So, you have finally made the decision to start your own business! Congratulations!
Some of you may have been working for many years for someone else and have now decided to start something of your own. Others, may be new entrepreneurs, starting up a business for the first time. Whichever applies, it is going to be the start of an exciting new journey, filled with passion as you work to build and grow your own company.
But as the saying goes, the journey of a thousand miles begins with the first step. And in this situation, the first step is usually, incorporating a company.
You may ask yourself. It’s a hassle, it costs money, there are compliance obligations, etc. The answer? You’re absolutely right! Incorporating a company is not necessarily the best way forward for every new entrepreneur. For some of you, you might be better off registering a sole proprietorship, or simply acting as an individual “freelancer”. It is not a one-size-fits-all business vehicle.
But for most traditional-type businesses out there, a corporate presence must take shape in the form of a company. The “sdn bhd” or “private limited” needs to be visible to potential customers, partners, investors, financiers. It really depends on the requirements of each individual.
If you have decided that incorporating a company is the best way forward for your new business, look no further than this easy-to-follow guideline.
Step 1: Decide what type of company to incorporate. In selecting the right type of company, best to opt for a company limited by shares, the most common type of company. You’ll need a
minimum of 2 subscribers to the shares of the company, a minimum of 2 directors (see update below), and a company secretary. These 2 directors and company secretary must have their main, or only, place of residence in Malaysia.
UPDATE since Companies Act 2016: For a company limited by shares (Sdn Bhd), only 1 director and 1 shareholder is needed, they can be the same person, which means only 1 person who lives in Malaysia is needed to start a Sdn Bhd.
Step 2: Do a name search. There are rules and regulations on the kinds of names that can (and cannot) be registered as a company name. To this end, a name search must be conducted to ensure availability and registrability. Form 13A together with a fee of RM 30 will need to be submitted to the Companies Commission of Malaysia, also known as Suruhanjaya Syarikat Malaysia or SSM.
UPDATE since Companies Act 2016: For name search, the easiest way is to create an account on www.ssm-einfo.my which is a portal where people purchase company information and search for their desired company name there. If no result shows up, it means the name is not taken! What people usually do is to consult a company secretary directly who can do the search for them, with or without charges.
Step 3 : Prepare incorporation documents. Two documents need to be prepared, one known as the Memorandum of Association and another known as the Articles of Association. Also required to be submitted is Form 48A which is a statutory declaration by a director or promoter before appointment, as well as a declaration of compliance in the form of Form 6 (this statutory declaration will be made by the Company Secretary).
Other than these, the original version of Form 13A, a copy of the letter from SSM approving the company name and a copy of each directors’ IC as well as that of the Company Secretary’s, must be compiled for submission. Together, these may be referred to as the Incorporation Documents.
UPDATE since Companies Act 2016: No incorporation document is needed for company incorporation since M&A is no longer a mandatory requirement. If a person does the incorporation themselves through the MyCoID portal, they need to go to the SSM counter to present their IC / passport as identity validation. If they do it through Foundingbird, we use e-KYC where the director(s) and shareholder(s) will get a link in their emails to send a selfie and photo of their IC / passport.
Step 4: Lodge the Incorporation Documents and pay the fees. Incorporation Documents must be submitted to SSM within 3 months from the date of approval of the company’s name by SSM, failing which a fresh application for a name search must be done. With regard to fees, each application to incorporate a company must be submitted together with the prescribed fee. The fee is predetermined based on the authorised share capital of the company in RM.
UPDATE since Companies Act 2016: Hence, a person can incorporate their company online through MyCoID portal which is the official SSM portal, or to do it through a company secretary. One of the biggest differences between Foundingbird and traditional company secretary is we do not require a physical appointment nor signing and scanning any paperwork as everything can be done online, from filling in the incorporation form, making payment, to identity verification using e-KYC. Besides, clients can download the Foundingbird app where their company documents are stored and they have access to various business deals such as dispatch services, hiring portals, webstore builders, etc. to get their business started easier. In the future, we will integrate accounting and payroll management system into the app as well.
Step 5 : Wait for the Certificate of Incorporation. A Certificate of Incorporation will be issued by SSM upon compliance with the incorporation procedures and submission of the duly completed Incorporation Documents.
UPDATE since Companies Act 2016: A notice of incorporation will be provided by SSM upon approval instead of a certificate of incorporation which can be purchased later if needed.
In conclusion, while it is possible to conduct the whole process by yourself, it might be penny wise pound foolish to do so. Navigating the minefield that is the regulatory landscape in Malaysia, is not for the faint –hearted or for the inexperienced.
You could make mistakes, spend an inordinate amount of time struggling to understand the documentation and trying to find out what to do next, and even have your documentation rejected by SSM owing to a technical error or non-compliance. So unless you have prior experience doing this for previous companies, or are yourself a lawyer or company secretary, it might be best not to attempt to DIY. Instead, it might be more advisable to retain the services of a small company secretarial firm to take care of the paperwork for you – even though it would be cheaper to do it yourself online.
As a final tip, when selecting a company secretarial firm, go for a small-sized one that services non-listed companies, by reason of the fact that firms servicing large public listed companies are likely to charge more.
Give Foundingbird a try to easily incorporate your Sdn Bhd with low cost.