What is a foreign company’s branch office?
Branch offices are not separate legal entities. It must carry out the same business operations as the parent company as it is an extension of the foreign parent firm.
The Malaysian branch’s debts are fully the responsibility of the foreign parent business. A branch office is appropriate for foreign enterprises that want to temporarily expand their business into Malaysia. Its activities must match those of the foreign parent company.
To set up a branch office in Malaysia, there must be at least one resident agent from Malaysia.
Benefits of branch office setup in Malaysia:
Access to a new market
It’s standard procedure to utilize a branch office to expand a business elsewhere.
Management control
The foreign parent business has complete control over all of the operations of the Malaysian branch office.
Simple registration
There are few registration procedures for a branch office because it is not a separate legal entity with articles of incorporation. The registration process speeds up as a result.
Tax benefits
The branch is subject to regulations with double taxation and is taxed on revenue derived in Malaysia.
Setting up a branch office requires:
1. The company must be registered via the SSM online system, and its name must match that of the foreign parent company.
2. At least one resident agent is required to start a branch office.
3. There are no restrictions on hiring local or foreign employees for a branch office.
Required papers are:
- A certified copy of the certificate of incorporation or registration for a corporate entity.
- A certified copy of the company’s articles of incorporation, memorandum, or other governing documents, if available.
- A copy of the application, along with a name reservation.
- A copy of the email confirming the approval of the name reservation.
- If the papers are in another language, a certified translation in Bahasa Malaysia or English is required.
- Form 79 is a foreign company’s return containing information on its directors and any changes to that data.
- The power of the lawyer shows that the parent company has authorized a Malaysian resident to accept papers on the parent company’s behalf.
Registering a business name
Procedure for establishing a branch office setup in Malaysia:
- The company name needs to be registered with the SSM for RM50.00. The name will be held for 30 days starting from the date of confirmation, and for RM 50.00, it may be extended for an additional 30 days each time for a total of 180 days.
- The registered company name and the foreign company name must match.
Registration of SSM
After 30 days of receiving confirmation of the company name, you must submit the following details to the SSM together with the proper documents:
If the shareholder is a company, provide the company’s name, registration number, registered office, and place of origin.
Name, identity number, nationality, and primary residence in Malaysia of each shareholder.
Anyone out there appointed as a director of a foreign company in Malaysia is required to supply their name, government-issued identification, nationality, and regular address.
The address and name of a Malaysian citizen.
Your share capital amount will determine the registration fee:
| Authorised share capital (RM) | Fees (RM) |
| Up to 400,000 | 1,000 |
| 400,0001 – 500,000 | 3,000 |
| 500,001 – 1 million | 5,000 |
| 1,000,001 – 5 million | 8,000 |
| 5,000,001 – 10 million | 10,000 |
| 10,000,001 – 25 million | 20,000 |
| 25,000,001 – 50 million | 40,000 |
| 50,000,001 – 100 million | 50,000 |
| 100,000,001 and above | 70,000 |
Compliance and post-registration criteria.
Opening a bank account
The opening of a corporate bank account is possible following the registration of your firm in Malaysia. We advise conducting some research to select the ideal bank for you because each bank offers distinct benefits and costs.
Several national and international banks are available for you to pick from, including:
1. Maybank
2. CIMB Bank
3. Public Bank Berhad
4. RHB Bank
5. Hong Leong Bank Berhad
6. UOB Bank
7. HSBC Bank
What criteria must be met to open a corporate bank account in Malaysia?
The following documents are necessary to open a corporate bank account, but they may differ depending on the bank:
Completed application forms from the bank
A letter of introduction and recommendation from existing customers of the bank (some banks require this, some do not).
Directors’ and authorised signatories’ identification cards, photocopied.
Certified original copy by the company secretary of :
Constitution of the company
Return of share allocation (section 78)
the directors’ list (section 58)
Registration office location (section 46)
Declaratory Statement of Incorporation (section 17)
Resolution from the board of directors to open a bank account and the list of authorised signatories
Conclusion
Foreign investors often choose to set up a branch office in Malaysia since it expands their business presence there and the firm is responsible for the branch’s debts.
Contact JS Advisory in Malaysia for assistance with the registration process if opening a branch office in Malaysia is in line with your company’s desire to expand.