Company Formation in Malaysia: A Guide for US Entrepreneurs

Malaysia is an increasingly appealing destination for international entrepreneurs who are eager to expand their businesses. Much of this appeal comes from the country’s pro-business environment, skilled workforce and relatively low startup costs.

Here, we’ll discuss what Americans and other foreign businesspeople need to know about company formation in Malaysia to help them tap into Southeast Asia’s opportunities.

We’ll cover everything from the types of business entities in Malaysia to how to register a company in Malaysia, obtain a business registration number and handle practicalities such as opening a corporate bank account and meeting paid-up capital requirements. We'll also discuss the Wise Business account. The global account that can help your company with all things cross-border.

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Why Choose Malaysia for Company Formation?

Malaysia welcomes foreign investors with open arms. The government allows up to 100% foreign ownership of Malaysian private companies in many sectors (no local partner required), making it straightforward for U.S. entrepreneurs to maintain full control of their Malaysian ventures.

The country also ranks among the top in the region for ease of doing business, thanks to a stable legal framework and pro-business government policies.¹

Moreover, Malaysia’s business climate offers financial advantages. Startup costs and living expenses are lower than in many Western countries, and there are tax perks such as no withholding taxes on dividends paid to overseas shareholders.²

English is widely spoken in the corporate sector, which is a plus for American entrepreneurs.³ All of this lends itself to Malaysia being a good option to consider for company formation.

Types of Business Entities in Malaysia

You have a few entities to choose from when planning a business in Malaysia. What’s right for you will depend on the type of business you run and a number of other factors.⁴

Your options include:

• Private Limited Company (Sdn. Bhd.): The most popular structure for foreign businesses, a Sdn. Bhd. offers limited liability and separate legal status. Foreigners can own 100% in most sectors, though some have ownership limits. At least one resident director is required. It allows one to 50 shareholders and does not permit public share offerings. This setup suits small to medium enterprises due to its liability protection and access to local licensing.
• Limited Liability Partnership (LLP): An LLP combines aspects of partnerships and companies, offering limited liability to all partners and fewer compliance requirements than a Sdn. Bhd. It requires at least two partners and a local compliance officer. While it’s easier to maintain, it’s less suited to foreign investors since LLPs can’t raise equity easily.
• Sole Proprietorship: This is a single-owner structure with minimal compliance and full personal liability. Only Malaysian citizens and permanent residents can register. Foreigners without residency status cannot use this option.
• Partnership: Owned by two or more individuals, this structure also requires Malaysian citizenship or residency. Like sole proprietorships, liability is unlimited. It’s rarely used by foreign investors.
• Branch Office: A branch acts as an extension of a foreign company, not a separate entity. It can be 100% foreign-owned but is taxed as a foreign company and limited to activities similar to the parent. A local agent is required. Branches are typically used for short-term operations or market testing.
• Representative Office: This is a temporary, non-commercial presence for foreign companies conducting research or networking. It cannot earn income and is funded entirely by the parent company. A rep office is useful for early market entry before forming a company or branch.

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How to Register a Company in Malaysia

Once you’ve chosen a business structure (often an Sdn. Bhd. for U.S. entrepreneurs), it’s time to register your company with Malaysia’s Companies Commission (SSM).

You’ll do this online through what’s known as the MyCoID portal or with the help of a company secretary.

Next, you’ll move on to these steps:

1. Name Search and Reservation

Perform a name search to ensure the name you have in mind is available. If it is, you can submit it to SSM for approval. If approved, your chosen name is reserved for 30 days. This costs RM 50.⁵

2. Prepare Incorporation Documents

Now it’s time to get your incorporation documents ready.⁶

These include:

• The company’s Constitution (optional)
• Details of directors/shareholders
• A registered Malaysian address
• Passport copies and proof of overseas address (if you have foreign directors or shareholders)

A resident director is required, and you must appoint a licensed Malaysian company secretary within 30 days (many firms include this in their services).⁷

3. Submit the Application

You or your company secretary will upload the documents and pay the fee via the MyCoID portal. The direct registration fee (which includes name reservation and incorporation) for a standard Sdn. Bhd. is RM 1000.⁸

4. Business Registration Number and Certificate

Once approved, your company is officially registered. SSM will issue a business registration number for Malaysia. This 12-digit ID is issued by SSM after incorporation. You’ll use this ID for all legal, tax and banking matters.¹⁹

5. Post-Incorporation Tasks

If you have yet to appoint your company secretary, do that now. You’ll also need to register for corporate tax with the Inland Revenue Board (LHDN) and apply for any necessary licenses. Some businesses will also need to register for GST or other taxes.

Lastly, open a corporate bank account in Malaysia to begin business operations; we’ll talk more about that in a moment.

Key Requirements for Foreign-Owned Companies

Forming a company in Malaysia as a foreigner is very doable, but there are a few additional requirements to be aware of compared to a local entrepreneur.

These ensure that even a foreign-owned company has sufficient local presence and compliance:

Resident Director Company Secretary

As discussed above, every Malaysian company needs at least one director who “ordinarily resides” in Malaysia. Additionally, a licensed Malaysian company secretary must be appointed within 30 days of incorporation.

Registered Address

You’ll need a physical business address in Malaysia (P.O. boxes don’t count) to receive official mail from authorities. If you don’t have an office yet, you can use your service provider’s address or a virtual office in Kuala Lumpur.¹⁰

Paid-Up Capital

You can legally start an Sdn. Bhd. with RM 1. That said, it’s usually expected that foreign-owned companies show stronger financial backing. RM 100,000 to 500,000 is common for SMEs, while some sectors or visa processes suggest RM 500,000 or more.¹¹

Industry-Specific Requirements

If you’re entering a regulated sector like banking, education, or oil and gas, there are some other rules and regulations you may need to follow.¹² For example, some industries require government approvals or a local partner, and others may impose foreign ownership limits or require Bumiputera participation.¹³

For consulting, tech, F&B and most general services, 100% foreign ownership is usually allowed.¹⁴

Opening a Corporate Bank Account in Malaysia

Once your company is incorporated, one of the first things to do is open a corporate bank account.

To open a corporate bank account, you’ll need your Notice of Registration or Certificate of Incorporation, business registration number and company constitution if applicable. Most banks require the resident director and signatories to attend in person.¹⁵

Initial deposits are usually small, around RM 1,000 to RM 5,000, and become available for business use once the account is active.¹⁶

With all of these bases covered, you’ll be well on your way to successfully establishing and running your Malaysian company. Malaysia’s combination of business-friendly policies and openness to foreign ownership provides a great platform for American businesses to grow internationally.

Frequently Asked Questions

How long does it take to register a company in Malaysia?

It can take a few weeks to complete the process.¹⁷ Banks carry out their own due diligence, including Know-Your-Customer checks on the company and directors. Processing time varies depending on the bank, so it helps to compare options.

How much does it cost to set up a company in Malaysia as a foreigner?

Government fees are around RM 1,000 (USD $220). Professional services range from RM 2,000 to 6,000 (USD $500 to $1,300). Annual compliance costs are relatively low. Paid-up capital is not a cost but working capital.¹⁸

What tax obligations will my Malaysian company have?

Sdn. Bhd. companies pay 24% corporate tax, with a lower rate for small profits.¹⁹ Dividends are not taxed in Malaysia; however, starting from the 2025 year of assessment, individuals will be subject to a 2% tax on dividend income that exceeds MYR 100,000.²⁰

Learn More About Company Formation in Other Countries

Country	Title
Bulgaria	Company Formation in Bulgaria: A Path to the EU for US Entrepreneurs
Canada	Company Formation in Canada: Guide for US Entrepreneurs and Expats
Cyprus	Company Formation in Cyprus: Guide for US Entrepreneurs
Estonia	Company Formation in Estonia: Guide for US Entrepreneurs
France	Company Formation in France: A Guide for US Entrepreneurs and Expats
Germany	Company Formation in Germany: A Guide for US Entrepreneurs
Greece	Company Formation in Greece: Guide for US Entrepreneurs and Expats
Hungary	Company Formation in Hungary for US Entrepreneurs
Ireland	Company Formation in Ireland: Guide for US Entrepreneurs
Singapore	Company Formation in Singapore: A Guide for US Entrepreneurs
Malta	Company Formation in Malta: Guide for US Entrepreneurs
Poland	Company Formation in Poland: Guide for US Entrepreneurs in 2025
Romania	Company Formation in Romania: Guide for US Entrepreneurs
Spain	Company Formation in Spain: Guide to Global Expansion for Americans

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Sources:

1. Ease of Doing Business
2. Costs in Malaysia
3. English in Malaysia
4. Business Entities in Malaysia
5. Name Search of a Company
6. Constitution
7. Resident Director and Company Secretary
8. Name Search of a Company
9. Business Registration Number
10. Registrated Address
11. Paid-Up Capital
12. Oil and Gas
13. Foreign Investment in Malaysia
14. Foreign Company Registration Options
15. Opening a Corporate Bank Account
16. Fixed Deposits
17. How to Register a Company in Malaysia
18. Cost to Register a Company in Malaysia
19. Malaysia Corporate Taxes
20. Malaysia Income Determination