Issues to Setup a Business in Malaysia for Foreigner – Immigration & Visa Issues)

Hello Everyone,

I know I’ve not been writing for sometime, I’ve been quite occupied with growing the firm and we now are a team of 3 people :D. Yeay for Fareez Shah & Partners. First and Foremost I would like to thank my colleague Intan Nabilaa  for preparing the content here.

Due to the rapid growth of the startup scene in Malaysia, we have been receiving plenty of queries from foreigners who wish to set-up shop here or local startups whom wish to bring in foreigner as Co-Founder.

The reason for this article is that we had plenty of incident where Foreigners have set-up a Private Limited Company first (with another Company Secretary) only to realise they cannot operate their business. In such situation here are some of the issues you need to consider:

1) SETTING-UP PRIVATE LIMITED COMPANY 

When you want to set-up your Private Limited Company (Sendirian Berhad/Sdn. Bhd.) there is no requirement for minimum paid-up capital. Yes, you heard me right… foreigners can create a RM2.00 Company.

But here is the catch:

(a) If you have read our article on the minimum requirement to set up a Private Limited Company, you will know that you need a minimum of 2 Directors. For Foreigner the requirement is that the Directors must be a resident or have primary place of resident in Malaysia. The law however does not say you need working visa, PR status or etc to be a Director. So all you need to show is you have a local correspondence address.

(b) Here is where it gets a bit tricky, yes you can register as a Director but when performing your duties as a Director, the law will deem that you are working and thus you will need a working visa, business card or etc (read more about your options here or PM me so I can introduce you to service providers that may help)

Implication for performing duties as Director without proper documents:

a)  Fine of not more than RM10,000 and/or Imprisonment not more than 5 years and/or whipping;

b) Banks will refuse to set-up bank accounts for you (unless you have good relationship with them, depends on your luck) – Can’t run a business without a bank account; and/or

c) Government Agency/Government Link Agency will refuse to deal with you.

As such, after setting up the Company the Director(s) should proceed to apply for proper paper.

2)REQUIREMENT FOR COMPANY WHEN APPLYING WORKING VISA/PERMIT

The requirements to apply working permit/visa are as follows:

(a) Company Eligibility Criteria:

  1. You need to have a private limited company (example: ABC Sdn Bhd)
  2. Company paid up capital requirement:
    • 100% local owned : RM250,000;
    • Joint venture (minimum foreign equity is 30% shareholding in the company) : RM350,000; or
    • 100% foreign owned : RM500,000.
    • Foreign-owned companies operating in wholesale, retail and trade (restaurant): RM1,000,000.

So what does all of the above means… You don’t have to meet the minimum paid-up capital requirement to set-up a Company, but you will need to have the minimum paid-up capital to apply for working visa/permit.

IMPORTANT NOTEThe common issue that arises is that Company Secretary sometimes forgot to mention to the Foreign Founder that they need to get working visa/permit to operate their business but it is not required to set-up the Company. So it leads to a situation where the Foreign Founder becomes frustrated that he/she will not be able to operate his business after setting it up. 🙁

SOLUTION

  1. Increase Paid Up Capital as Required Above
  2. Obtain MSC Status
  3. Apply through Malaysia Tech Entrepreneur Programme
  4. Nominee Structure

(You can contact us to understand further on the solutions above – while we try and prepare another article to elaborate further on the solution)

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