COUNTRY

Malaysia

SETTING UP A BRANCH OFFICE IN MALAYSIA

Setting up a branch office in Malaysia is a fairly straightforward process if you meet all the minimum requirements. Our guide below will let you know about all the essential information relating to setting up a branch office in Malaysia. 

A branch in Malaysia can be registered through the Companies Commission of Malaysia (SSM). A Malaysian branch is allowed to undertake legitimate profit-making activities by acting independently, unlike a representative office that is not allowed to undertake any commercial activities.  

What Is A Branch Office?

A branch office is not a legal entity in its own right. It is a branch of the foreign parent company and must carry out the same business operations as the parent company. 

The foreign parent company is accountable and responsible for any obligations owed by the Malaysian affiliate. A branch office’s operations must be the same as those of the international parent company, and a branch is appropriate for foreign companies who wish to extend their business in Malaysia on a short-term basis.

KEY REQUIREMENTS FOR SETTING UP A BRANCH OFFICE IN MALAYSIA

It is essential to know that when establishing a business in Malaysia as a branch, the branch office will be completely reliant on the parent company and will represent its best interests in the Malaysian market. As the branch office is a legal extension of the parent company’s business, the operation in Malaysia must be authorized by the parent company overseas. 

Some of the key requirements for setting up the branch office are listed below –

Name of the branch office

The branch must be registered in the same trading name as the parent company overseas.

Permitted business activity

The business activity of the branch must be the same as the foreign overseas company. 

Ownership and Liability

The branch office in Malaysia is owned by the parent company, which will be liable for any obligations incurred due to the branch’s operations in this country.

Requirements for accounting

Malaysia’s branch office must file annual accounting records with the local authorities. 

Advantages Of Setting Up A Branch Office In Malaysia

Access to the Malaysia market

Establishing a branch office is one of the easier options for companies wishing to move into the jurisdiction. By setting up a branch office, you will have a great chance to increase your company’s growth.

Tax advantages

The branch is taxed on revenue generated within Malaysia and can enjoy multiple double-taxation agreements in place with other countries. Hence depending on your business activities, it might be beneficial to set up a branch instead of an Sdn Bhd

Easy registration

As a branch office is not a separate legal business with its articles of incorporation, there are fewer registration requirements. This simplifies the registration procedure. As a result, you can commence your business operations in no time after setting up a branch office.

No restrictions on hiring employees

A branch does not have any restrictions on hiring local employees. As such, it does not differ much in terms of operations compared to an Sdn Bhd. 

REQUIREMENTS FOR SETTING UP A BRANCH OFFICE IN MALAYSIA

Requirements Description
Name The name of the company will need to be the same as the overseas parent company, and it must be registered through the Companies Commission of Malaysia (SSM) online system.
Business activity The branch must be registered with the same business activity as the parent company.
Physical office Depending on the entity's intended business activity, a branch might need to have a valid business premise for operation.
Officers To open a branch office, at least one resident agent must be present.

Required Documents For The Setup Of The Branch Office In Malaysia

The list of documents needed is as follows.

  • Certified copy of a foreign company’s certificate of formation or registration.
  • If obtainable, a certified copy of the memorandum and articles or other papers outlining its constitution.
  • A copy of the application, as well as a reservation for the availability of names.
  • A copy of the email for approval verification of name reservation.
  • Documents that are certified in Bahasa Malaysia or English if they are in another language.
  • Form 79 – Return by a foreign firm containing information on its directors and changes to its information.
  • A power of attorney proves that the parent firm has designated an individual resident in Malaysia to accept paperwork on its behalf.

STEPS FOR SETTING UP A BRANCH OFFICE IN MALAYSIA

Registration of the company name

The name of the company will need to be registered with the SSM. Once the company name has been approved, the name will be reserved for 30 days from the date of approval, and you may extend the name reservation every 30 days for a maximum of 180 days for a fee of RM50. The company name that has been registered should be the same as the foreign company’s name.

Registration with SSM

Within 30 days of the company name’s approval, you must register the branch by submitting the required documents from SSM. Relin Consultants will prepare the necessary documents required for submission. 

As of 2022, the registration fee for a trading name of branch offices costs RM 60 annually, and an additional RM 5 will be payable for each branch office opened in Malaysia. 

Companies must inform SSM of any updates, such as changes to the shareholding structure, changes in directors, changes in registered agents, and changes in office address. The standard fee for updating the register in 2022 is approximately RM20. 

The fee for registering your company will depend on the amount of your shared capital.

Authorized share capital (RM) Fees (RM)
Up to 400,000 1,000
400,000 – 500,000 3,000
500,000 – 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
If you require further assistance setting up a branch in Malaysia, do reach out to us at enquiry@relinconsultants.com

Corporate bank account opening

Once the registration is completed, the branch can proceed to open a corporate bank account in Malaysia

Some of the reputable banks in Malaysia are as follows. 

  • Maybank
  • Public Bank Berhad
  • RHB Bank
  • Hong Leong Bank Berhad
  • UOB Bank
  • HSBC Bank

You can refer to corporate bank account opening for additional information on opening a bank account in Malaysia. 

Annual compliance requirements of a branch

  • Tax filing

All Malaysia branches must annually prepare Audited financial statements and complete their tax filing. Failure to do so will subject the branch to penalties. A branch must also declare and complete the withholding tax filing and payment should there be any overseas remittance of profits. 

  • Annual Return filing

A branch must also ensure it timely submits the annual return to SSM.

A branch failing to do so will result in an offense, and if convicted, the company and its directors will face penalties under sections 165 and 169 of the Companies Act 1965.

Feel free to contact me if you require additional information regarding annual return filings in Malaysia.

FAQs

What is the difference between a branch and a representative office?

A representative office is not permitted to earn a profit, but a branch office is permitted to execute specific parent company tasks and may generate profits.

How much does it cost to register the company’s name with SSM?

The cost for registering the company’s name is RM50.

What are the tax rates in Malaysia?

A Malaysian branch will be subjected to local corporate taxes if it generates income within Malaysia. In addition, a branch is also subject to withholding tax levied at a rate of 10%.

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