Immigration & Visa Issues to Set Up a Business in Malaysia for Foreigner

Due to the rapid growth of the startup scene in Malaysia, we have been receiving plenty of queries from foreigners who wish to set up shop here or local startups who wish to bring in foreigners as Co-Founder.

The reason for this article is that we had plenty of incidents where Foreigners have set up a Private Limited Company first (with another Company Secretary) only to realize they cannot operate their business. In such a situation here are some of the issues to set up a business in Malaysia you need

Setting Up A Private Limited Company

When you want to set up your Private Limited Company (Sendirian Berhad/Sdn. Bhd.) there is no requirement for minimum paid-up capital. Yes, you heard me right… foreigners can create an RM2.00 Company.

But here is the catch:

(a) If you have read our article on the minimum requirement to set up a Private Limited Company, you will know that you need a minimum of 1 Director. For Foreigners, the requirement is that the Directors must be a resident or have a primary place of residence in Malaysia. The law however does not say you need a working visa, PR status or etc to be a Director. So all you need to show is you have a local correspondence address.

(b) Here is where it gets a bit tricky, yes you can register as a Director but when performing your duties as a Director, the law will deem that you are working and thus you will need a working visa, business card or etc (read more about your options here or PM me so I can introduce you to service providers that may help)

Implication for performing duties as Director without proper documents:

a) Fine of not more than RM10,000 and/or Imprisonment not more than 5 years and/or whipping;

b) Banks will refuse to set up bank accounts for you (unless you have a good relationship with them, depends on your luck) – Can’t run a business without a bank account; and/or

c) Government Agency/Government Link Agency will refuse to deal with you.

As such, after setting up the company, the Director(s) should proceed to apply for a proper paper.

Requirement for the company when applying for a working visa/permit

The requirements to apply working permit/visa are as follows:

(a) Company Eligibility Criteria:

You need to have a private limited company (for example ABC Sdn Bhd)
Company paid up capital requirement:
- 100% locally owned: RM250,000;
- A joint venture (minimum foreign equity is 30% shareholding in the company) : RM350,000; or
- 100% foreign owned: RM500,000.
- Foreign-owned companies operating in wholesale, retail, and trade (restaurant): RM1,000,000.

So what does all of the above mean… You don’t have to meet the minimum paid-up capital requirement to set up a company, but you will need to have the minimum paid-up capital to apply for a working visa/permit.

IMPORTANT NOTE: The common issue that arises is that Company Secretary sometimes forgot to mention to the Foreign Founder that they need to get a working visa/permit to operate their business but it is not required to set up the Company. So it leads to a situation where the Foreign Founder becomes frustrated that he/she will not be able to operate his business after setting it up.