Sdn Bhd Incorporation Malaysia 2026: Step-by-Step Guide + Cost
Why incorporate a Sdn Bhd?
- Limited liability — shareholders are not personally liable for company debts (subject to fraud and personal guarantees).
- Separate legal personality (Salomon v Salomon principle) — the company can sue and be sued in its own name; it survives changes of ownership.
- Easier to raise capital — banks lend to companies, not individuals; investors prefer shares.
- Continuity — the business survives the death or departure of a founder.
- Tax efficiency — corporate tax 17% on first RM 600,000 of chargeable income (SME rate); 24% above. Compare to top personal income tax rate of 30%.
- Credibility — banks, suppliers, and customers prefer dealing with companies over sole proprietorships.
Requirements under the Companies Act 2016
- 1 director minimum — at least 18 years old, of sound mind, not bankrupt, ordinarily resident in Malaysia (section 196 CA 2016)
- 1 shareholder minimum — can be the same person as the director, or any natural or legal person (Malaysian or foreign)
- 1 company secretary — must be appointed within 30 days of incorporation. Must be a member of a prescribed body (MAICSA, MIA, MICPA) or licensed under section 235 CA 2016
- Registered office address in Malaysia — typically the company secretary’s office
- Constitution (formerly Memorandum and Articles of Association) — optional under CA 2016 since the Act provides default rules, but recommended
- Approved company name — checked against SSM database
- Initial paid-up capital — no minimum; RM 1 sufficient
Step-by-step incorporation process
- Step 1: Name reservation (1-3 working days) — submit proposed names via SSM’s MyCoID online portal. Fees RM 50 per name. Up to 3 names can be checked simultaneously. Approved name reserved for 30 days.
- Step 2: KYC and document collection (parallel with Step 1) — collect from each director and shareholder: copy of MyKad / passport; proof of residential address (utility bill less than 3 months old); statement of personal information; declaration of fitness (under section 198 CA 2016).
- Step 3: Drafting the constitution and resolutions — prepare the company constitution (if using a custom one), the first board resolution appointing director and secretary, and the first shareholder resolution.
- Step 4: Filing the incorporation application — Form Section 14 of CA 2016 with SSM, accompanied by: name approval, statement of compliance, constitution (if any), director and shareholder declarations, particulars of registered office, secretary appointment.
- Step 5: SSM review and incorporation (5-14 working days) — SSM reviews and issues the Certificate of Incorporation (Notice of Registration of Company under section 17 CA 2016) and the company’s e-Registration Number (12-digit).
- Step 6: Post-incorporation tasks — Open corporate bank account (RM 1 to RM 1,000 minimum balance depending on bank); Apply for Inland Revenue tax file (Borang E and CP58); LHDN file number; SOCSO and EPF registration if employing staff; Sales and Service Tax registration if applicable.
How much paid-up capital should you have?
| Purpose | Recommended paid-up |
|---|---|
| Minimum legal | RM 1 |
| Standard SME, no special licences | RM 1,000 to RM 100,000 |
| SME seeking initial bank financing | RM 100,000 to RM 500,000 |
| Company employing foreign workers (employment pass) | RM 500,000 minimum (subject to ratio rules) |
| Foreign-owned company applying for MM2H | RM 1 million minimum |
| Holding industry licence (banking, etc.) | Varies — banking RM 300 million; insurance RM 100 million |
Paid-up capital can be increased later by share allotment — but the SSM filing fee is calculated on the increase amount. It’s common for first-time founders to start at RM 1,000 and increase as needed.
Cost breakdown
SSM fees (paid to government)
- Name search and reservation: RM 50 per name
- Registration fee for paid-up capital up to RM 100,000: RM 1,010
- Sliding scale upward to RM 70,000 for paid-up > RM 100 million
Professional fees
- Lawyer for incorporation + standard constitution: RM 1,500 to RM 3,500
- Lawyer with bespoke constitution / shareholders’ agreement: RM 5,000 to RM 25,000
- Company secretary first-year retainer: RM 1,200 to RM 3,000
- Accountant for Borang E / tax setup: RM 500 to RM 1,500
Indicative all-in first-year cost
RM 3,500 to RM 10,000 for a standard SME incorporation. RM 10,000 to RM 30,000 if you also commission a shareholders’ agreement, employment contracts, and IP/trademark filings.
Should you have a constitution?
Under section 31 of the Companies Act 2016, a company is NOT required to have a constitution — the default rules in the Act apply. However, a constitution is recommended where:
- You want different share classes (founder shares with super voting rights, preference shares for investors)
- You want restrictions on share transfers (rights of first refusal, pre-emption)
- You want a specific quorum for board meetings or special resolutions
- You want indemnity provisions for directors
- You have multiple shareholders and want to set out reserved matters
For 1-2 shareholder companies with simple structures, the default rules under CA 2016 work fine and a constitution is unnecessary.
Post-incorporation compliance calendar
- Within 30 days: Appoint company secretary (under section 236 CA 2016)
- Within 60 days: First Annual General Meeting NOT required under CA 2016 for private companies
- Annual: File Annual Return (within 30 days of company anniversary date) — section 68 CA 2016
- Annual: File audited financial statements with SSM (within 6 months of financial year end) — section 248 CA 2016
- Annual: File LHDN tax return (Borang C/CP6 by 7 months after year end)
- Ongoing: Update SSM on changes of director, shareholder, secretary, address, share capital
Free 30-minute consultation
We incorporate companies and draft tailored constitutions and shareholders’ agreements. Free consultation for first-time founders and SME structures.
- WhatsApp +60 17-702 2800
- Phone +60 18-662 8866
- Email [email protected]
For more on corporate matters, see our Corporate & Commercial Lawyer Malaysia page.