Malaysia – How To Set Up A Company Or Business In Sarawak.

Introduction 

The largest state in Malaysia, Sarawak, offers investors and businesses a unique combination of prospects. Often known for its abundant natural resources and expanding infrastructure, Sarawak has become an increasingly attractive destination for business opportunities. However, in order to establish a formal presence and to carry out businesses in Sarawak, one has to first incorporate a company in Sarawak. However, there are different requirements imposed by the Sarawak government when incorporating a company as compared to in Peninsular Malaysia. 

Difference between a Company and Business 

Although on some occasions the terms “company” and “business” are used interchangeably, but they refer to different distinct entities with different legal and operational implications. A company is a formal legal entity registered under the Companies Act 2016, which then offers limited liability protection and is a separate legal entity from its owners. In contrast, a business typically refers to a sole proprietorship or partnership, which is not a separate legal entity and does not provide limited liability protection to its owners. It is important to note that both company and business have a different incorporation process. 

Setting up a Company in Sarawak 

(i) Understanding the Types of Companies 

When establishing a company in Sarawak, one of the most important choices is selecting the appropriate type of company. This is because the legal framework, liabilities and operational structure of a company are decided by the type of company. Hence, business owners must evaluate their business goals, investment capacity, and long-term plans before deciding on a company type. 

Before making a choice, it is essential to understand the differences between each type of company under the Malaysian law, particularly those applicable in Sarawak: 

1. Private Limited Company (Sendirian Berhad or Sdn. Bhd.): The most common type of company, which limits the liability of its shareholders to the shares they hold. 

2. Public Limited Company (“PLC”) (Berhad or Bhd.): Suitable for larger enterprises intending to raise capital through public investment. 

3. Foreign-Owned Company: Companies with foreign ownership require additional approvals, particularly in Sarawak, which enforces stricter governance to ensure local benefits. 

4. Limited Liability Partnership (“LLP”): An alternative for smaller businesses, combining features of partnerships and private limited companies. 

Each type of company has its unique requirements and benefits, hence the size and nature of the business would determine which structure is the best. 

(ii) Process of Company Incorporation in Sarawak  

To first register a company in Sarawak, you must first search for a business name and check its availability with the Inland Revenue Board (“LHDN”) Kuching Sarawak Office. This step can be done online through the e-Resident & District Office (“e-R&DO”) website. Once the business name is confirmed, the registration process can proceed wither online or offline. 

For online registration, create an account on the Companies Commission of Malaysia (“SSM”) website and submit the following documents¹: 

• Form 9 (Certificates of Incorporation) 

• Form 24 (Particular of Shareholders) 

• Form 49 (Particular of Directors/Officers) 

A prescribed fee based on the company’s authorised share capital has to be paid. 

Alternatively, offline company registration is also possible by submitting the same set of documents to the SSM Kuching Sarawak office. Payments may be made in cash at the office.² Once the registration process is completed, the Certificate of Incorporation will be given which serves as a legal proof that the company is duly registered and is allowed to commence operations. 

Pre-Incorporation Requirements for Businesses 

Unlike Peninsular Malaysia, business in Sarawak is not governed by the Registration of Business Act 1956 (“ROBA”)³ but is governed by the Business Name Ordinance (Law of Sarawak Chapter 64)⁴ and the Business, Professionals and Trading Licensing Ordinance (Laws of Sarawak Chapter 33)⁵. Not only that, registration of new businesses in Sarawak goes through LHDN rather than the conventional SSM. The Sarawak government imposes specific conditions and governance requirements for incorporating a company that differs from those in Peninsular Malaysia. 

(i) Details Required for Business 

The Business Name Ordinance provides for the details required to be submitted to the Registrar with a statement in writing which includes⁶: 

1. The name of the firm, that is to say, the name under which the business is carried on, and if the business is carried on under more than one name, every such name; 

2. The number of partners; 

3. The full names, address and nationality (or race) of the proprietor or of each partner as the case may be. If any person is or has at any time been known by any other name or names, these must be stated; 

4. The principal place of business and every branch office and subsidiary place of business of the firm; 

5. The general nature of the business; 

6. The date of commencement of the business; 

7. If the firm is a partnership, the duration of the partnership (if fixed); 

8. Specimens of all chops and official seals to be used in connection with the business; 

9. The proportionate share of each partner in the business; 

10. Particulars sufficient to identify all other businesses or firms in which the proprietor or any of the partners, as the case may be, is or are interested, including such businesses or firms as may not be required to be registered under this Ordinance. 

(ii) Process of Business Registration in Sarawak 

Like incorporating a company, one must verify the availability of the business name. However, the process of registering a business in Sarawak can only be done physically by visiting the LHDN office in Kuching, Sarawak, and go to the Business Name Search counter (Kaunter Pencarian Nama Perniagaan, PNP). Obtain a Business Name Search slip and list three potential names for your business, along with other relevant details. The LHDN officer will confirm availability and provide a checklist of documents needed for submission. 

The nature of your business may determine if additional documents or approvals are required, such as: 

• Trade License Application Form (Borang IRD No.8) 

• Business Names Ordinance Form (Borang R20) 

• Borang TL from Jabatan Statistik 

Registered Office is required in Sarawak 

All companies and businesses in Sarawak must have a registered office within the state, serving as the official address for receiving correspondence and notices from regulatory authorities. Additionally, businesses are required to create a business stamp featuring the complete commercial address.⁷ The following documents are typically needed for registration with LHDN: 

• A Tenancy Agreement or Sales and Purchase Agreement. 

• A Lease of Land (if applicable). 

• A Print-Out of Title (if applicable). 

Additional Requirements may be required by the State Government 

Joint venture companies and wholly foreign-owned companies must provide evidence of paid-up capital expenditures such as current annual financial statements of the company, to verify that these funds have been allocated within the State of Sarawak. Examples of such expenditures include office renovations, asset acquisitions, and similar activities. This documentation is also essential for application renewals.⁸ 

For businesses in the oil and gas (“O&G”) industry, obtaining a license from Petroleum Sarawak Berhad (“PETROS”) is mandatory. Even registered O&G companies must secure the necessary work permits for non-Sarawakian employees. Unauthorized activities, such as operating without proper licensing or using social passes for short-term work like inspections, are prohibited and subject to strict enforcement. 

For example, PETROS requires Non-Private Limited Company (“Non-PLC”) to have at least 51% Sarawakian participation in shareholders, directors, management, employees, and financial management before they could apply for a licence in O&G.⁹

*Extracted from https://www.petroleumsarawak.com/what-we-do/be-our-partner/registration-requirements 

Under the Sarawak Labour Ordinance (Chapter 76)¹⁰, employers are also required to obtain state government approval before hiring non-resident workers. Non-compliance can result in severe penalties, including fines and imprisonment.¹¹ 

Conclusion 

While Sarawak offers significant opportunities, starting a company or business in Sarawak requires strict compliance with its unique regulatory framework. Entrepreneurs must navigate processes like company registration, maintaining a registered office, and obtaining necessary licences, such as those from PETROS for regulated industries. Sarawak’s needs must be met by prioritising local involvement in ownership, management, and operations. For companies ready to comply with its rules, Sarawak offers a promising environment with its abundant resources and encouraging policies. 

For further information, please contact:

Abdul Karim Ariez Mohd Nur Harris, Azmi & Associates

karimariez@azmilaw.com

1. SSM, ‘Companies Act 2016’ https://www.ssm.com.my/Pages/Legal_Framework/Companies-Act-2016.aspx accessed 3 January 2025. 

2. Ibid. 

3. Registration of Business Act (Act 197). 

4. Chapter 64, Business Names Ordinance (1958 Edition). 

5. Ibid. 

6. Chapter 64, Business Names Ordinance (1958 Edition), s 5. 

7. Invest Sarawak, ‘Business Registration in Sarawak’ https://investsarawak.gov.my/business-registration/ accessed 3 January 2025. 

8. Invest Sarawak, ‘Business Registration in Sarawak’ https://investsarawak.gov.my/business-registration/ accessed 3 January 2025. 

9. Petros, ‘Registration Requirements’ https://www.petroleumsarawak.com/what-we-do/be-our-partner/registration-requirements accessed 3 January 2025. 

10. Chapter 76, Sarawak Labour Ordinance (1958 Edition). 

Nura V Lorna, ‘Strict licensing rules for O&G industry in Sarawak’ (Sarawak Tribune, 19 November 2024) https://www.sarawaktribune.com/strict-licensing-rules-for-og-industry-in-sarawak/ accessed 3 January 2025.