post incorporation matters

Post Incorporation Matters

by with No Comment Company Secretary Services

Starting a company in Malaysia involves more than just incorporation with the Companies Commission of Malaysia (SSM). Once a company is officially registered, there are several essential post-incorporation steps to ensure compliance with legal requirements and smooth business operations. Below are the key post-incorporation matters that company owners should address:

  1. Opening a Corporate Bank Account

A corporate bank account is necessary for managing company transactions. Most banks require the following documents:

    • Certificate of Incorporation (Section 17, Companies Act 2016)
    • Constitution (if adopted)
    • Superform (Section 14)
    • Board resolution authorizing the opening of the account
    • Forms and identity documents of directors and signatories
  1. Appointment of Company Secretary

Under the Companies Act 2016, every company must appoint a licensed company secretary within 30 days of incorporation. The company secretary plays a crucial role in ensuring regulatory compliance and maintaining statutory records.

  1. Registering for Statutory Compliance

Companies may need to register with various government bodies depending on their business nature:

    • LHDN (Inland Revenue Board of Malaysia) – For tax registration and obtaining a tax file number
    • SOCSO, EPF, and EIS – Registration with PERKESO and the Employees Provident Fund for staff contributions
    • Customs Department – If the company plans to register for the Sales and Service Tax (SST) or apply for import/export licenses
  1. Applying for Business Licenses & Permits

Certain industries require specific licenses, such as:

    • Retail and F&B – Business premises license, Halal certification (if applicable)
    • Construction & Engineering – CIDB registration
    • Import/Export & Trading – Import/export licenses from the Royal Malaysian Customs Department
  1. Setting Up Proper Accounting and Bookkeeping Systems

Companies should establish an accounting system to track financial transactions. Hiring an accountant or subscribing to accounting software can help manage tax filings, payroll, and financial reporting.

  1. Registering for Goods and Services Tax (GST) / Sales and Service Tax (SST)

Businesses exceeding the taxable threshold must register for SST with the Royal Malaysian Customs Department. Compliance with tax obligations is crucial to avoid penalties.

  1. Maintaining Statutory Records and Registers

Companies are required to maintain statutory records, such as:

    • Register of Members and Directors
    • Minutes of meetings
    • Financial statements and annual returns
  1. Annual Compliance & Filings

Each year, companies must:

    • File annual returns with SSM
    • Prepare and submit audited financial statements (except for exempted private companies)
    • Declare and pay corporate taxes to LHDN

Conclusion

Properly managing post-incorporation matters ensures that the company remains compliant with Malaysian regulations. Failing to adhere to statutory requirements can lead to penalties and business disruptions. Seeking professional assistance from a corporate service provider or company secretary can help navigate these obligations efficiently.

For more information, feel free to contact us.

 

EUROGAIN SECTA SDN. BHD.

22-1&2, Jalan 1/64, Off Jalan Kolam Air/Jalan Sultan Azlan Shah,
51200 Kuala Lumpur, Malaysia.

Tel: +603  4045 1080 (General Line)
Fax: +603 4045 1050
Mobile: +6 016 – 2069 480

Contact Persons:
Mr. Dennis De Witt | dennisdewitt@eurogain.com.my
Ms. Salamiah Senusi | amy.senusi@eurogain.com.my
Ms. Jeen Wong | jeen@eurogain.com.my

Setting Up a Company Limited by Guarantee (CLBG) in Malaysia

Setting Up a Company Limited by Guarantee (CLBG) in Malaysia

by with No Comment Company Secretary Services

A company limited by guarantee (CLBG) is a public company incorporated with the principal liability of its members limited by the constitution to such amount as the members undertake to contribute to the assets of the company if the company is wound up.

CLBGs are typically established for non-profit purposes and must align with objectives such as:

    1. providing recreation or amusement;
    2. promoting commerce and industry, art, science, religion, charity, pension or superannuation schemes; or
    3. promoting any other objects useful for the community or country, such as environment, health, education, research, social; or sports.

Role of the Companies Commission of Malaysia (CCM)

The Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia – SSM) regulates and oversees the incorporation and compliance of CLBGs. It ensures that such companies operate within the provisions of the Companies Act 2016 (CA2016) and relevant regulations.

Steps to Incorporate a CLBG

Step 1: Name Search & Reservation

A name search must be conducted through CCM’s MyCoID online system to ensure the availability of the proposed company name. Once approved, the name is reserved for 30 days from the date of approval.

Additional Requirements:

    • Explanation of any abbreviations or non-English terms in the company name.
    • Statement of the nature of the business and objectives.
    • Details of the promoters/trustees, including NRIC/Passport information.

Step 2: Requirements for Promoters & Directors

A promoter or director of a CLBG must meet the fit and proper criteria set by CCM. This includes:

    • Relevant experience, qualifications, and competency.
    • Good reputation, character, and integrity.
    • Security clearance from the Royal Malaysian Police or other agencies if required.

The Registrar may approve a person as a director of a CLBG if he is satisfied that the person is fit and proper and competent to perform the duties of a director under the CA 2016,

Step 3: Submission of Incorporation Documents

The incorporation documents must be submitted to CCM within 30 days from the name approval date.

Required documents include:

    • Draft Constitution (following CCM’s sample template).
    • Declaration by Director or Promoter confirming eligibility.
    • Letter of Consent to act as a director or promoter.
    • Complete Biodata of Trustees.
    • Statutory Declaration confirming an initial contribution or donation of RM1 million.

Step 4: Issuance of Certificate of Incorporation

Upon successful submission and approval, CCM issues the Certificate of Incorporation, officially recognising the CLBG as a registered entity.

License to Omit “Berhad” or “Bhd”

A CLBG may apply for ministerial approval to omit “Berhad” or “Bhd” from its name, provided it has an initial fund of RM1 million to support operations. This ensures:

    • Financial sustainability for at least two years.
    • Protection against premature winding-up.
    • Cash contributions pledged by donors must be received within six months of incorporation.

Failure to meet this requirement means the company must retain “Berhad” or “Bhd” in its name.

Ongoing Compliance & Maintenance of a CLBG

To remain in good standing, a CLBG must:

    • Annual General Meeting (AGM) – Must be held within six months after the financial year-end and not later than 18 months from the date of incorporation.
    • Annual Return Filing – Lodged with CCM within 30 days of the company’s incorporation anniversary.
    • Audited Financial Statements (AFS) –
    • The first AFS must be prepared within 18 months of incorporation; and subsequent AFS within six months of its financial year-end.
    • AFS must be sent to every member and laid before an AGM (shall be at least 21 days before the date if its AGM)
    • AFS must be lodged with CCM within 30 days of AGM.
    • Notify CCM of any statutory changes, such as:
    • Appointment or resignation of directors
    • Changes to the Constitution
    • Public fundraising initiatives
    • Purchase or disposal of property
    • Approval of directors’ fees and allowances
    • Accounting & Record-Keeping – CLBG must maintain accurate financial records to reflect a true and fair financial position (Section 245 CA2016).

All major operational changes such as appointment of new directors, change to the Constitution, purchase and disposal of property, having a public donation drive and fixing of fees and allowances for directors, require CCM’s prior approval.

Get Started

We can assist with the incorporation of your CLBG, ensuring full compliance with legal and regulatory requirements.

Contact us today for a free preliminary name search and expert guidance on setting up your CLBG efficiently.

EUROGAIN SECTA SDN. BHD.

22-1&2, Jalan 1/64, Off Jalan Kolam Air/Jalan Sultan Azlan Shah,
51200 Kuala Lumpur, Malaysia.

Tel: +603  4045 1080 (General Line)
Fax: +603 4045 1050
Mobile: +6 016 – 2069 480

Contact Persons:
Mr. Dennis De Witt |dennisdewitt@eurogain.com.my
Ms. Salamiah Senusi |amy.senusi@eurogain.com.my
Ms. Jeen Wong | jeen@eurogain.com.my

sole-sdb-bhd

Enterprise to Private Limited Company (Sdn. Bhd.)?

by with No Comment Company Secretary Services

An enterprise is a licensed business that can either be a sole-proprietor or a partnership. They are mostly perceived as being a small-time business that handles small clients and generate low revenues.

Many business owners enjoy good returns and the ease of running an enterprise. Nevertheless, as their business expands rapidly, converting the business into a private limited company (“Sdn. Bhd.”) could be an option to be considered by the business owners.

There are many advantages of having a private limited company as compared to an enterprise. A private limited company is a separate legal entity, it has limited liability on its investment, it has perpetual succession, enjoy lower income tax rate, it may issue shares for capital funding, it may enjoy other corporate reliefs such as capital allowance, as well as have foreign ownership.

Below are some clarifications on when you should consider converting an enterprise to a private limited company:-

1. When the liability of the business is separated from the owner (Separate Legal Entity)

Separate legal entity means a company has a legal personality separate from its shareholders (i.e. members).  A company can sue or be sued in its own name, holds its own property and is liable for the debts it incurred. This means that the owner is not liable for any lawsuits made against the Company. The liability of the owner is limited to only the amount they have invested in the company. However, an enterprise is not a separate legal entity and therefore, the owner is personally liable in case of lawsuits and debts.

2. When the business needs more funds

Every enterprise or private company needs capital to run its business. For an enterprise, the capital is pumped in by the business owner whilst for a company, the capital is increased by way of issuance of ordinary shares invested by the shareholders.

During the recent Covid-19 pandemic, most businessmen were faced with financial difficulties and probably sought for personal bank loans. Unlike an enterprise, a company may overcome its financial difficulties by issuing preference shares to raise capital without putting up their assets as collateral or by diluting the control of the company by the ordinary shareholders.

3. When the business continues its existence (Perpetual Succession)

An enterprise will cease to exist if there is a non-renewal of its license with Companies Commission of Malaysia or if the owner is deceased or became bankrupt.

A company will continue its existence despite the aforesaid events. In other words, the existence of a company does not rely on the life of its shareholders or directors as the shares in a company may be transmitted or transferred to their heirs or beneficiaries as defined in their will. Moreover, any assets owned by a company will remain in the company as long as the company is in existence, unless the assets are disposed off.

4. When it is time to enjoy Tax Benefits

As a result of the inseparability of the business owner from his enterprise, profits earned by the business will form as part of the owner’s personal income and might be taxed with a high rate of up to 30% as personal chargeable income. On the contrary, a company tax is lower, between 17% to 24%.

Therefore, if your personal tax rate exceeds 17%, it is definitely the time to consider converting your business to a private limited company.

A company may also enjoy a wide range of tax incentives that cover major industry sectors. For instance, a company that participates in a promoted activity or produce a promoted product, may apply for Pioneer Status (“PS”) with the Malaysian Investment Development Authority. PS grants for eligible companies enjoy a five-year partial exemption from the payment of income tax.

Furthermore, profit distribution in a form of dividends to the shareholders of a company is tax exempted in the hand of the shareholders. Malaysia practices the single-tier tax system where taxes paid under corporate tax is not taxed again when dividends are paid.

5. Foreigners are welcomed

An enterprise cannot admit a foreigner as its partner. Every partner must be a Malaysian Citizen or Permanent Resident of Malaysia. However, a company’s only basic requirement is that there must be at least 1 director who resides in the country. There is no restriction on foreign shareholders in a company.

This way, it is possible for companies to be created for the purpose of a joint venture or partnership with foreigners who are willing to invest in Malaysia.

 

Contact us

To learn more about converting your enterprise to a private limited company (Sdn. Bhd.), please speak to us.

We look forward to being of service to you.

Please do not hesitate to contact us should you require any further information and clarification.

EUROGAIN SECTA SDN. BHD.
22-1&2, Jalan 1/64, Off Jalan Kolam Air/Jalan Sultan Azlan Shah,
51200 Kuala Lumpur, Malaysia.

Tel: +603  4045 1080 (General Line)
Fax: +603 4045 1050
Mobile: +6 016 – 2069 480

Contact Persons:
Mr. Dennis De Witt           dennisdewitt@eurogain.com.my
Ms. Salamiah Senusi        amy.senusi@eurogain.com.my
Ms. Jeen Wong                   jeen@eurogain.com.my