Foreign Company Setup in Malaysia

For most foreign entrepreneurs this is the first and biggest question — and the answer is reassuring.

Yes. A foreigner or foreign company can own 100% of the equity in a Malaysian private limited company (Sdn Bhd) in most business sectors. The Companies Act 2016 imposes no general requirement for a local or Malaysian shareholder, and the mandatory 30% Bumiputera equity rule that once applied to most services was abolished in 2009.

Foreign-equity limits therefore arise only from sector-specific licensing rules, not from the Companies Act itself. Consulting and advisory, general trading, technology, e-commerce and most manufacturing and professional services all allow full foreign equity as of 2026.

Where a foreigner wants to actually run a business on the ground, the standard vehicle is a 100% foreign-owned Sdn Bhd incorporated with SSM (Suruhanjaya Syarikat Malaysia / Companies Commission of Malaysia). It is a separate Malaysian legal entity, liability is limited to shareholders, and it can trade, invoice, sign contracts and sponsor Employment Passes for foreign staff.

Two structural rules always apply, regardless of ownership:

• At least one director "ordinarily resident" in Malaysia (a principal place of residence in Malaysia — a Malaysian citizen, PR holder, or an expatriate on a valid Employment Pass).
• A licensed company secretary appointed within 30 days of incorporation.

Check for equity caps only if you are entering a regulated sector — see the restricted-sectors table below.

A foreigner has three main structures. Only one lets you genuinely trade and earn income locally.

Branch (foreign company): registered with SSM, must appoint a local agent and maintain a Malaysian registered office. Because the parent remains fully liable and it is generally viewed as temporary, it is less favoured for long-term local operations.

Representative Office (RE) / Regional Office (RO): approved by MIDA, not incorporated under the Companies Act. It cannot generate income, trade, invoice or sign commercial contracts. An RE gathers market/investment information, conducts R&D and promotes exports of Malaysian goods; an RO coordinates the parent's affiliates across the region. It is usually approved for around 2 years initially and extendable on review, subject to MIDA's assessment (roughly 6–8 weeks to approve). MIDA requires the office to be wholly funded by the overseas parent from sources outside Malaysia and to run operating expenditure of at least RM 300,000 per annum, typically employing 1–3 expatriates. Some corporate service providers cite an indicative parent-company size (for example, around USD 250,000 in shareholder funds) as a practical guideline, but that is not a published MIDA threshold — verify eligibility against the current MIDA RE/RO guideline.

Bottom line: to earn revenue locally, incorporate an Sdn Bhd. A branch keeps the parent fully liable; a rep/regional office cannot earn a cent.

Government fees are small — the real budget is service fees plus the paid-up capital you must inject. All figures are approximate and current as of 2026.

Paid-up capital is separate from fees and is money that stays in your company:

• RM1 — SSM statutory minimum (not sufficient for a visa or licence).
• ~RM500,000 — practical threshold for a foreign-owned services/advisory company to sponsor an Employment Pass.
• RM1,000,000 — for trading, import/export, restaurant/F&B and WRT-licensed businesses.

Most foreign founders engage a corporate service provider (CSP) to run the whole MyCoID filing, supply the registered address and often the initial resident director — direct DIY filing by a non-resident is rare.

This is the friction point that surprises most foreign founders.

A Sdn Bhd must have at least one director who is "ordinarily resident" in Malaysia — meaning a principal place of residence in Malaysia. That person can be a Malaysian citizen, a permanent resident, or an expatriate holding a valid Employment Pass. Directors must be natural persons aged 18 or over, not bankrupt and not disqualified.

The catch: a brand-new foreign founder usually does not yet qualify, because they don't have an Employment Pass or Malaysian residence at incorporation. There are two common ways through:

1. Resident / nominee director service — a corporate secretarial firm provides a qualifying resident director purely to satisfy the statutory condition (typically RM6,000–24,000/year). This is a compliance role, not day-to-day management, and terms should be documented.
2. Appoint yourself once your EP is issued — many founders start with a nominee director, then replace them with the EP-holding founder after the Employment Pass comes through.

Separately, every Sdn Bhd must appoint a licensed company secretary within 30 days of incorporation — a member of a prescribed professional body or a secretary licensed by SSM. The secretary handles statutory filings and SSM compliance and is mandatory for all private limited companies.

You also need a registered office address in Malaysia (usually the secretary's or CSP's office) and at least one shareholder (minimum 1, maximum 50; individual or corporate; can be 100% foreign).

The single most misunderstood number in Malaysian company setup is paid-up capital, because two different authorities apply two very different thresholds.

SSM (incorporation): the statutory minimum is nominal — as little as RM1. SSM will happily incorporate a plain Sdn Bhd at RM1 paid-up.

Immigration / ESD (Employment Pass) and sector licences: these are the real gates for a foreign-owned company, and RM1 does not satisfy them:

So if your plan is to bring in a foreign director on an Employment Pass, budget for ~RM500,000 of paid-up capital for a services business, and RM1,000,000 for anything that needs a WRT licence. This is capital injected into the company (working funds), not a fee paid away.

A practical sequence: incorporate first (often at a lower figure with a nominee director), then inject the required paid-up capital for your intended EP category or WRT licence before you register with ESD and apply for passes.

If your business touches physical goods — retail, wholesale, F&B, trading, distribution, import/export — this section is essential.

What it is: the WRT (Wholesale, Retail and Trade) or Distributive Trade licence is issued by KPDN (Ministry of Domestic Trade and Cost of Living). It is required for foreign-involved companies engaged in "distributive trade" — wholesale, retail, restaurants/F&B, franchising, direct selling, and trading/import-export of goods, plus certain services with a physical commercial presence.

Who needs it: any company where foreigners hold MORE THAN 50% of the equity must obtain a WRT licence before carrying on distributive-trade activity. The >50% foreign-ownership threshold is the trigger.

Capital condition: a minimum paid-up capital of RM1,000,000 is a prerequisite for foreign-owned companies applying for the WRT licence — which is precisely why a 100%-foreign retail/F&B/trading Sdn Bhd effectively needs RM1 million paid-up.

Exemption: companies that are locally-owned (at least 51% Malaysian equity) generally do not require the WRT licence, and the RM1 million capital condition does not apply to them.

Process: applied via the BLESS portal to KPDN; typically around 2–3 months, and requires supporting local approvals (e.g. local council / PBT premise and signboard licences) and a registered business premises.

Other conditions: KPDN may impose additional requirements on foreign-owned distributive-trade businesses — minimum floor-space for certain retail formats, appointment of local/Bumiputera directors, hiring of local staff, and restrictions on certain "controlled" retail formats. Importantly, the WRT licence must often be approved BEFORE an Employment Pass is submitted.

100% foreign equity is the default in most sectors in 2026, but it is not universal. The following sectors still cap foreign equity or impose local/Bumiputera participation and regulator approval. Confirm the exact current cap with the relevant sectoral regulator before incorporating.

In regulated sectors such as oil & gas, telco, financial services and wholesale trade, equity quotas of roughly 30–51% Bumiputera or local participation can still apply. The exact percentage varies by the specific licence, so a foreigner in a regulated sector should verify the current cap directly with the regulator (or via a licensed company secretary) before proceeding.

MIDA and manufacturing: MIDA (under MITI) is the lead agency for manufacturing. A Manufacturing Licence (ML) under the Industrial Coordination Act 1975 is required where shareholders' funds are ≥ RM2.5 million OR there are ≥ 75 full-time employees, applied via the InvestMalaysia portal; smaller firms can instead apply for a confirmation letter of exemption from the Manufacturing Licence. Malaysia permits 100% foreign equity in most manufacturing with no mandatory Bumiputera equity.

A crucial point many searchers conflate: incorporating a company does not grant residency or the right to work in Malaysia. To work in and manage your own Malaysian company, a foreign director must obtain an Employment Pass (EP) — and the company must be incorporated and capitalised first.

The paid-up capital gate (Immigration, not SSM): expect ~RM500,000 paid-up for advisory/consultancy/services, and RM1,000,000 for import/export, trading, restaurant and WRT-licensed businesses. Any sector licence (e.g. WRT) must often be approved before the EP is submitted.

EP salary thresholds (revised policy effective 1 June 2026):

Applications filed on or after 1 June 2026 are assessed under this revised policy; earlier filings fall under the old one.

Process: the company is first registered/activated with the Expatriate Services Division (ESD) of Immigration / MYXpats Centre (or the relevant regulator — MIDA for manufacturing, MDEC for tech). Then apply for an EP per expatriate. Note remote incorporation is possible, but opening the corporate bank account and EP verification generally require in-person attendance.

For foreign-owned entities, the corporate bank account is usually the slowest and least predictable part of setup — plan for it early.

Enhanced due diligence: banks scrutinise beneficial ownership, source of funds and expected transaction volumes. Foreign-owned companies face enhanced KYC/EDD as standard.

Physical presence effectively required: directors and authorised signatories are generally expected to attend an in-person KYC meeting. Remote account opening has a very low approval rate.

Documents typically required:

• Notice/Certificate of Incorporation and the company constitution
• The current CA 2016 statutory records — the Notice of Registration (s.15, replacing the old Form 9), return of allotment (s.78, former Form 24) and particulars/change of directors (s.58, former Form 49)
• Board resolution appointing the account signatories
• Passports and visas for foreign signatories
• Foreign-issued documents need certified translation and Wisma Putra attestation — Malaysia is not party to the Hague Apostille Convention, so an apostille alone is not accepted

Timeline: roughly 20–40 business days for foreign-owned entities, driven by the enhanced due diligence. Commonly used banks include Maybank, CIMB, Public Bank, HSBC, Standard Chartered and OCBC.

After the account is open, complete the remaining registrations — tax file with LHDN, EPF/SOCSO if hiring, and SST if you cross the turnover thresholds — and replace any nominee director with your EP-holding self once the pass is issued.