Why Set Up a Branch Office?
A branch (legally called a “foreign company” under the Companies Act 2016) lets an overseas corporation trade in Malaysia without forming a separate legal entity. All contracts, assets and liabilities sit with the parent, so the branch is ideal when you:
- Want full managerial control from HQ.
- Plan short- or medium-term projects (e.g., construction, EPC, oil-&-gas).
- Need to book Malaysian income directly into head-office accounts.
Remember: A branch is not ring-fenced from its parent. If you need liability separation or a local equity partner, a subsidiary (Sdn Bhd) may be better.
Legal Basis & Key Conditions
| Requirement | Source |
|---|---|
| Register as a foreign company before establishing a “place of business” or within 30 days afterwards | s. 562 CA 2016 |
| Appoint one local authorised agent (individual or corporate) to accept service of process | s. 566 CA 2016 |
| Maintain a registered office in Malaysia | s. 566 CA 2016 |
| Lodge annual return every year on the branch’s registration anniversary | s. 576 CA 2016 |
| File parent-company audited financial statements + branch statements within 2 months of the parent’s AGM | s. 575 CA 2016 |
Failure to comply attracts fines up to RM50,000 plus RM1,000 per day of continuing default.
Advantages vs Disadvantages
| Branch Office | Subsidiary (Sdn Bhd) |
|---|---|
| Single set of global accounts; easier profit repatriation (no dividends) | Separate legal entity; parent liability ring-fenced |
| Faster exit—one striking-off / deregistration | Can access SME tax rates, local incentives |
| Taxed at 24 % flat on Malaysian profits | Graduated SME rates (15 %/17 %/24 %) if criteria met |
| Parent must file worldwide financials with SSM | Only Malaysian subsidiary’s accounts filed |
| Certain government licences insist on local company | Eligible for Bumiputera or local-ownership tenders |
Step-by-Step Registration Process
| # | What You’ll Do | Docs & Tips |
|---|---|---|
| 1. Name Check | Ensure the parent’s exact legal name is available in Malaysia (add “(Malaysia) Branch” if desired). | Name is reserved during filing – no RM50 reservation needed if you proceed straight to registration. |
| 2. Compile Documents (certified, apostilled or notarised) | 1. Certificate of incorporation 2. Constitution/M&As 3. Latest audited accounts 4. List of directors & shareholders 5. Memorandum of appointment and power-of-attorney for local agent | Non-English docs require certified translation. |
| 3. Prepare Section 562 Application (Super-Form for Foreign Company) | Use SSM template – fill addresses, business nature (MSIC codes), agent details, paid-up capital, etc. | |
| 4. Pay SSM Fee | Based on parent’s share capital (converted to RM at spot rate): ≤ RM 1 m –> RM 5,000 > 1 m ≤ 10 m –> RM 20,000 > 10 m ≤ 50 m –> RM 40,000 > 50 m ≤ 100 m –> RM 60,000 > 100 m or no share capital –> RM 70,000 | Pay online via MyCoID or at SSM counter. |
| 5. SSM Review & Approval | SSM issues the Notice of Registration usually within 1 working day if documents are complete | |
| 6. Post-Registration | – Carve parent company chop on invoices – Register for tax file with LHDN – Open bank account (provide Section 562 notice + board resolution) – Apply for industry licences (if needed) |
Total timeline: 5–10 working days (depends on document certification and courier time).
Ongoing Compliance Calendar
| When | What to File | Fee |
|---|---|---|
| Within 2 months after parent AGM | Parent audited FS + branch accounts (s. 575) | RM 200 SSM |
| Every anniversary of registration | Annual Return (s. 576) | RM 500 |
| Ad-hoc | Changes in agent, directors, registered office or name (s. 567-570) | RM 50–250 |
Tax: Branch profits are taxed at the non-resident rate of 24 %; no withholding tax on after-tax remittance to HQ.
Required Documents at a Glance
| Document | Certification Level | Notes |
|---|---|---|
| Certificate of Incorporation (parent) | Notary + Malaysian Embassy | Within 3 months of issuance |
| Constitution / M&A | Same as above | Translated if not English |
| Power of Attorney for agent | Notary | Authorises agent to accept service |
| Board Resolution approving branch | Notary | States Malaysian business scope |
| Latest Audited FS | Parent auditors’ original | Convert currency to RM for SSM |
| Section 562 Form | SSM e-Form | Signed by agent & director |
Common Mistakes & How to Avoid Them
| Mistake | Fix |
|---|---|
| Late filing (> 30 days after place of business established) | Start compile & SSM filing before leasing office / hiring staff. |
| Incomplete certification chain | Use one stop – notary, then apostille/consular legalisation if your home country not in Hague Convention. |
| Forgetting Beneficial Ownership register | Maintain BO register & annual BO submission (2020 SSM guideline). |
| No local agent backup | Appoint at least two individuals in the PoA, in case one resigns. |
How Our Firm Can Help
- Pre-flight advisory – branch vs subsidiary vs rep office analysis.
- Document certification logistics (notary, consular, translation).
- Section 562 filing & fee payment with SSM.
- Local authorised agent service (licensed company secretary).
- Full post-registration support – tax file, MBRS filings, payroll, SST.
Last Updated: 28-Apr-2025