Having that much experience makes him a trusted voice in the business industry.
Reviewer:
Article Reviewed By
Md Forhad Hossain
(BA-Hons, MBA, LL.B, LL.M)
Meet Md. Forhad Hossain – is an expert in company registration with over 14 years of experience. He has helped more than 400 businesses in Malaysia and over 7,000 clients from around the world start their journey successfully.
Forhad is passionate about making business registration simple and stress-free. His knowledge and dedication have earned him the trust of entrepreneurs worldwide.
If you’re looking for someone to guide you, Md. Forhad Hossain is the name you can Rely on. Social: Linkedin Youtube
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