Answers to Frequently Asked Questions
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- What is the difference between a shelf company and a newly
formed company?
A shelf company is an existing company formed with a RM2/= paid
up share capital, 2 local directors and shareholders, and a RM100,000
authorised share capital (stamp duty paid). Upon purchase of a shelf
company, the existing directors resign & blank transfer forms
are delivered to transfer the share to the purchasers. Business can
commence immediately upon purchase.
In order to form a new company, first we have to get approval from
the register of companies to use this proposed name. This process
can sometimes take a long time depending on the name chose. Upon approval
of use of name, the company secretary then prepares the necessary
documents for incorporation for filling. This may take another 5-10
day from the date the entire relevant documents are signed.
Business can only commence after the certificate of incorporation
has been issued by the register of companies.
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- What is included in the purchase or formation price quoted?
Processing of relevant documents for shares transfers or subscriber's
shares.Filing or documents to ROC for relevant changes in directors'
secretaries.
RM2/= paid up share capital and stamp duty on RM100,000 authorised
share capital. Any excess stamp duty to be borne by client.
Secretarial books consisting of minute's book. Share register, member's
register 10 copies of memorandum & articles of association &
1 no. common seal.
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- Who is the company secretary & what responsibility does
she have?
According to Section 139 of the Companies Act 1965, all limited
companies must have a licensed company secretary who is an officer
of the company. Her/his duties are set out in the Act itself and are
primarily to ensure the companies are adhering to the procedures set
out in the Companies Act. Which is why the company secretary charges
a retainer fee for his/her expertise in this field.
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- What do you consider as a dormant company, a semi-active company
and an active company?
A dormant company is one that has ceased operation.A semi-active
company is one that is in operation but does not require frequent
resolutions to be alone e.g. a trading company.An active company is
one take frequently requires resolutions to be done for purpose of
obtaining licenses, bank facilities, transactions involving large
sums of monies e.g. Developer company.
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- Can any other company personnel draw up their own resolutions
without having to go through the company secretary?
Yes, the company can have anyone draw up the resolution document
itself but these documents have to be verified by the company secretary
since the company secretary shall be held responsible for the preparation
of the documents. In most cases, to minimise risks resolutions are
done by the company secretary.
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- What are the qualifications require to become a director
of a private limited company?
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| 01 |
He/she must be of age 18 years and above. |
| 02 |
He/she person must not be an un-discharged bankrupt. |
| 03 |
He/she must not have been convicted of an appointment. |
| 04 |
He/she must be a resident of Malaysia or having a permanent
residential address in Malaysia. |
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"Having a permanent residential address" is interpreted
as "having the right of abode in the country on a long term basis".
A person with a valid work permit will qualify for a permanent residential
address status. The Companies Commission will not disallowed the incorporation
of any application as the onus of responsibility to check and confirm
the attainment of the minimum requisites for the incorporation lies
with the company secretary. As such, the implications in the event
that such a company is incorporated without the minimum 2 "local"
directors, that company is deemed to be illegal in status and all
contracts are deemed null & void unless the situation is remedied.
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- I have come across foreign directors of companies who do not
have a work permit nor a long term stay visa of any sort but have been
installed as local directors in their companies. The Companies Commission
has not rejected the installation. This would be contrary to what is
stated above.
We have written in to the Commission once regarding this matter
and their response is that it is not their duty to check on the immigration
status of the director. The onus then would fall on the company secretary
to define the clause "permanent residential address" status
according to the Immigration law. In our opinion, we would prefer
to define the clause according to Immigration & tax laws as we
see and that is what has been stated in the answer in the previous
question. Ultimately, the important question here is: "If anything
should go wrong with the business, where does the company stand legally?
Is it an illegal entity?" "Enemies" may use this point
to get rid of unwanted partners.
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- Can foreigners owned shares & what is the maximum shareholding
allowed in a local private company & the minimum share capital in
a foreign owned company?
There is no restriction on maximum shareholding i.e. foreigners
can own 100% of a company. There is no requirement to divest 30% shareholding
to any locals unless the business or activities require government
licencing and approvals. By law, all companies with foreign ownerships
are required to apply for Foreign Investment Committee approval. Approval
is normally given on condition that 30% shareholding is divested to
an ethnic local Malay within 2 years. Normally, small businesses will
not apply for any FIC approval unless there is business with the government
departments. If the company intends to transact with government departments
which will require licensing, the minimum local "bumiputra"
(ethnic Malay) participation must be 30% and above. And the management
structure of 50% or above is more favourable to get government contracts.
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- Are the foreign shareholders allowed to work in Malaysia?
Is there a way to circumvent this local director requirement?
Foreign investors are allowed to work if they hold a valid work
permit. Shareholders can be locals or foreigners but for foreigners
to become directors, they must have a valid work permit. A foreigner
on a dependent's visa or with the Malaysia My Second Home visa will
qualify as a passive director but not a working director. The alternative
is to seek nominees or trustees. The cost of a nominee or trustee
is between RM1,500 and RM2,500 per annum.
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- I understand that the minimum share capital for any company
to employ an expat under a work permit is RM250,000. What if I do not
have the requisite amount to be banked into the company?
Cash or assets can be pumped in as share capital. If you do not have
the cash, assets will also qualify. For every RM250,000 share capital,
you can qualify for 1 expat work permit; RM1 million will give you
5 work permits.
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- Can the RM250,000 capital that put in be used and taken out
immediately?
Yes, the money can be used immediately for anything the company
chooses to use it for. It cannot make loans to the shareholders if
the ultimate result is that the shareholders owes the company money
as this contravenes the Companies Act which states that the company
cannot apply funds to purchase its own shares. Even though this is
the case, frequently most company still practices making loans to
its directors/shareholders and at year end during audit, re-invest
the amount owing to comply with the Act.
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- Can the visa applicant go and apply to the Immigration Dept.
instead of going through an agent? What is the advantages of using an
agent?
It is absolutely possible for the applicant to go through the application
process him/herself. Just be prepared to make numerous trips, long
waiting period each time and dealing with unhelpful immigration officers
at the counters. If your time cost is very high, then the agents will
go through the same application procedures on your behalf. Over at
Receptionist.com.my, we guarantee our quality service with refund
if work permit is not approved. How? This sensitive information will
be divulge on a more person to person basis - so contact us at info@receptionist.com.my.
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- Is there any way to get a work permit in a company without
having to put up RM250,000 share capital?
Yes, by setting up a representative office of a foreign company.
If you have an existing foreign company, you can set up a branch office
in KL . There are no capital requirements here but there are restrictions
i.e. the company cannot do trading but it can perform marketing and
research functions. For more info. on representative office, please
email info@receptionist.com.my.
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- How long is the Professional EP valid for (a) under a private
limited company and (b) a representative office?
Standard 2 years for both. The EP under the private limited company
shall be extendable for an unlimited time period provided it satisfies
all the immigration criterias and if the applicant is a shareholder
of the company. The work permit for the representative office is normally
extendable for another 3 year up to a maximum of 5 years without question
but after the fifth year, you will have to justify why you have already
set a local private company up after 5 long years of market research
and development. Extensions of another 2 years is possible selectively.
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- What are the charges for a EP?
The average service fee exclusive of government levies is between
RM3,500 to RM6,000 depending on nationality, applicant's qualification
and complexity of each individual case.
- What do you mean by depending on nationality, applicant's
qualification and complexity of case?
A straight forward genuine case complying with all the immigration
criterion with all relevant documents intact will be relatively easier
than a conjured up post for an applicant not really qualified for
the job but wants to get a long term work permit. There are about
10 nationalities that are blacklisted and these nationalities will
have to pay the higher fee as there is double scrutiny from different
government departments (not just immigration) and so double the work.
So the scale for the straight forward genuine case starts at RM3,500
and the not so genuine and blacklisted cases RM5,000 upwards.
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- What is the cost of setting up or buying a company?
A shelf company cost between RM2,200 and RM2,500 depending on how
good the name sounds but is up to each individual company secretarial
firm. However this does not include the monthly company secreatrial
retainer fee.
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- What are the cost implications of setting up your own business?
Whether or not you have business or income, the annual statutory
maintenance costs for accounts, audit, tax and statutory filing with
the Companies Commission would be at least RM2,500 a year depending
on how active your company has been.
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- What if at the end of the day we decide to close the company
if there is no business? Can we do that and what is the cost?
Yes, you can de-register the company if the company does not have any
debts to any third party. If there are debts or if your share capital
exceeds RM100, you will have to wind up using a members voluntary liquidation.
The difference between liquidation and de-registering , other than having
(or not having) debts to third party is the cost and time. The cost for
de-registering is around RM1,200 but the cost for receivership and liquidation
will start at RM4,000 onwards depending on how messy the company is.
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