Introduction - Companies Act can be defined as the legal act that regulates the formation, dissolution and management of companies. It differs from Country to Country. No company can be established without following the norms set by the law. Given below is a comparison between Singapore and Malaysia.
Singapore's Companies Act came into force in 1967. Any business that has more then 20 employees is termed as a Company. Companies in Singapore are governed by the Companies Act (Cap 50, 1994 Rev Ed.). Certain companies in addition to the Companies Act are also governed by other Acts. Example, Banks and Insurance companies are also governed by the Insurance and Banking Acts.
Company wishing to do business in Malaysia must register with the Companies Commission of Malaysia under the Companies Act, 1965. It is challenging to form a company in Malaysia because of bureaucratic incorporation procedures. The cost for registration ranges from US$300 to US$21,000, depending on the company's authorized and issued share capital.
Given below is a comparative study for setting up a business in Singapore and Malaysia.
I. Types of Companies that can be formed
Singapore
• Sole-proprietorships/Partnerships/Limited Liability partnership
• Private limited company
• Public limited companies
Malaysia
• Limited Company by Guarantee
• Limited Company by Shares - Private and Public Limited Company
• Unlimited Company
II. Procedure and Timelines for Company Registration
Singapore
• Get company name approval
• Prepare registration documents
• Client to sign company registration documents
• Register company
• Open bank account
• Memorandum and Articles of Association
• Statutory Declaration of Compliance
• Particulars of Shareholders, Directors, Secretaries, etc.
• Certificate of Identity
• Situation of Registered Office/Office Hrs at Time of Registration
• Consent to Act as Director and Statement of Non-disqualification to Act as Director
• A Consent to Act as Secretary
• Time taken to register the Company is normally 1 day.
Malaysia
• Choose Company Name
• In case the proposed name is available, a reservation period of 3 months is granted
• Certified copy of Certificate of Incorporation from the country of origin
• Submit copies of Memorandum and Articles of Association, Articles of Association statutory declaration
• List of Directors and a memorandum stating the powers
• One or more agents who are residents of Malaysia to accept notices on behalf of the company
• Appointment of approved Auditor
• A registered office
III. Advantages of doing Business in Singapore vs. Malaysia
Singapore
• Singapore has extensive tax-treaties with other countries
• English is a common language
• Taxes are only on the income sourced within or that is remitted into Singapore from a foreign source
• It has a one-tier corporate tax system
Malaysia
• Does not have tax treaties with other countries
• Both the company and its shareholders will be taxed on the profits earned
• Minimum of 2 Directors and 2 Shareholders are required
• Companies are subject to withholding tax of 20% and the corporate tax on all income is 27%
• Foreign companies are required to apply for foreign investment committee approval when taking a Malaysian company shareholding exceeding 30%
• Malaysia is perceived as the world's 47th least corrupt country
• Malaysia ranks negative 63rd on United Nations Human Development Index.
For more information on Singapore refer to Singapore Company registrar and for information on Taxes refer to Singapore Tax Rate Guide.
by Andrew GMS Chen
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