Incorporation: Choosing Your Company Secretary for Private Limited Company

(Please read DIY Registration / Incorporation of Private Limited Company (Sdn. Bhd.) to have a better background understanding before reading this article)

In Malaysia for the longest time it is a standard practice to engage Certified Company Secretary (such as myself – I paid myself for this paid advertisement) to incorporate a Private Limited Company (Sdn. Bhd.) on your behalf.

However, with the coming into force of the New Companies Act 2016 (w.e.f. 31 January 2017) the whole structure has changed, whereby the business owner can incorporate the company themselves at RM1,060.60 and the appointment/service of Company Secretary is no longer required at the point of incorporation. [Please take note of my warning about doing it your self at DIY Registration / Incorporation of Private Limited Company (Sdn. Bhd.)]

But please be informed that the role of Company Secretary is not yet obsolete, you are required to appoint a Company Secretary within one (1) month after incorporation. In fact, I suspect that if the banks does not change their current policy, you will probably need to appoint a Company Secretary sooner to set up a bank account (haih…banks and their paper works)

COST FACTOR

Anyhow, under the new regime I felt that start-up, social enterprise or SME, should not be spending anywhere beyond RM2,500 for incorporation services for a company. I personally would only charge RM1,950 – all in for incorporation service (including 1 year retainer). I’m telling you this as a benchmark because normally when you search for service provider, they will either Scenario 1 – charge beyond RM2,000 or Scenario 2 – they claim that they charge the cheapest rate in town in the realm of RM1200 to RM1800 (sounds too good to be true right… because it is).

I am not saying that they are unscrupulous/evil Company Secretary, in fact most, if not all are reputable and excellent Certified Company Secretary. You must be thinking WTF dude this makes no sense!!! Truth be told its just a marketing strategy.

In Scenario 1 they will normally bundle up the incorporation service with other services such as accounting service, audit service and etc. (No happy ending, its not that kind of service)

In Scenario 2 they will only quote the actual Incorporation cost, but they will not mention the incidental cost such as Common Seal, Company Stamp, Monthly Retainer, Minutes of First Annual General Meeting, Maintaining Register and Minute Book and etc. All this incidental cost will later on add up and will go in the realm of RM2000 to RM2700 or even more. So don’t get shocked or upset, because technically they did not lie, you just never bothered to ask.

It is up to you to decide on the best package for yourself, depending on your budget and stage of business.

KNOWLEDGE FACTOR

We have encountered a lot of situation where start up founders appointed a Company Secretary that have no experience with fundraising exercise and is clueless about issuance of different class of shares,  which became a barrier in closing investment transaction quickly (we all know how important momentum is when running a startup). Eventually, we had to take over the role as Company Secretary in order to be able to close the investment quickly.

In some cases they would require the client to make payment upfront but after payment has been made they will refuse to do the necessary paper work and give you 1001 reason why it cannot be done until you get so frustrated and terminate their service (no names will be mentioned, so the onus is on you to do your homework)

I am not saying that these Company Secretaries are bad (we are also not saying we are the best) – it is just not their forte, their specialty is perhaps elsewhere – you can’t blame them, I think the onus is on the founder to asses the ability of your service provider and not just decide base on cost factor alone.

So you should find out the ability of your Company Secretary and find out if they have experience with investment transaction through issuance of different class of shares.

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