Difference Between of Local and Foreign Company in Malaysia
Company Law
The Companies Act 1965 is the Act that governs the incorporation of a company in Malaysia and such a company must be registered with the Companies Commission of Malaysia (CCM). A company limited or unlimited may be incorporated as a private limited (Sendirian Berhad) or public limited (Berhad) company . The Act generally sets out the requirements for incorporation, dissolution and winding up of the company. It sets out to balance between on the one hand the indoor management of the company and on the other the need to lift the corporate veil in the event of mismanagement etc. Courts are generally reluctant to interfere into the affairs of the company and would only do so within the purview of the Act. As such, if any action is taken against a company, a litigant need to know the application and the relevant provisions of the Companies Act 1965 (hereinafter referred to as “the Act”) and also the Company (Winding-Up) Rules 1972.
A Locally Incorporated Company
A locally incorporated company must maintain a registered office in Malaysia and normally the registered address is the address of the company secretary wherein all the necessary forms, documents, common seal etc are kept and this would also normally be the address for service of process. Therefore, it is essential for a local company to appoint a company secretary in Malaysia. The company must have at least two directors who are Malaysian citizens and resident in Malaysia. The director need not be a shareholder, however, as far as public limited companies are concerned (principal/subsidiary) the number of directors normally should not exceed 70 years of age. Insider dealing is disallowed under the Act and a company cannot hold shares in the holding company. The Act provides for shareholders rights e.g. in a public an equity share carries one vote at a poll at any general meeting conversely in a private limited company the company can grant different voting rights for its shareholders.
Foreign Companies
A foreign company desiring to conduct business in Malaysia must apply for the approval of CCM and upon approval has to lodge the necessary documents. The company must have a registered office in Malaysia (as described supra). A foreign incorporated company must file a copy of the annual return each year within one month of its annual general meeting. Within two months of its annual general meeting, the company must file in its fully audited accounts.
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