Licensing Requirements for Doing
Business in Malaysia

1. BUSINESS PREMISE LICENSES AND SIGNBOARD LICENSES

Companies doing business in Malaysia are required to apply for business premise licenses and signboard licenses from the respective State Authorities. The requirements for the application of a business premise license and a signboard license may vary according to each local authority. Generally, an application for a business license and signboard license must be accompanied by:

(i) Photocopy of the applicant's identity card

(ii) Passport-sized photograph of the applicant

(iii) Copy of the company's M&A and Forms 9, 24 and 49

(iv) Copy of either the rental agreement or the sale and purchase agreement of the company's business premise

(v) Copy of the Certificate of Fitness of the company's business premise

(vi) Copy of the Fire Department's support letter

(vii) Copy of the location plan of the company's business premise

(viii) Photographs of the business premise

(ix) Photographs showing the location of the company's signboard

(x) Samples of the signboard indicating its design and colors

For further information for companies located in Kuala Lumpur, kindly visit DBKL's website at www.dbkl.gov.my

For further information for companies located in Petaling Jaya, kindly visit MPPJ's website at www.mbpj.gov.my

2. SPECIAL LICENSES

In addition companies doing the following businesses are also required to obtain special licenses:

i) Manufacturing

Manufacturing companies with shareholders' funds of RM2.5M and above or which employ at least 75 full-time employees are required to apply for manufacturing license from MIDA.

For further details please visit MIDA's website at http://www.mida.gov.my

ii) Banking

Under the Banking and Financial Institutions Act, 1989, the Malaysian Central Bank licenses and regulates businesses such as banking, money broking, discount houses, provision of credit and finance, merchant banking, deposit taking and certain other financial businesses.

For further details, please visit Bank Negara's website at www.bnm.gov.my.

iii) Building and Construction

All Companies in this field must obtain a licence from the Construction Industry Development Board (CIDB) prior to incorporating in Malaysia and before undertaking any construction and related activities in the country.

For further details, please visit CIDB's website at www.cidb.gov.my

iv) Oil and gas industry

When incorporating in Malaysia, companies which wish to explore and develop upstream oil and gas reserves in Malaysia are required to sign a production sharing agreement with Malaysian state Oil Company Petronas.

For further details, please visit Petronas website at www.petronas.com.my

v) Wholesale and Retail Trade

When incorporating in Malaysia, note that all proposals for foreign involvement in wholesale and retail trade must obtain the approval of the Committee on Wholesale and Retail Trade (CWRT).

There is no restriction on maximum shareholding i.e. foreigners can own 100% of a company. If they own more than 30% of any company, they will be required to apply for Foreign Investment Committee approval, the process of which takes more than 6 months but approval is normally given. Normally, small businesses will not apply for any FIC approval unless there is business with the government departments.

Wholesale and Retail Trade (WRT) license is required by all companies that are in the wholesale, retail, trading, import/export and restaurant business which have foreign shareholding. The WRT license is required by all the said business sectors before they can apply for a professional work permit.

The Companies with foreign ownership that are engaged in distributive trade are required to obtain a wholesale and retail trade (WRT) license from the Malaysian Ministry of Domestic Trade and Consumer Affairs (MDTCA) [KEMENTERIAN PERDAGANGAN DALAM NEGERI DAN HAL EHWAL PENGGUNA (KPHDN)]. For WRT, the minimum paid up capital requirement is RM 1 million. Other companies with foreign ownership that are not engaged in distributive trade do not require a WRT license.

For further information, kindly visit KPHDN's website at www.kpdnkk.gov.my

3. FOREIGN INVESTMENT COMMITTEE APPROVAL

Foreign investors may have to obtain the approval from the FIC for the following:

• any proposed acquisition by foreign interests of any substantial fixed assets in Malaysia
• any proposed acquisition of assets or any interests, mergers and take-overs of companies and businesses in Malaysia by any means, which will result in ownership or control passing to foreign interests
• any proposed acquisition of 15% or more of the voting power by any one foreign interest or associated group or by foreign interest in the aggregate of 30% or more of the voting power of a Malaysian company and business
• control of Malaysian companies and businesses through any form of joint-venture agreement, management agreement and technical assistance or other arrangements
• any mergers and take-over of any company and business in Malaysia whether by Malaysian or foreign interests
• any other proposed acquisition of assets or interests exceeding RM10 million in value whether by Malaysian or foreign interests (the threshold was revised to RM10 million with effect from 21 May 2003)
• Any acquisition by Malaysian interests of shares in Malaysian incorporated companies which constitutes more than 50% of the voting power of the company, i.e. where it gains statutory control.

Specific projects approved by the Government are exempted from the requirement of obtaining FIC's prior approval. Normally, small businesses will not apply for any FIC approval unless there is business with the government departments.