Human Resource

Having helped numerous foreign businesses set up and operate across Malaysia, the MISHU team can happily confirm that yes, foreigners can legally start and run businesses in Malaysia.

However, compared to Malaysian-owned businesses, foreign ventures are generally subject to greater restriction in terms of:

• business entity options
• higher licensing requirements, and
• expatriate hiring

Finally, the non-negotiable requirement to have a locally residing director often complicates matters for foreign establishments in a way that local businesses simply do not face since they are already local.

That said, these requirements are not impossible to meet, and below we address the 20 top questions from foreign businesses looking to expand into Malaysia.

Let’s begin.

Foreign vs foreign-owned company

What is a foreign company in Malaysia?

Under the Companies Act 2016, a foreign company refers to:

• A company incorporated outside Malaysia
• A body corporate formed under foreign law

This type of entity registers in Malaysia as a branch of the overseas parent company.

What is a foreign-owned company in Malaysia?

A foreign-owned company is a company incorporated locally in Malaysia (usually a Sdn Bhd) where some or all shares are held by non-Malaysians. It is still considered a Malaysian company because it is incorporated with the Companies Commission of Malaysia (SSM), even if ownership is 100% foreign.

What is the key difference?

• Foreign company = Incorporated overseas, registered as a branch in Malaysia
• Foreign-owned company = Incorporated in Malaysia, but owned by foreigners

Business entities for foreign businesses in Malaysia

Can a foreigner register a sole proprietorship?

No. Sole proprietorships and partnerships registered with Suruhanjaya Syarikat Malaysia are only available to Malaysian citizens or permanent residents.

What business structures are available to foreigners?

Foreigners can choose from:

1. Private limited company / subsidiary (local company)
   • most common structure
   • can be 100% foreign-owned
   • separate legal entity
     
2. Branch office (Foreign Company)
   • extension of overseas company
   • parent company remains liable
     
3. Labuan Company
   • Malaysian Sdn Bhd owned by a foreign parent company
   • separate legal entity
   • limited to doing business in Labuan

Is a subsidiary or branch better?

It depends! Subsidiaries offer limited liability protection and more flexibility making them preferred for long-term operations while branches are simpler structures that can be set up for faster and cheaper but exposes parent company to liability.

We go in-depth in our subsidiary vs branch comparison for foreign businesses here.

Specifics on foreign-owned company registration

How to register a foreign-owned company in Malaysia?

The general process includes:

1. Name search and approval
   
2. Appointment of at least one director who ordinarily resides in Malaysia
3. Preparation of incorporation documents
4. Registration with SSM
5. Appointment of company secretary
6. Opening a corporate bank account
7. Applying for relevant business licenses

What are the requirements to register a private limited company in Malaysia?

Typical requirements include:

• Incorporation under the Companies Act 2016
• Minimum one resident director
• Registered office address in Malaysia
• Paid-up capital (industry-dependent)

What is the minimum paid-up capital?

Legally, RM1 is allowed by SSM.
However, practical requirements vary depending on:

• industry regulations
• Employment Pass applications
• WRT license requirements
  

Can a foreigner be a director?

Yes. A foreigner can be a director. However, the company must maintain at least one director who ordinarily resides in Malaysia.

What documents are required for incorporation with a foreign director?

Common documents include:

• passport copy
• proof of residential address (must be Malaysian address if they are resident director)
• proposed business activities
• shareholding structure details

Nominee directors and shareholders

What is a nominee director in Malaysia?

A nominee director is appointed to satisfy the resident director requirement and acts under a private agreement with the beneficial owner.

Why are nominee directors used?

They are typically used when:

• the foreign owner does not reside in Malaysia
  
• the company needs to meet the statutory resident director requirement
  

Can a nominee director be appointed if there is a sole foreign shareholder?

Yes. This is common where a foreigner owns 100% of the shares but requires a Malaysian-resident director for compliance.

What is a foreign shareholder?

A foreign shareholder is a non-Malaysian individual or foreign corporate entity holding shares in a Malaysian-incorporated company.

WRT licenses

What is a WRT license?

A Wholesale, Retail & Trade (WRT) license is required for foreign-owned companies engaging in distributive trade activities in Malaysia. It is issued by the Ministry of Investment, Trade and Industry (MITI).

Who needs a WRT license?

Generally required when:

• the company is foreign-owned
  
• the business involves wholesale, retail, franchising, import/export, or distribution activities
  

This includes f&b operations like foreign-owned restaurants, food kiosks, and stalls!

What if a foreign f&b business operates in Malaysia without a WRT license?

For starters, it’s a gamble whether or not the Local Authorities responsible for a premise and signboard license will even issue the business a license, and if they don’t, the business will not be able to operate at all.

If they accidentally issue the business a license to operate in a premise, every follow-up inspection is potentially the day the Local Council realises their mistake, at which point the business will likely be fined and potentially ordered to shut down.

What is certain is that without a WRT license, the business will not be able to bring foreign staff members over to Malaysia, as a WRT license is one of the mandatory supporting documents required to apply for an Employment Pass, and the Immigration authorities are generally much stricter than Local Councils.

What is the minimum paid-up capital for a WRT license?

For 100% foreign-owned companies, the minimum paid-up capital is typically RM1,000,000, though this may vary depending on the specific business model and regulatory updates.

Does every foreign-owned company need a WRT license?

No. Service-based businesses (e.g., consulting, IT services, certain advertising companies) may not require a WRT license unless their activities fall within distributive trade guidelines.

However, these companies will need an Unregulated Services Sector (USS) license which carries identical requirements and application steps to its WRT counterpart.

Let MISHU handle your WRT license application

If you are a foreigner looking to set up a restaurant in Malaysia, consider our professional WRT license application services for a one-stop solution for company incorporation, visa applications, and full licensing support.