Subsidiary vs. Branch in Malaysia

Updated on Thursday 01st September 2016

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Foreign investors in Malaysia can carry out business operations in the country through a branch or a subsidiary or a representative office. The first two types of businesses are preferred because they have a larger business scope.

The differences between the subsidiary and the branch in Malaysia lie mainly in the foreign company’s liability. The experts at our law firm in Malaysia can help you with detailed information about the registration and taxation principles for each type of company you can incorporate in the country.
 

Foreign company registration in Malaysia


All companies in Malaysia must be registered with the Companies Commission of Malaysia. Foreign companies are defined as those types of legal entities that are incorporated outside of the country. These foreign corporations may conduct business activities in Malaysia provided that they register the foreign company in the country or if they incorporate a new, local company.

In order to be registered in Malaysia, foreign companies must provide a copy of their Articles of Association, proof of registration in the country of origin, a special registration form and proof of appointment/power of attorney for the individual or individuals who will act on behalf of the company in Malaysia. Additional documents may be needed, especially in the case of subsidiaries that need to have their name approved in the country.

Our lawyers in Malaysia can help you draw up and submit the needed documentation as well as provide you with information about any needed translations for documents that are not in English or Malay.
 

Differences between a Malaysian branch and a subsidiary


The branch and the subsidiary are both two good options for foreign companies that want to establish their presence in the Malaysian market. The choice may depend on the parent company’s available capital as well as the nature of the business.

The branch is simply an extension of the parent company abroad. It must have the same name and perform the same business activities and the parent company is completely liable for the debts and obligations of its Malaysian branch. The incorporation costs, as well as the maintenance costs, are lower in this case.

The subsidiary is a separate legal entity from the foreign company and it can be incorporated as a local Malaysian company. This means that the subsidiary is not dependent on its foreign counterpart and can engage in its own name in business activities in Malaysia. This company will need to observe all of the local registration, taxation and reporting requirements.

For more information about foreign investments in the country please contact the experts at our law firm in Malaysia.

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