{"id":133410,"date":"2026-04-07T12:07:18","date_gmt":"2026-04-07T12:07:18","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=133410"},"modified":"2026-04-07T12:07:18","modified_gmt":"2026-04-07T12:07:18","slug":"malaysia-doing-business-in","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/malaysia-doing-business-in\/","title":{"rendered":"Malaysia: Doing Business In"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-133410","comparative_guide","type-comparative_guide","status-publish","hentry","guides-doing-business-in","jurisdictions-malaysia"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Wong &amp; Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2023\/12\/Wong.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Wong &amp; Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2023\/12\/Wong.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Doing Business In laws and regulations applicable in Malaysia<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the system of law in your jurisdiction based on civil law, common law or something else?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia follows the English common law with legislation and case law precedents as primary sources of law. Many Malaysian statutes draw upon equivalent legislation from common law counterparts, and English law continues to be strongly persuasive in Malaysian courts. Malaysia has Syariah laws which are applicable only to Muslims in personal and religious matters.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the different types of vehicle \/ legal forms through which people carry on business in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Malaysia, businesses are commonly carried on through one of the following corporate vehicles:<\/p>\n<p><strong>(a) Locally incorporated companies<\/strong><\/p>\n<p>Locally incorporated companies have a separate legal personality, with shareholders&#8217; liability limited to the amounts invested for shares of the company or by guarantee.<\/p>\n<p><strong>(b) Branches of foreign companies<\/strong><\/p>\n<p>A foreign company may register a branch to carry on business in Malaysia. A branch has no separate legal personality, so its liabilities are those of its parent company. An agent in Malaysia must be appointed to be answerable for statutory compliance.<\/p>\n<p><strong>(c) Representatives\/regional offices<\/strong><\/p>\n<p>A foreign company, especially one in the manufacturing or services sector, may establish a representative\/regional office in Malaysia with approval from the Malaysian Investment Development Authority (&#8220;MIDA&#8221;). Representative\/regional offices are not allowed to engage in commercial activities. Permissible activities for a representative\/regional office include:<\/p>\n<p>(i) planning or coordinating business activities;<br \/>\n(ii) undertaking research and product development; and<br \/>\n(iii) other activities that will not result directly in actual commercial transactions.<\/p>\n<p><strong>(d) Limited liability partnerships (&#8220;LLPs&#8221;)<\/strong><\/p>\n<p>LLPs have a separate legal personality. Partners&#8217; liabilities are limited in respect of claims against the LLP and the wrongful acts of other partners.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can non-domestic entities carry on business directly in your jurisdiction, i.e., without having to incorporate or register an entity?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A foreign company shall not carry on business in Malaysia unless it incorporates a local subsidiary or registers a branch office in Malaysia. In certain regulated industries, a local subsidiary (rather than a branch) is required to be established to hold the requisite licence and carry on the prescribed regulated activities in Malaysia.<\/p>\n<p>The Malaysian Companies Act 2016 (&#8220;MCA&#8221;) defines &#8220;carrying on business&#8221; broadly but provides specific exceptions where a foreign company will not be regarded as carrying on business in Malaysia, such as conducting activities concerning its internal affairs, maintaining bank accounts, effecting sales through independent contractors, soliciting orders which become a binding contract only if they are accepted outside Malaysia, investing funds or holding any property. Whether a foreign company is regarded as &#8220;carrying on business&#8221; in Malaysia would depend on the particular facts and circumstances of each case.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any capital requirements to consider when establishing different entity types?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, there are no minimum capital requirements for establishing entities in Malaysia. Specifically:<\/p>\n<p>(a) Locally incorporated companies may be incorporated with one ordinary share issued at RM 1.<\/p>\n<p>(b) Foreign company branches do not have any authorised or paid up capital requirements.<\/p>\n<p>(c) Representative\/regional offices do not have any authorised or paid up capital requirements but are typically required to meet minimum annual operational expenditure of RM 300,000 (subject to application for exemption).<\/p>\n<p>(d) LLPs do not have any minimum capital requirement.<\/p>\n<p>Notwithstanding the above, minimum capital requirements may be imposed by regulators, government agencies or financial institutions for specific purposes such as licensing, regulatory approvals or financing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are the different types of vehicle established in your jurisdiction? And which is the most common entity \/ branch for investors to utilise?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Locally incorporated companies, branches of foreign companies and LLPs are established or registered by lodging the required documents with the Companies Commission of Malaysia (&#8220;CCM&#8221;) following name reservation. In contrast, an application to set up a representative\/regional office must be submitted to MIDA by the parent entity.<\/p>\n<p>In practice, foreign companies typically carry on businesses in Malaysia through locally incorporated companies, particularly where regulatory licences or approvals are required. Branches and LLPs may be suitable where such requirements do not apply, particularly for start-ups and SMEs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is the entity operated and managed, i.e., directors, officers or others? And how do they make decisions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Companies in Malaysia adopt a single-tier board system, and the business and affairs of the company are managed by the board of directors who typically make decisions by the passing of board resolutions in writing or at a board meeting. Day\u2011to\u2011day operations are generally carried out by the company&#8217;s management team under the board\u2019s oversight.<\/p>\n<p>In LLPs, partners are responsible for managing the business, whose rights and duties are governed by a limited liability partnership agreement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there general requirements or restrictions relating to the appointment of (a) authorised representatives \/ directors or (b) shareholders, such as a requirement for a certain number, or local residency or nationality?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Locally Incorporated Companies<\/strong><\/p>\n<p>Private companies must have at least one director, and public companies must have at least two directors, who shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia. Each director must be a natural person who is at least 18 years old and not disqualified from being a director under the MCA.<\/p>\n<p>Private limited companies may have 1 to 50 shareholders, while public companies must have at least two shareholders. There are no nationality or residency requirements for shareholders, subject to sector-specific foreign equity or Bumiputera requirements.<\/p>\n<p><strong>LLPs<\/strong><\/p>\n<p>An LLP must be formed by at least two partners, who may be individuals or bodies corporate, with no restrictions on nationality. An LLP must appoint at least one compliance officer who is a Malaysian citizen or permanent resident and ordinarily resides in Malaysia.<\/p>\n<p><strong>Foreign Company Branches and Representative\/Regional Offices<\/strong><\/p>\n<p>Branches and representative\/regional offices do not have directors or shareholders separate from its principal company, and operate through authorised representatives of their principal company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Apart from the creation of an entity or establishment, what other possibilities are there for expanding business operations in your jurisdiction? Can one work with trade \/commercial agents, resellers and are there any specific rules to be observed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the MCA, a foreign entity will not be regarded as carrying on business in Malaysia (and therefore will not be required to establish a legal presence in Malaysia) merely because it effects sales through an independent contractor.<\/p>\n<p>However, whether a foreign entity is deemed to be carrying on business in Malaysia is a question of fact assessed on a case by case basis. Where a foreign entity engages local companies to act as their agents or resellers in Malaysia, the risk of being regarded as &#8220;carrying on business in Malaysia&#8221; is generally lower if such agents or resellers have no authority to represent or bind the foreign entity. However, such arrangements may give rise to tax considerations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any corporate governance codes or equivalent for privately owned companies or groups of companies? If so, please provide a summary of the main provisions and how they apply.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Malaysian Code on Corporate Governance (&#8220;MCCG&#8221;) issued by the Securities Commission Malaysia. introduces best practices and guidance to improve board policies and processes and to strengthen board oversight and the integration of sustainability considerations in the strategy and operations of companies.<\/p>\n<p>The MCCG applies to listed companies in Malaysia on an &#8220;apply or explain an alternative basis&#8221; and adopts a proportionate application to companies depending on size, complexity and suitability. The MCCG now specifically encourages non-listed entities to embrace the MCCG to enhance accountability and transparency.<\/p>\n<p>In addition, sector\u2011specific regulators may impose corporate governance requirements. For instance, Bank Negara Malaysia (&#8220;BNM&#8221;, i.e. the Central Bank of Malaysia) issues a Policy Document on Corporate Governance (&#8220;CGPD&#8221;) prescribing corporate governance standards and practices for financial institutions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the options available when looking to provide the entity with working capital? i.e., capital injection, loans etc.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Typically, working capital may be provided through equity or debt financing as follows:<\/p>\n<p>(a) capital injection from existing shareholders or external investors in exchange for new shares in the company; and<\/p>\n<p>(b) loans or other financing instruments from shareholders, related companies, banks or third party financiers.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the processes for returning proceeds from entities? i.e., dividends, returns of capital, loans etc.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, a company may, subject to the applicable requirements under the MCA (and the listing requirements, if applicable) and the company&#8217;s constitution, repatriate or return proceeds to its shareholders through:<\/p>\n<p><strong>(a) Dividends Distribution:<\/strong> A company can only distribute dividends to its shareholders out of profits and if the company is solvent. A company is regarded as solvent if the company is able to pay its debts as and when the debts become due within 12 months immediately after the dividend distribution is made.<\/p>\n<p><strong>(b) Capital Reduction:<\/strong> A company may reduce the amount of its share capital and repays the reduced amount to its shareholders. Capital reduction can be undertaken by way of solvency statement or by obtaining a court order.<\/p>\n<p><strong>(c) Redemption of Preference Shares:<\/strong> Shareholders who hold redeemable preference shares may require the company to redeem their shares and repay cash based on the terms under the company constitution.<\/p>\n<p><strong>(d) Share buyback (limited to public listed companies):<\/strong> Listed companies are allowed to purchase its own shares if so authorised by its constitution and the following requirements are satisfied:<\/p>\n<p>(i) the company is solvent at the date of the purchase and will not become insolvent by incurring the debts involved in the obligation to pay for the shares so purchased;<br \/>\n(ii) the purchase is made through the stock exchange on which the shares of the company are quoted and in accordance with the relevant rules of the stock exchange; and<br \/>\n(iii) the purchase is made in good faith and in the interests of the company.<\/p>\n<p><strong>(e) Repayment of shareholder loan:<\/strong> A company may repatriate cash to its shareholder via a repayment of any existing shareholder loan, subject to compliance with exchange control rules.<\/p>\n<p><strong>(f) Winding up:<\/strong> A company may distribute and repatriate cash in the company through winding up the company. Distribution of cash and property of a company in the winding up process shall, however, be made in accordance with the ranking, priorities and preferences set out under the MCA.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are specific voting requirements \/ percentages required for specific decisions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Matters not expressly requiring a special resolution under the MCA may be approved by an ordinary resolution (which requires a simple majority (i.e., 50% + 1 vote) of the members), unless the company&#8217;s constitution requires otherwise.<\/p>\n<p>Matters requiring a special resolution (i.e., approval by at least 75% of the members) under the MCA include, among others, changes to the company\u2019s name or constitution, conversion between private and public company status, reduction of share capital, variation of class rights and voluntary winding up.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are shareholders authorised to issue binding instructions to the management? Are these rules the same for all entities? What are the consequences and limitations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Shareholders are not authorised to issue binding instructions to the management. Management is bound to take instructions from the board of directors. However, shareholders retain certain residual powers, including the right to remove directors by ordinary resolution, the right to requisition general meetings (where holding at least 10% of the issued share capital or such lower threshold specified in the constitution), and the ability to make recommendations to the management by passing a special resolution.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the core employment law protection rules in your country (e.g., discrimination, minimum wage, dismissal etc.)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Malaysian Employment Act 1955 (&#8220;EA&#8221;) is the principal legislation governing matters of employment in the private sector in West Malaysia and Labuan. It prescribes minimum standards for all employees, including those on fixed-term contracts, probationers, and foreign employees. Certain entitlements under the EA (e.g., overtime pay and termination benefits) are applicable only to (i) employees earning not more than RM4,000 per month and (ii) selected categories of blue collar employees, specifically manual labour, supervisors of manual labour and drivers of commercial vehicles, regardless of the amount of wages earned (collectively, &#8220;Identified Employees\u201d). The equivalent pieces of legislation in East Malaysia are the Sabah and Sarawak Labour Ordinances, which apply to employees who earn below RM2,500 per month.<\/p>\n<p>A statutory minimum wage applies nationwide, currently set at RM1,700 per month or RM8.72 per hour.<\/p>\n<p>The EA restricts termination of pregnant employees and employees on maternity leave, subject to limited exceptions. Save for the foregoing and trade union related protections under the Industrial Relations Act 1976, Malaysia currently does not have comprehensive anti discrimination laws applicable to private sector employment.<\/p>\n<p>Malaysia has recently introduced protections for gig workers under the Gig Workers Act 2025, such as minimum content requirements for service agreements, \u201cjust cause\u201d for termination, mandatory internal grievance mechanisms and escalation of unresolved disputes to the Industrial Relations Department.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">On what basis can an employee be dismissed in your country, what process must be followed and what are the associated costs? Does this differ for collective dismissals and if so, how?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia does not recognise &#8220;at will&#8221; employment. An employee may only be dismissed for just cause or excuse, otherwise the employee would have the right to file an unfair dismissal claim against the former employer. There are three broad categories of just cause and excuse, namely misconduct, poor performance and redundancy.<\/p>\n<p>In a successful unfair dismissal claim, the dismissed employee may be reinstated together with back wages of a maximum of 24 months&#8217; last drawn salary. If reinstatement is not granted, they may be awarded back wages and additional compensation in lieu of reinstatement.<\/p>\n<p>For collective dismissals, employers are recommended to give warning as early as practicable, and where the employees are represented by a trade union, to consult with the union and ensure compliance with any applicable collective bargaining agreement (&#8220;CBA&#8221;). Employers may also consider negotiating a mutual or voluntary separation arrangement with the employees for amicable departure of the employees.<\/p>\n<p>Subject to the specific grounds for termination, all employees in West Malaysia and Labuan are entitled to the EA-prescribed minimum termination notice period which correspond to their length of service in retrenchment exercises, transfers of business and business closures. Identified Employees are generally entitled to the EA-prescribed minimum termination benefits, unless terminated on grounds of misconduct. The entitlements of non-Identified Employees to severance are generally governed by their employment contract.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have a system of employee representation \/ participation (e.g., works councils, co-determined supervisory boards, trade unions etc.)? Are there entities which are exempt from the corresponding regulations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Malaysia, both employees and employers have the right to form, join or be represented by unions, subject to restrictions imposed in the interest of security, public order or morality.<\/p>\n<p>There are two types of trade unions in Malaysia, namely national unions (generally representing employees in the same or similar sector) and in-house unions (representing employees hired by the same employer). Trade unions are more common in certain industries such as manufacturing, logistics and plantations.<\/p>\n<p>Whilst the Malaysian Federal Constitution recognises all Malaysian citizens&#8217; right to form associations, the Trade Union Act 1959 restricts public officers including members of the Royal Malaysian Police, members of any prison service, members of the armed forces and public officers engaged in a confidential or security capacity from joining or being a member of any trade union.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a system governing anti-bribery or anti-corruption or similar? Does this system extend to nondomestic constellations, i.e., have extraterritorial reach?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Anti bribery and anti corruption in Malaysia are primarily governed by the Malaysian Anti-Corruption Commission Act 2009 (&#8220;MACC Act&#8221;), which has extraterritorial reach in respect of offences committed outside Malaysia by Malaysian citizens and permanent residents.<\/p>\n<p>Section 17A of the MACC Act introduces corporate liability, applying to companies and partnerships incorporated in Malaysia that conduct business in Malaysia or abroad, and foreign companies and partnerships that have business operations in Malaysia.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What, if any, are the laws relating to economic crime? If such laws exist, is there an obligation to report economic crimes to the relevant authorities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Economic crimes in Malaysia are primarily governed under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (&#8220;AMLA&#8221;) and the MACC Act.<\/p>\n<p>Under the AMLA, reporting institutions are required to promptly report suspicious transactions to BNM. The MACC Act imposes a statutory duty on any person who gives or receives gratification, or from whom gratification is solicited or attempted to be obtained, to report such bribery offences to the Malaysian Anti-Corruption Commission.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is money laundering and terrorist financing regulated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Money laundering and terrorist financing in Malaysia are primarily regulated under the AMLA, which confers wide investigative and enforcement powers on authorities, including asset freezing and seizure.<\/p>\n<p>BNM oversees AMLA compliance in the financial sector and adopts United Nations Security Council Resolutions and Ministry of Home Affairs designated sanctions lists for sanctions compliance. Other enforcement agencies including the Royal Malaysia Police, the Malaysian Anti-Corruption Commission (for corruption-related money laundering), and the Securities Commission Malaysia may take action against reporting institutions for AMLA non-compliance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there rules regulating compliance in the supply chain (for example comparable to the UK Modern Slavery Act, the Dutch wet kinderarbeid, the French loi de vigilance)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Article 6 of the Federal Constitution explicitly prohibits slavery and forced labour. This principle is reinforced by several key pieces of legislation in Malaysia.<\/p>\n<p>From an employment perspective, the EA and the Children and Young Persons (Employment) Act 1966 (&#8220;CYPA&#8221;) prohibit forced labour and safeguard child labour rights.<\/p>\n<p>From a criminal law perspective, the Penal Code of Malaysia criminalises the buying or disposing of any person as slaves and the habitual dealing in slaves. In addition, the Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007 criminalises all forms of trafficking (including children and persons who are unable to fully take care of or protect themselves due to physical or mental disability or condition) and provides protection to victims.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please describe the requirements to prepare, audit, approve and disclose annual accounts \/ annual financial statements in your jurisdiction.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Directors of a company in Malaysia must prepare financial statements of the company within 18 months from the date of incorporation, and thereafter within six months of each financial year end (\u201cFYE\u201d).<\/p>\n<p>The audited financial statements (&#8220;AFS&#8221;) must be circulated to, among others, the shareholders within six months of the FYE for private companies, or at least 21 days before the annual general meeting (&#8220;AGM&#8221;) for public companies. The AFS must be lodged with the CCM within 30 days of circulation for private companies, or 30 days after the AGM for public companies.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please detail any corporate \/ company secretarial annual compliance requirements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Companies in Malaysia are subject to the following annual statutory reporting requirements:<\/p>\n<p>(a) preparation, circulation, and lodgement of AFS; and<br \/>\n(b) lodgement of an annual return with the CCM within 30 days from the anniversary of its incorporation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a requirement for annual meetings of shareholders, or other stakeholders, to be held? If so, what matters need to be considered and approved at the annual shareholder meeting?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Private companies are no longer required to hold AGMs, unless otherwise provided in the company&#8217;s constitution.<\/p>\n<p>Public companies must hold an AGM within six months of their FYE and not more than 15 months after the last preceding AGM to transact the following business:<\/p>\n<p>(a) the laying of AFS and the directors&#8217; and auditors&#8217; reports;<br \/>\n(b) the election of directors in place of those retiring;<br \/>\n(c) the appointment of auditors and the fixing of their fees; and<br \/>\n(d) any resolution or other business of which notice is given in accordance with the MCA and the company&#8217;s constitution.<\/p>\n<p>A newly incorporated company is exempt from holding an AGM in the year of its incorporation or the following year, if its first AGM is held within 18 months of incorporation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any reporting \/ notification \/ disclosure requirements on beneficial ownership \/ ultimate beneficial owners (UBO) of entities? If yes, please briefly describe these requirements.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the MCA, a company must (a) take steps to identify its beneficial owner(s) (\u201cBO\u201d); (b) issue written notices to shareholders and relevant persons to obtain BO information; (c) maintain a register of BO; and (d) notify CCM of its BO information and any changes thereto.<\/p>\n<p>The MCA also imposes a duty on BOs to notify the company of their BO status and any changes to their status or particulars. If a company is unable to determine its BO after taking all reasonable measures, the company shall provide the name and particulars of a natural person who holds the position of senior management in place of the BO.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What main taxes are businesses subject to in your jurisdiction, and on what are they levied (usually profits), and at what rate?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia adopts a territorial principle of taxation in that only income accruing in or derived from Malaysia, or received in Malaysia from outside Malaysia, is subject to income tax in Malaysia. The main taxes include:<\/p>\n<p><strong>(a) Income Tax:<\/strong> Resident and non\u2011resident companies are taxed at 24% on chargeable profits derived from Malaysia. Income derived from foreign sources and received in Malaysia by resident persons is taxable with effect from 1 January 2022.<\/p>\n<p><strong>(b) Capital Gains Tax (&#8220;CGT&#8221;):<\/strong> Effective from 1 January 2024, chargeable gains from disposal of certain capital assets are subject to CGT in Malaysia at the rate of 10%, unless exempted. If the capital assets were acquired prior to 1 January 2024, the disposer may elect to pay CGT at 2% on the gross disposal price.<\/p>\n<p><strong>(c) Real Property Gains Tax (&#8220;RPGT&#8221;):<\/strong> The RPGT rate for companies ranges from 10% to 30%, depending on the number of years since the date of acquisition of the real property, subject to certain exemptions.<\/p>\n<p><strong>(d) Sales Tax:<\/strong> Sales tax is charged on taxable goods manufactured in Malaysia by a registered manufacturer and sold, used or disposed by them, or imported into Malaysia by any person, at a rate of 5%, 10% or a specified rate depending on the category of taxable goods.<\/p>\n<p><strong>(e) Service Tax:<\/strong> Service tax is generally charged at 6-8% on taxable services provided in Malaysia by a service tax registered person in business and on imported taxable services.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any particular incentive regimes that make your jurisdiction attractive to businesses from a tax perspective (e.g. tax holidays, incentive regimes, employee schemes, or other?)<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia has a specific tax incentive regime for qualifying business activities and investments that meet the prescribed criteria.<\/p>\n<p>Historically, incentives included Pioneer Status (partial or full income tax exemption) and the Investment Tax Allowance. Effective 1 March 2026, Malaysia has begun a phased transition to the New Incentive Framework (&#8220;NIF&#8221;) starting with the manufacturing sector, with the services sector to follow from Q2 2026. While the legacy tax incentive regime remains applicable to existing approvals, new incentive applications are now assessed using outcome\u2011based metrics under a tiered incentive structure, with the level of tax relief calibrated to a project\u2019s performance against prescribed economic outcomes.<\/p>\n<p>Under the NIF, two outcome\u2011based incentives are available:<\/p>\n<p>(a) a Special Tax Rate ranging from 0% to 15%, depending on the incentive category, for up to 15 years; and<\/p>\n<p>(b) a redesigned NIF\u2011Investment Tax Allowance of up to 100% of qualifying capital expenditure for up to 15 years.<\/p>\n<p>Companies undertaking manufacturing activities within eligible subsectors may qualify for NIF incentives, subject to meeting the relevant criteria and qualifying conditions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any impediments \/ tax charges that typically apply to the inflow or outflow of capital to and from your jurisdiction (e.g., withholding taxes, exchange controls, capital controls, etc.)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia imposes withholding tax on certain payments made by residents to non-residents, including royalties, technical fees, installation fees and rental of movable property, at rates between 10% and 15% on gross unless there is a double-taxation agreement between Malaysia and the country of the non-resident (in which case the withholding tax rate may be reduced).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any significant transfer taxes, stamp duties, etc. to be taken into consideration?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia has an extensive stamp duty regime in place that applies to instruments of transfers of land and shares, loan, leases, tenancies, and service agreements. Effective 1 January 2026, stamp duty is being implemented on a phased self assessment basis, beginning with rental and lease related instruments, general stamping and securities; extending from 1 January 2027 to instruments effecting transfers of property ownership; and applying to all remaining chargeable instruments from 1 January 2028.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any public takeover rules?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Public takeovers in Malaysia are primarily regulated under the Malaysian Code on Take-overs and Mergers 2016 and the Rules on Take-overs, Mergers and Compulsory Acquisitions 2016.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a merger control regime and is it mandatory \/ how does it broadly work?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is currently no merger control regime of general application in Malaysia under the Competition Act 2010. Instead, sectoral merger control regimes are currently in operation, specifically in civil aviation and communications and multimedia industries.<\/p>\n<p>However, proposed amendments to the law are expected to be tabled in Parliament in 2026 introducing a cross-sectoral merger control regime. It is anticipated that a transitional grace period will be provided before the new regime becomes fully effective.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there an obligation to negotiate in good faith?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, Malaysian law does not recognise a duty to negotiate or perform contracts in good faith, and Malaysian courts have held that there is no general implied duty of good faith in commercial contracts.<\/p>\n<p>However, the duty of good faith has been recognised in cases of employment contracts, partnerships, joint ventures and insurance contracts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What protections do employees benefit from when their employer is being acquired, for example, are there employee and \/ or employee representatives\u2019 information and consultation or co-determination obligations, and what process must be followed? Do these obligations differ depending on whether an asset or share deal is undertaken?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In a share deal, there are generally no significant employment law issues, as the employer remains the same and the employment contracts are generally unaffected by the acquisition of shares.<\/p>\n<p>In an asset deal, the migration of employees must be effected through termination and re-hire. There is no automatic transfer of employees under Malaysian law, and an employer cannot unilaterally transfer an employee to another employer without the employee&#8217;s consent.<\/p>\n<p>Under the Employment (Termination and Lay\u2011Off Benefits) Regulations 1980, Identified Employees are deemed terminated when a business undergoes a change of ownership, entitling them to statutory termination benefits based on length of service, unless the buyer makes an offer of employment on terms no less favourable and with full recognition of prior service within seven days of the ownership change, and the employee unreasonably refuses the offer. Non\u2011Identified Employees&#8217; entitlements to termination benefits depend on the terms of their employment agreements \/ CBA (if they are unionised).<\/p>\n<p>There is no legal requirement to consult the employees (or their union, if they are unionised) in respect of the migration, unless contractually required under the employment agreements\/CBA, although consultation is recommended as good industrial practice.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please detail any foreign direct investment restrictions, controls or requirements? For example, please detail any limitations, notifications and \/ or approvals required for corporate acquisitions.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malaysia does not have a single overarching foreign investment regime. Foreign investment restrictions are sector\u2011specific and depend on the nature of the business, with requirements typically imposed through government policy, licensing conditions or sectoral regulations.<\/p>\n<p>Corporate acquisitions may require prior approvals or notifications from\/to the relevant regulatory authorities, depending on the applicable government policy, licensing conditions or sectoral regulations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have any exchange control requirements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The exchange control regime in Malaysia is governed by the Financial Services Act 2013, the Islamic Financial Services Act 2013, and the Foreign Exchange Policy Notices issued by BNM (&#8220;FEP Notices&#8221;).<\/p>\n<p>Generally, the Malaysian Ringgit is not tradable outside of Malaysia, so payments offshore will need to be made in foreign currency (except the currency of Israel). Certain transactions can only be carried out by residents and non-residents to remit funds to and from Malaysia with BNM&#8217;s prior approval, unless expressly permitted under the FEP Notices.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most common ways to wind up \/ liquidate \/ dissolve an entity in your jurisdiction? Please provide a brief explanation of the process.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Malaysia, companies may be dissolved under the MCA either by being struck off the register by the CCM (typically for dormant companies) or by way of winding up. Winding up may be voluntary or compulsory. Voluntary winding up includes members\u2019 voluntary winding up (&#8220;MVWU&#8221;) for solvent companies and creditors\u2019 voluntary winding up (&#8220;CVWU&#8221;) for insolvent companies, while compulsory winding up is carried out pursuant to a court order.<\/p>\n<p>The most common method is MVWU, which requires a members\u2019 special resolution, a directors\u2019 declaration of solvency, and the appointment of a liquidator to realise and distribute the company\u2019s assets. If the company is later found to be insolvent, the process converts into a CVWU.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5018<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/133410","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=133410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}