Malaysia Company Incorporation: The Complete 2026 Guide

Somewhere between Singapore’s sky-high operating costs and the regulatory opacity of emerging Southeast Asian markets lies a jurisdiction that sophisticated international investors have been quietly leveraging for decades: Malaysia.

The numbers tell a compelling story. Malaysia ranks 12th globally in the World Bank’s Ease of Doing Business Index — above France, Belgium, and Switzerland. Its corporate tax rate of 24% (with preferential rates as low as 3% for specific offshore structures) is competitive by any regional standard. The legal system is rooted in English Common Law, courtroom proceedings are conducted in English, and the Companies Commission of Malaysia (SSM) has progressively digitised its registration infrastructure to the point where a standard company can be incorporated in as little as three to five business days in 2025.

For Western investors — whether an entrepreneur seeking an ASEAN operational hub, a wealth manager structuring a regional holding vehicle, or a high-net-worth individual considering a permanent business presence in Southeast Asia — Malaysia company incorporation framework offers a rare combination: genuine regulatory sophistication, low bureaucratic friction, and multi-layered tax optimisation pathways that its neighbours cannot easily replicate at the same cost-to-benefit ratio.

This guide covers the terrain exhaustively. From the nuts and bolts of the Companies Act 2016 to the offshore regime of the Labuan Financial Services Authority (Labuan FSA), from the 100% foreign ownership question to the Employment Pass you will need to manage your new company in person, every critical dimension is addressed with precision. Costs are real. Timelines are realistic. Risks are named.

Before proceeding: For a broader context on all investment categories available to international HNW investors in Malaysia — capital markets, real estate, and business opportunities — we recommend reading our Investing in Malaysia: The Ultimate Guide 2026 as a companion resource.

Section 1 — Malaysia vs. Singapore vs. Hong Kong: The Honest Comparison

The most frequent question a Western investor asks before incorporation in Southeast Asia is not “how do I do it?” but “where do I do it?” The Singapore default has dominated the conversation for thirty years, but the calculus has shifted meaningfully since 2020.

The critical competitive advantage Malaysia holds over Singapore for most foreign investors is cost structure: salaries, office space, and professional services run at 40–60% of Singapore equivalents. For companies where the ASEAN sales pipeline is more important than proximity to Singapore’s financial institutions, Kuala Lumpur increasingly wins the argument on pure economics.

Hong Kong’s appeal has diminished significantly since 2020 for reasons that extend beyond tax rates, and the city’s loss has been Malaysia’s gain — particularly in the fintech, trading, and family office segments.

Where Singapore retains a clear advantage is in access to institutional banking, venture capital ecosystems, and bilateral treaty networks. A holding company in Singapore paired with an operational subsidiary in Kuala Lumpur remains a popular dual-jurisdiction structure for companies scaling across ASEAN.

Section 2 — The Main Corporate Structures Available to Foreign Investors

Malaysia offers five principal legal vehicles for conducting business, but the practical choice for a foreign investor narrows quickly to three. Understanding the distinction between them is foundational.

2.1 — Sendirian Berhad (Sdn Bhd): The Private Limited Company

The Sdn Bhd is Malaysia’s equivalent of a UK private limited company or a French SARL. It is the dominant structure for foreign investors seeking to operate locally, employ staff, open corporate bank accounts, and transact in Malaysian Ringgit.

Key structural characteristics:

• Minimum 1 director who is ordinarily resident in Malaysia (critical constraint for foreigners — detailed in Section 3)
• Minimum 1 shareholder (maximum 50 for a private company)
• Company Secretary mandatory within 30 days of incorporation (must be a licenced MAICSA member or a licensed company secretary under the Companies Act 2016)
• Registered office address required in Malaysia
• Annual audit mandatory (unless exempt as a dormant or zero-revenue company)
• Corporate tax: 24% on chargeable income (17% preferential rate for first RM 600,000 for qualifying SMEs with paid-up capital ≤ RM 2.5 million)

The Sdn Bhd is the right structure for: operational businesses, regional headquarters, manufacturing, technology services, consulting, and real estate holding vehicles.

2.2 — Branch Office vs. Subsidiary

A foreign company wishing to establish a presence in Malaysia without creating a fully separate legal entity may register a Branch Office (Cawangan) under Section 561 of the Companies Act 2016. A branch is a legal extension of the foreign parent company — it carries the parent’s liabilities, files its own tax returns in Malaysia, and requires an authorised agent resident in Malaysia.

A Subsidiary is a newly incorporated Sdn Bhd in which the foreign parent holds shares. It is a fully separate legal entity, limiting the parent’s liability to its equity investment. For most foreign investors, the subsidiary (Sdn Bhd) structure is preferable precisely because of this liability firewall.

The branch office is typically used by multinational corporations conducting initial market prospecting, or by professional services firms (law firms, engineering consultancies) that require the credibility of a named international brand while maintaining a lean local footprint.

2.3 — Representative Office

A Representative Office is an even lighter structure — it does not generate revenue, does not pay corporate tax, and exists solely for market research, liaison, and sourcing activities. It cannot execute contracts, issue invoices, or employ Malaysian citizens in production roles.

For investors who want a physical presence to conduct due diligence before committing to full Malaysia company incorporation, a Representative Office can be established through the Malaysian Investment Development Authority (MIDA) for manufacturing and services sectors.

2.4 — Labuan International Business Company (IBC): The Offshore Structure

Labuan is Malaysia’s dedicated international business and financial centre, governed by the Labuan Financial Services Authority (Labuan FSA) under the Labuan Business Activity Tax Act 1990. It occupies a distinct regulatory environment from mainland Malaysia, offering a preferential tax regime and a specific type of company — the Labuan IBC.

This structure deserves its own section (Section 5). For orientation purposes: a Labuan IBC is the correct vehicle for international trading, cross-border financial services, intellectual property holding, leasing, and family office structures where minimal local economic substance can be demonstrated. Corporate tax is 3% on net audited profit for trading activities, or zero for investment holding activities.

2.5 — Sole Proprietorship and Partnership

Malaysian law permits foreign individuals to register as sole proprietors or partners in general partnerships under the Registration of Businesses Act 1956. In practice, this is not recommended for foreign investors: these structures offer no liability protection, limited banking access, and restricted operating licences. They are mentioned here for completeness only.

Section 3 — The Companies Act 2016: What Every Foreign Investor Must Understand

The Companies Act 2016 (CA 2016), which came into force on 31 January 2017, replaced the Companies Act 1965 and represents the most significant modernisation of Malaysian corporate law in half a century. For foreign investors, its practical implications fall into four critical areas.

3.1 — The Resident Director Requirement

Section 196(4) of the CA 2016 mandates that every Sdn Bhd must have at least one director who is ordinarily resident in Malaysia. “Ordinarily resident” means the director must have their primary habitual residence in Malaysia — not merely hold a valid visa, but genuinely live there.

This requirement creates the central structural challenge for foreign founders who do not yet reside in Malaysia. The three principal solutions are:

Option A — Nominee Director. A professional nominee director is a Malaysian citizen or permanent resident who serves as the statutory resident director, while the foreign investor retains full operational and shareholding control through a Shareholder Agreement and a Director’s Service Agreement. Fees for this arrangement range from RM 3,000 to RM 7,000 per annum, plus a security deposit.

Option B — Employment Pass First. The foreign investor incorporates the company, appoints a temporary nominee director during the initial phase, then applies for an Employment Pass as an expatriate director/CEO. Once the Employment Pass is approved, the nominee director resigns and the foreign investor assumes the role directly. This is the cleaner long-term solution.

Option C — Relocate and qualify. Foreign nationals who obtain the MM2H visa, a long-term Social Visit Pass, or Permanent Residency automatically satisfy the “ordinarily resident” requirement.

3.2 — The Mandatory Company Secretary

Under Section 235 of the CA 2016, every company must appoint a licenced Company Secretary within 30 days of incorporation. The Company Secretary must be a member of the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA), or a person licensed under Section 20G of the Companies Commission of Malaysia Act 2001.

The Company Secretary is not a ceremonial role. Their responsibilities include maintaining the Statutory Registers (Members, Directors, Charges), filing annual returns with SSM, convening board meetings, managing share transfers, and ensuring compliance with all CA 2016 obligations. Annual retainer fees range from RM 720 to RM 2,400 per year for standard Sdn Bhd structures.

3.3 — Share Capital: The Myth of the RM 1 Minimum

CA 2016 eliminated the concept of par value shares and technically requires only RM 1 in paid-up capital for incorporation. However, this figure is largely theoretical for foreign-owned companies seeking practical operational credibility.

In practice:

• A paid-up capital of RM 500,000 is the minimum threshold commonly required by the Immigration Department to sponsor an Employment Pass for a foreign director
• Certain regulated sectors (wholesale trade, retail) may require paid-up capital of RM 1,000,000 or more for 100% foreign ownership
• Corporate banks in Malaysia use paid-up capital as a creditworthiness proxy — a RM 1 company will face significant obstacles opening a Maybank or CIMB commercial account

The appropriate paid-up capital for a foreign-owned operational Sdn Bhd in 2025 sits between RM 100,000 and RM 1,000,000 depending on the industry, intended banking relationship, and whether the company intends to sponsor Employment Passes.

3.4 — Annual Compliance Obligations

A foreign-owned Sdn Bhd must fulfil the following recurring obligations:

• Annual Return (Borang 78A): Filed within 30 days of each anniversary of incorporation with SSM. Fee: RM 50 for companies with share capital below RM 100,000; RM 500 for larger companies.
• Audited Financial Statements: Required annually. Companies with turnover below RM 100,000 and fewer than 5 shareholders may qualify for audit exemption — however, banks and partners frequently require audited accounts regardless.
• Corporate Income Tax Return (Form C): Filed with the Inland Revenue Board (LHDN) within 7 months of the financial year-end.
• SST Registration: Service Tax at 8% (from March 2024) applies to service providers with annual turnover exceeding RM 500,000. Sales Tax applies to manufacturers and importers of taxable goods.

Section 4 — Foreign Ownership in Malaysia: The 100% Question Answered

The most persistent misconception about doing business in Malaysia is that foreigners cannot own 100% of a company. This is incorrect — but the correct answer requires nuance. Malaysia’s foreign investment framework has been substantially liberalised over the past two decades, with the most consequential shift occurring in 2009 when the government abolished mandatory 30% Bumiputera equity requirements across most service sectors. Today, 100% foreign equity ownership is permitted in the majority of sectors, subject to specific conditions and paid-up capital thresholds.

4.1 — Open Sectors (100% Foreign Ownership Permitted)

Manufacturing and Industrial: All manufacturing projects approved by MIDA may be 100% foreign-owned, regardless of investment size. This includes electronics, pharmaceuticals, food processing, chemicals, and automotive components.

Information and Communication Technology (ICT): Software development, IT consulting, data centres, cybersecurity, and related technology services are fully open to foreign capital.

Professional and Business Services: Management consulting, engineering, accounting (subject to professional body registration), legal services (via Qualified Foreign Law Firms), HR services, and advertising agencies.

Education, Healthcare, Tourism and Hospitality: Private educational institutions, private hospitals, specialist clinics, hotels, resorts, and travel agencies may all be 100% foreign-owned, subject to the relevant ministry licensing.

4.2 — Restricted Sectors: Where Foreign Ownership Has a Ceiling

For investors targeting restricted sectors, the standard solution is a Joint Venture (JV) with a qualified Malaysian partner. Structuring the JV agreement to protect foreign investor rights (veto rights, put/call options, transfer restrictions) requires specialist legal counsel.

4.3 — MIDA Approval: When Is It Required?

Most service-sector Sdn Bhds do not require MIDA approval — registration with SSM is sufficient. However, MIDA approval is mandatory for: manufacturing companies proposing capital investment of RM 2.5 million or more, companies applying for Pioneer Status or Investment Tax Allowance incentives, and companies seeking to establish regional operations centres, shared services centres, or R&D facilities. MIDA’s website (mida.gov.my) maintains a current sector-by-sector guide to equity requirements.

Section 5 — Labuan FSA: The Offshore Structure in Depth

Labuan is a Federal Territory of Malaysia comprising a small island group off the coast of Sabah in East Malaysia. Its strategic value to international investors has nothing to do with geography and everything to do with its status as Malaysia’s designated International Business and Financial Centre (IBFC), governed by the Labuan Financial Services Authority since 1990.

5.1 — What Is a Labuan IBC?

A Labuan International Business Company (IBC) is a company incorporated under the Labuan Companies Act 1990, registered with the Labuan FSA, and conducting business predominantly with non-Malaysian entities. It is distinct from a mainland Sdn Bhd in every material respect: different governing law, different tax regime, different banking ecosystem.

5.2 — The Tax Structure: Why 3% Matters

A Labuan company conducting Labuan trading activities (banking, insurance, trading, management, licensing, shipping operations) pays corporate income tax at 3% of net audited profits — compared to 24% for a mainland Sdn Bhd. A Labuan company conducting Labuan non-trading activities (pure investment holding, managing portfolios of securities) pays zero corporate income tax on investment income.

Additionally: no withholding tax on dividends paid to foreign shareholders, no capital gains tax on disposal of investments held by a Labuan holding company, and no GST/SST for Labuan entities conducting purely offshore business.

This creates a powerful Labuan holding + mainland operational subsidiary structure commonly used by European investors: a French entrepreneur incorporates a Labuan IBC (0% tax on dividends received), which holds 100% of an operational Sdn Bhd in Kuala Lumpur (24% on profits). Dividends flow upward to the Labuan holding tax-free, with no Malaysian withholding applied at the Labuan distribution level.

5.3 — Substance Requirements: The Critical Post-BEPS Reality

Following OECD BEPS guidelines, the Labuan Business Activity Tax (Amendment) Act 2020 introduced mandatory economic substance requirements for Labuan entities claiming tax benefits. A Labuan company must now demonstrate:

• At least 2 full-time employees based in Labuan (physical presence, not remote)
• Annual operating expenditure of at least RM 50,000 within Labuan

Companies failing substance requirements are assessed at the 24% mainland corporate tax rate — negating the entire Labuan advantage. This is the most commonly underestimated compliance risk for foreign investors using Labuan IBCs.

5.4 — Labuan IBC: Ideal Use Cases

The Labuan structure is appropriate for: international trading companies buying and selling goods across ASEAN, IP holding companies licensing technology or brand rights to operating subsidiaries, family offices managing portfolios of international investments, fintech and payment processing companies (subject to Labuan FSA licensing), equipment leasing companies financing assets into the ASEAN region, and holding companies above a network of operational subsidiaries in multiple ASEAN countries.

It is not appropriate for companies whose primary revenue comes from Malaysian domestic market customers — the Labuan FSA will reclassify such activity as Malaysian-sourced income subject to mainland tax.

5.5 — Labuan IBC Malaysia company incorporation Costs

The Labuan FSA’s official directory of licensed Trust Companies is available at labuanfsa.gov.my.

Section 6 — Malaysia Company Incorporation: Step-by-Step Guide (Sdn Bhd)

The following sequence reflects current SSM procedures as of 2025, assuming full online processing through the MyCoID 2016 portal (ssm.com.my).

Step 1 — Company Name Reservation (1–3 business days)

Name availability is checked and reserved through the SSM’s MyCoID portal. The proposed name must not be identical or confusingly similar to an existing entity, must not contain restricted words (Bank, Finance, Insurance, Trust, Royal, National — unless specifically approved), and must not be offensive or contrary to public interest. Fee: RM 30 per name submission (non-refundable). A reserved name is held for 30 days.

Step 2 — Prepare Constitutional Documents

Under CA 2016, a Constitution is optional — companies may elect to be governed by the default provisions of the Act itself. However, foreign-owned companies with complex shareholder arrangements (drag-along rights, anti-dilution provisions, preferred share classes) are strongly advised to prepare a tailored Constitution. Documents required for SSM submission include: Form Section 14 (Incorporation application), details of all directors and shareholders, Constitution (optional but recommended), Consent to Act as Director (Form 48A), and a Statutory Declaration of compliance.

Step 3 — SSM Submission and Payment (1–3 business days)

Step 4 — Certificate of Incorporation

Upon approval, SSM issues a Certificate of Incorporation electronically. The company is legally in existence from this date. The entire process from name reservation to Certificate of Incorporation takes 3–7 business days for standard applications.

Step 5 — Post-Incorporation Compliance Checklist (Within 30 Days)

• Appoint Company Secretary (MAICSA-licenced)
• Convene First Board Meeting (adopt Constitution, appoint directors, allot shares, establish financial year-end)
• Open corporate bank account
• Register for SST if applicable (turnover threshold: RM 500,000 for service tax)
• Apply for any sector-specific licences (MIDA, Ministry of Health, Bank Negara, etc.)
• Establish registered office (physical address required)

Step 6 — Capital Injection

Paid-up capital must be deposited into the company’s Malaysian bank account once opened. For foreign shareholders remitting capital from abroad, the transfer must be documented as a Foreign Direct Investment in accordance with Bank Negara Malaysia’s Foreign Exchange Administration (FEA) rules. No approval is required for FDI inflows, but accurate documentation is critical for repatriation purposes.

Section 7 — Costs & Timelines: The Real Numbers

7.1 — Year 1 Total Cost of Incorporation

7.2 — Recurring Annual Compliance Costs

7.3 — Timeline Summary

The single biggest source of delay in foreign-owned Malaysia company incorporation is corporate bank account opening, which involves a physical KYC interview, extensive due diligence on source of funds, and — for complex foreign ownership structures — compliance review by the bank’s FDI team. Applicants should budget a minimum of four weeks and have certified copies of all corporate documents apostilled from their home country.

Section 8 — Opening a Corporate Bank Account as a Foreign-Owned Company

8.1 — Recommended Banks for Foreign-Owned Sdn Bhds

Maybank (Malayan Banking Berhad) — Malaysia’s largest bank by assets. Strong ASEAN trade finance infrastructure. Requires at least one director physically present in Malaysia for account opening. Recommended for companies with significant domestic Malaysian transactions.

CIMB Bank — Second-largest bank. Slightly more flexible on documentation for foreign-owned entities. Good regional network across ASEAN.

Hong Leong Bank — More accommodating for smaller foreign-owned companies. Digital SME banking infrastructure is among the best in Malaysia.

HSBC Malaysia — Preferred by Western businesses with existing HSBC relationships globally. Global account linkage facilitates international transfers. Compliance requirements are rigorous but the process is well-documented.

RHB Bank — Strong for companies in manufacturing, property, and construction sectors. Competitive trade finance facilities.

8.2 — Standard Document Requirements

• Certificate of Incorporation (SSM-certified, apostilled if issued abroad)
• Company Constitution (if adopted)
• Board Resolution authorising account opening and designating signatories
• Form 24 (Return of Allotment of Shares) and Form 49 (Register of Directors)
• All directors’ passports (certified copies and originals for inspection)
• Proof of business address (utility bill or tenancy agreement)
• Source of funds declaration for initial capital deposit
• Bank’s own KYC forms and declarations

8.3 — Alternative: Neobanks and E-Money Licensees

Wise Business — Not a Malaysian bank but accepts Malaysian-registered companies. Provides multi-currency IBAN, local Malaysian bank details, and international wire transfers at competitive rates. Widely used by foreign-owned Sdn Bhds for receiving international payments as a transitional solution while the main bank account is being established.

GXBank / Boost Bank — Malaysia’s licensed digital banks (Bank Negara licences issued 2024). Their foreign-owned business account products are maturing rapidly and worth monitoring.

Section 9 — The Employment Pass: Your Path to Operational Residency

The Employment Pass (EP) is the primary mechanism by which a foreign national can legally reside in Malaysia while managing their own company. Without it, a foreign director can visit on a business visa but cannot perform day-to-day management functions as a habitual resident.

9.1 — Employment Pass Categories

For a foreign director managing their own Sdn Bhd, Category I is the appropriate tier. The minimum salary of RM 10,000/month must be paid by the Malaysian company — which means the company must have sufficient cash flow or paid-up capital to support this payroll commitment.

9.2 — Key Requirements for EP Sponsorship

• Paid-up capital of at least RM 500,000 (de facto Immigration Department threshold for 100% foreign-owned companies sponsoring a foreign director)
• Active operations or a credible business plan with evidence of client contracts, office lease, or purchase orders
• A valid physical registered business address (Immigration increasingly scrutinises virtual-only registrations)
• The foreign director must hold a university degree or possess 5+ years of relevant professional experience

9.3 — EP Application Process

Applications are submitted to the Expatriate Services Division (ESD) of the Immigration Department through the ESD Online Portal (esd.imi.gov.my). Processing time is typically 4–8 weeks for complete applications. A Dependent Pass can be obtained for spouses and children under 18. Spouses holding a Dependent Pass may apply separately for work authorisation.

Section 10 — MIDA Incentives: Pioneer Status, ITA, and the Principal Hub

The Malaysian Investment Development Authority (MIDA) administers a suite of fiscal incentives designed to attract foreign direct investment into strategic sectors. These incentives are genuinely significant — and systematically overlooked by foreign investors who proceed without professional guidance.

10.1 — Pioneer Status

A company granted Pioneer Status enjoys a full or partial income tax exemption on statutory income for a period of 5 to 10 years. High-technology activities and strategic projects qualify for 100% income tax exemption for 10 years. Priority activities receive a 70% income tax exemption for 5 years. Pioneer Status is available to companies in manufacturing, high-value services, and biotechnology. Applications must be submitted to MIDA before the company commences production — retroactive applications are not accepted.

10.2 — Investment Tax Allowance (ITA)

An alternative to Pioneer Status, the ITA grants an allowance of 60% to 100% of qualifying capital expenditure incurred within 5 years of the first qualifying capital expenditure. This allowance is offset against 70–100% of the company’s statutory income in each year of assessment. ITA is typically more beneficial for capital-intensive manufacturing or R&D operations where significant equipment investment occurs in Year 1–2.

10.3 — Principal Hub Incentive

For multinational companies establishing regional headquarters in Malaysia, MIDA offers the Principal Hub Incentive: a preferential corporate tax rate of 0%, 5%, or 10% for 5 years (renewable for a further 5 years) for companies that centralise substantive management, procurement, finance, R&D, or marketing functions for their ASEAN or global operations in Malaysia. This is one of the most compelling arguments for choosing Kuala Lumpur over Singapore as a regional hub. More information at mida.gov.my/incentives.

Section 11 — Risks and Common Pitfalls: The Honest Assessment

11.1 — Nominee Director Risk: The Most Dangerous Shortcut

The nominee director arrangement is the path of least resistance for foreign investors without Malaysian residency. It is also the most legally precarious element of any foreign-owned Sdn Bhd. Under Malaysian law, a director owes fiduciary duties to the company — not to the foreign shareholder. A nominee director who acts in bad faith, resigns without notice, or is influenced by third parties to make unauthorised resolutions can create material harm: accounts frozen, contracts cancelled, regulatory applications derailed.

The mitigation: A properly drafted Nominee Director Agreement with specific indemnification clauses and power of attorney provisions is non-negotiable. Never grant a nominee director signing authority on corporate bank accounts. Engage a nominee director provided by a reputable corporate services firm with professional liability insurance, rather than an individual known personally.

11.2 — Sector Misclassification

Malaysia’s foreign equity restrictions are industry-specific, and SSM’s business activity classification system (MSIC 2008 codes) does not always map intuitively to modern business models. A technology company that also sells physical products may inadvertently be classified under retail trade (restricted to 70% foreign equity) rather than e-commerce services (unrestricted). Obtain a formal written opinion from a Malaysian corporate lawyer on the appropriate MSIC classification before incorporation.

11.3 — Labuan Substance Failure

Companies using Labuan IBCs that fail to maintain the minimum 2 employees and RM 50,000 annual Labuan operating expenditure will be assessed at the full 24% mainland corporate tax rate — with potential penalties for underpayment in prior years. The cost of managed substance services (RM 6,000–15,000/year) is trivial compared to the tax differential. Commit to genuine Labuan substance from Day 1.

11.4 — Paid-Up Capital Insufficient for Operational Needs

Investors who incorporate with nominal paid-up capital subsequently discover that their company cannot open a corporate bank account without extended delays, cannot sponsor an Employment Pass, cannot qualify for MIDA incentive applications, and cannot win government tenders or large corporate contracts. Right-size your paid-up capital at incorporation. For a foreign-owned operational company with Employment Pass requirements, RM 500,000 is the effective minimum.

11.5 — Failure to Document Capital Remittance Correctly

Bank Negara Malaysia’s Foreign Exchange Administration (FEA) rules require that foreign direct investment inflows be documented correctly at the time of capital injection. Investors who misclassify the transfer (as a loan rather than equity, for example) face restrictions on repatriation of profits, dividends, and eventually investment principal. Ensure your Malaysian bank and Company Secretary are aligned on FEA documentation requirements before the first capital remittance.

Section 12 — FAQ: Your Critical Questions Answered

Can a foreigner own 100% of a company in Malaysia?

Yes, in the majority of sectors. Manufacturing, technology, professional services, healthcare, education, and hospitality are among the fully open categories. Retail, construction, telecommunications, and a handful of other sectors retain foreign equity caps. MIDA’s current sector guide provides the definitive reference.

What is the difference between a Sdn Bhd and a Labuan IBC?

A Sdn Bhd is a mainland Malaysian private limited company, governed by the Companies Act 2016, subject to 24% corporate tax, and designed for domestic or regional operations. A Labuan IBC is an offshore entity governed by the Labuan Companies Act 1990, subject to 3% tax on trading profits (or zero on investment holding), and designed for international cross-border activities. Substance requirements apply to Labuan IBCs.

How much does it cost to incorporate in Malaysia?

Year 1 total costs (excluding paid-up capital) range from approximately RM 13,700 to RM 32,600 (€2,740–6,520), depending on whether a nominee director is required, the complexity of constitutional documents, and professional service provider choice. See Section 7 for the full cost breakdown.

How long does incorporation take?

The SSM registration process itself takes 3–7 business days. Full operational readiness — including bank account opening and Employment Pass — typically requires 6–14 weeks. The Employment Pass is the principal timeline driver.

Do I need a Malaysian director?

Yes. The Companies Act 2016 (Section 196) requires at least one director ordinarily resident in Malaysia. Foreign investors use nominee director arrangements while establishing residency or during the Employment Pass application process.

What is the minimum paid-up capital?

Technically RM 1. In practice, RM 500,000 is the effective minimum for a foreign-owned company intending to open a bank account and sponsor an Employment Pass.

What taxes does a foreign-owned Sdn Bhd pay?

Corporate income tax at 24% on chargeable income (17% on first RM 600,000 for qualifying SMEs). Service Tax at 8% if annual service turnover exceeds RM 500,000. No withholding tax on dividends paid to foreign shareholders. No capital gains tax on disposal of shares.

What is the Company Secretary and is it mandatory?

A Company Secretary is a licenced professional (MAICSA member) responsible for statutory compliance, filing, and maintaining company registers. Yes — appointment within 30 days of incorporation is mandatory under the Companies Act 2016.

Can I open a bank account remotely?

Not with major Malaysian banks in standard procedures. At least one director must attend a physical KYC interview. Wise Business can be used as a transitional international payment solution while the local account is being established.

What happens if I don’t comply with annual filing requirements?

The SSM may impose fines for late filing of Annual Returns (up to RM 50,000 for companies) and may strike a company off the register for persistent non-compliance. Directors of non-compliant companies are personally liable for the company’s filing obligations under the CA 2016.

Ready to Incorporate? Connect with Our Vetted Network

SmartInvestMalaysia.com works exclusively with a curated network of licenced corporate service providers, company secretaries, and commercial lawyers who specialise in serving Western investors establishing operations in Malaysia. Our partners have processed hundreds of foreign-owned Sdn Bhd and Labuan IBC incorporations for clients from France, Belgium, Switzerland, the United Kingdom, and the United States.

What we can connect you with:

• MAICSA-licenced Company Secretaries with dedicated international client desks
• Corporate lawyers for Shareholder Agreements, Constitution drafting, and sector-specific legal opinions
• Qualified Employment Pass specialists with current Immigration Department processing expertise
• Labuan Trust Companies for offshore structure implementation and substance compliance
• Corporate banking introductions with relationship managers at Maybank, CIMB, and HSBC Malaysia

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📩 Submit your Malaysia company incorporation inquiry using the contact form below. Please include your target sector, intended paid-up capital, and whether you require Employment Pass sponsorship. Qualified inquiries receive a personalised response within 48 business hours.

Legal Disclaimer: This guide is provided for informational purposes only and does not constitute legal, tax, or financial advice. Laws and regulations change; the information herein reflects our best understanding as of early 2026. Before making any structural or investment decisions, consult a qualified Malaysian corporate lawyer, licensed tax adviser, and — where relevant — a specialist in your home country’s international tax obligations.

Last updated: February 2026 | SmartInvestMalaysia.com Editorial Team