Now you can apply DP10 Work Permit ONLINE
From 15th April, 2014, Now you can apply DP10 work permit online DIRECTLY from Immigration ESD Online website of Immigration Department. Once you have registered your company with paid up capital and have arranged physical office with fixed phoneline and signboard, NO NEED to hire any "Flying Agent". Simply register ONLINE on Immigration Work Permit ESD website to apply DP10 Work Permit ONLINE.
Questions & Answers
o 1) Can a foreigner set up a sole proprietorship or partnership?
Foreigners cannot set up sole proprietorship or partnerships unless in very specific professional industries like medical or engineering whereby there is also culpability for personal indemnities.
Only foreigner with permanent residency can set up enterprises and sole proprietorships.
o 2) What is the difference between a shelf company and a newly formed company?
A shelf company is an existing company formed with a RM2/= paid up share capital,2 local directors and shareholders, and a RM100,000 authorised share capital (stamp duty paid). Upon purchase of a shelf company, the existing directors resign & blank transfer forms are delivered to transfer the share to the purchasers. Business can commence immediately upon purchase.
In order to form a new company, first we have to get approval from the register of companies to use this proposed name. This process can sometimes take a long time depending on the name chose. Upon approval of use of name, the company secretary then prepares the necessary documents for incorporation for filling. This may take another 5-10 day from the date the entire relevant documents are signed.
Business can only commence after the certificate of incorporation has been issued by the register of companies.
o 3) How long does a name search take for the Registrar of Companies to approve?
The result are out normally within 5 working days of submission according to the Client's Charter of the Companies Commission (though it is normal for a few days delay) and you will have a time period of 3 months from the date of the results to register your company.
o 4) Is the shelf company free from liability?
Yes. There is a pre-signed indemnity letter from the previous shareholders admitting liability for transactions before the purchase date but also absolving for liabilities after the purchase date.
o 5) What is included in the purchase or formation price quoted?
Processing of relevant documents for shares transfers or subscriber's shares.Filing or documents to ROC for relevant changes in directors' secretaries.
RM2/= paid up share capital and stamp duty on RM100,000 authorised share capital. Any excess stamp duty to be borne by client.
Secretarial books consisting of minute's book. Share register, member's register 10 copies of memorandum & articles of association & 1 no. common seal.
o 6) How long does it take to register a new company?
From the submission of all necessary paperwork to the ROC it normally takes 5 days for the result to be available but as the ROC's internal information technology systems do breakdown often, it may take up to 2 weeks for the Business Registration Certificate to be issued.
o 7) Who is the company secretary & what responsibility does she have?
According to Section 139 of the Companies Act 1965, all limited companies must have a licensed company secretary who is an officer of the company. Her/his duties are set out in the Act itself and are primarily to ensure the companies are adhering to the procedures set out in the Companies Act. Which is why the company secretary charges a retainer fee for his/her expertise in this field.
o 8) I am a qualified accountant. Can I be my own company secretary?
Only a Malaysian resident who is licensed by the Companies Commission or is a member of a professional body can be appointed as a company secretary for a private limited company.
o 9) From the list of shelf companies, what is the difference between the names listed under B9 and the rest?
B9 refers to the names of companies that have been approved but isn't incorporated yet. It will take about 5 days to incorporate the company. The memorandums & articles and incorporation documents can then be filled with the names of the shareholders & directors (the persons buying the company in this case) and these names will be the ones appearing in the M & A unlike the ready made ones which carries the name of someone else who incorporated the company first.
o 10) What do you consider as a dormant company, a semi-active company and an active company?
A dormant company is one that has ceased operation.A semi-active company is one that is in operation but does not require frequent resolutions to be alone e.g. a trading company.An active company is one take frequently requires resolutions to be done for purpose of obtaining licenses, bank facilities, transactions involving large sums of monies e.g. Developer company.
o 11) Can the secretarial books be kept at the company's office or anywhere else other that the company secretary's address?
Yes, the company secretarial books can be kept at another location but this location must be made public by filing a form with the Registrar of Companies.
o 12) Can any other company personnel draw up their own resolutions without having to go through the company secretary?
Yes, the company can have anyone draw up the resolution document itself but these documents have to be verified by the company secretary since the company secretary shall be held responsible for the preparation of the documents. In most cases, to minimise risks resolutions are done by the company secretary.
o 13) What are the qualifications require to become a director of a private limited company?
- He/she must be of age 18 years and above.
- He/she person must not be an un-discharged bankrupt.
- He/she must not have been convicted of an appointment.
- He/she must be a resident of Malaysia or having a permanent residential address in Malaysia. "Having a permanent residential address" is interpreted as "having the right of abode in the country on a long term basis". A person with a valid work permit will qualify for a permanent residential address status. The Companies Commission will not disallowed the incorporation of any application as the onus of responsibility to check and confirm the attainment of the minimum requisites for the incorporation lies with the company secretary. As such, the implications in the event that such a company is incorporated without the minimum 2 "local" directors, that company is deemed to be illegal in status and all contracts are deemed null & void unless the situation is remedied.
o 14) What are the implications of becoming a director of a private limited company?
Directors are responsible for general management of the company and are answerable to the shareholders of the company and the government. Though the private limited status of the company absolve the shareholders and directors from debt to third parties, directors are personally liable for any monies owing to the government bodies e.g tax, statutory contributions, late fines & penalties levied by any government body. Shareholders are free from all liabilities except for share capital already paid.
o 15) I have come across foreign directors of companies who do not have a work permit nor a long term stay visa of any sort but have been installed as local directors in their companies. The Companies Commission has not rejected the installation. This would be contrary to what is stated above.
We have written in to the Commission once regarding this matter and their response is that it is not their duty to check on the immigration status of the director. The onus then would fall on the company secretary to define the clause "permanent residential address" status according to the Immigration law. In our opinion, we would prefer to define the clause according to Immigration & tax laws as we see and that is what has been stated in the answer in the previous question. Ultimately, the question that is important here is: "If anything should go wrong with the business, and you have a dispute with your partners, where does the company stand legally? Is it an illegal entity?" "Enemies" may use this point to get rid of unwanted partners.
o 16) Can a non-director be a signatory to the company's bank account?
Yes, if he is named as a manager of the company in the Form 49. Some banks do allow third parties to sign cheques without any supporting documents like Form 49 but most do make a big fuss about it.
o 17) Can foreigners owned shares & what is the maximum shareholding allowed in a local private company & the minimum share capital in a foreign owned company?
There is no restriction on maximum shareholding i.e. foreigners can own 100% of a company.There is no requirement to divest 30% shareholding to any locals unless the business or activities require government licencing and approvals. By law, all companies with foreign ownerships are required to apply for Foreign Investment Committee approval. Approval is normally given on condition that 30% shareholding is divested to an ethnic local Malay within 2 years. Normally, small businesses will not apply for any FIC approval unless there is business with the government departments. If the company intends to transact with government departments which will require licensing, the minimum local "bumiputra" (ethnic Malay) participation must be 30% and above. And the management structure of 50% or above is more favourable to get government contracts.
o 18) Is it mandatory for all companies with foreign investment to get FIC approval? What if I don't apply? What are the repercussions?
From legal viewpoint, YES. In reality, there are a lot of foreign owned companies that have not applied for the FIC approval. By law, all companies must get the approval and it is normally given. Depending on the size of your investment and business, we leave it up to the directors/shareholders’ discretion to decide on the importance of this approval. If you are caught not having the FIC approval, all contracts entered into by the company may be challenged and declared “null & void”. So if you are going to do significant business, then I would advise that you get this approval. However, if you do decide to go ahead to get the approval , please be aware of the conditions in the next Q & A below.
o 19) Are there any conditions attached to this approval?
Yes, approval is always granted for the first 2 years with a condition that the company divest at least 30% of its shareholdings to a local investor. A lot of foreign companies have a problem with this condition but the renewal of this approval is usually not a big problem as the government do understand that sometimes it is difficult to find the right partner. However, you may only succeed in renewing without divesting for another 5 years before the government decide on an investor on your behalf. After that , you will be required to go into negotiations with this investor or find your own. Almost always, nominees are used to get around this problem.
o 20) Are the foreign shareholders allowed to work in Malaysia? Is there a way to circumvent this local director requirement?
Foreign investors are allowed to work if they hold a valid work permit. Shareholders can be locals or foreigners but for foreigners to become directors, they must have a valid work permit under the sponsorship of the company they are working for. A foreigner on a dependent's visa or with the Malaysia My Second Home visa will qualify as a passive director but not a working director. The alternative is to seek nominees or trustees. The cost of a nominee or trustee is between RM1,500 and RM2,500 per annum.
o 21) What if I do not have the requisite amount to be banked into the company? Can the RM500,000 capital put in be used and taken out immediately?
Cash or assets can be pumped in as share capital. If you do not have the cash, assets will also qualify. The minimum share capital requirement for qualification purposes depends on the business activity and the percentage of local shareholding in a company. Certain activities are encourage and will require RM500K. Others like warehousing , retail & trade distribution require another approval called the WRT approval and this approval require a minimum of RM1 million if the company is 100% foreign owned. However, if there is local equity, then that amount is reduced depending on the percentage of the equity. The company cannot loan money to its share holders to buy shares from the company i.e. Share capital must be paid into the bank account in cash or into the company’s assets. However, there is no stopping the company withdrawing the same amount immediately after the bank in. The total amount paid into the bank does not have to remain in the account if it is need urgently elsewhere but directors who are also shareholders must not owe the company any monies at year end closing so the auditors would not question whether the shares were actually paid up or not. How this is done will depend on how good your accountant is.
o 22) I understand that the minimum share capital for any company to employ an expat under a work permit is RM250,000. What if I do not have the requisite amount to be banked into the company? Can the RM250,000 capital that put in be used and taken out immediately?
That used to be the case before 1 January 2009. From 1 Jan 2009 on, the new minimum equity structure for qualification of an expatriate post position is as such:-
o 23) What is WRT and why is it required?
WRT stands for Warehousing, Retail & Distributive Trade. The previous share capital requirement for this approval was RM350K. Because of abuse from the private companies using a RM350K company to "sell“ work permits to primarily Asian foreigners who are small time traders and many were caught selling carpets and watches on the streets, this minimum threshold has now been increased to RM500K for a company with local partners & RM1 million for 100% foreign owned equity. This new threshold is to ensure the authenticity of the new investor.
o 24) Is there any way of solve this problem of this huge amount of share capital required in order to do business in Malaysia and apply for a work permit?
Yes. Please email us at email@example.com or call us at 0060-3-92875120
o 25) What if the foreigner is a Malaysian spouse? Will the minimum capital be RM250,000?
Any local company can sponsor the Malaysian spouse. No minimum share capital is required.
o 26) Can the visa applicant go and apply to the Immigration Dept. instead of going through an agent? What is the advantages of using an agent?
Absolutely possible for the applicant to go through the application process themselves. Just be prepared to make numerous trips, long waiting period each time and dealing with immigration officers at the counters.
o 27) Is there any way to get a work permit in a company without having to put up RM250,000 share capital?
Yes, by setting up a representative office of a foreign company. If you have an existing foreign company, you can set up a branch office in Malaysia . There are no capital requirements here but there are restrictions i.e. the company cannot do trading but it can perform marketing and research functions. For more info. on representative office, please email firstname.lastname@example.org
o 28) What if I do not want a representative office set up and do not have RM250,000 to put up?
There are several proposals that are temporary measures for the increase of paid up capital which have worked out for some people. The details of these proposals are sensitive and should be discussed on a more personal basis. You can contact us for a preliminary discussion at (Office): 0060-3-92875120 or on Mob: 0060-10-2985120
o 29) How long is the Professional EP valid for (a) under a private limited company and (b) a representative office?
Standard 2 years for both. The EP under the private limited company shall be extendable for an unlimited time period provided it satisfies all the immigration criterias and if the applicant is a shareholder of the company. The work permit for the representative office is normally extendable for another 3 year up to a maximum of 5 years without question but after the fifth year, you will have to justify why you have already set a local private company up after 5 long years of market research and development. Extensions of another 2 years is possible selectively.
o 30) What are the charges for an EP?
The average service fee exclusive of government levies is between RM3,500 to RM7,500 depending on nationality, applicant’s qualification and complexity of each individual case.
o 31) What is the cost of setting up or buying a company?
A shelf company cost between RM3,500 and RM3,000 depending on how good the name sounds but is up to each individual company secretarial firm.
o 32) What are the cost implications of setting up your own business?
Whether or not you have business or income, the annual statutory maintenance costs for accounts , audit , tax and filing with the Companies Commission would be at least RM2,500 a year depending on how active your company has been.
o 33) What if at the end of the day we decide to close the company if there is no business? Can we do that and what is the cost?
Yes, you can de-register the company if the company does not have any debts to any third party. If there are debts, you will have to liquidate. The difference between liquidation and de-registering , other than having (or not having) debts to third party is the cost and time. The cost for de-registering is around RM2,500 but the cost for receivership and liquidation will start at RM5,000 onwards depending on how messy the company is. De-registration is only available to RM2 paid up capital companies.
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