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 who wish to bring in foreigner as Co-Founder.
You can use the following link if you wish to seek an advice to setup a company in Malaysia:
The reason for this article is that we had plenty of incidents 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 1 Director. For Foreigner the requirement is that the Directors must be a resident or have a primary place of residence in Malaysia. The law however does not say you need a 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.
2)REQUIREMENT FOR COMPANY WHEN APPLYING FOR WORKING VISA/PERMIT
The requirements to apply working permit/visa are as follows:
(a) Company Eligibility Criteria:
- You need to have a private limited company (example: ABC Sdn Bhd)
- 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 NOTE: The 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. 🙁
- Increase Paid Up Capital as Required Above
- Obtain MSC Status
- Apply through Malaysia Tech Entrepreneur Programme
- 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)