Most foreign companies entering Malaysia reach for a Sdn. Bhd. — a locally incorporated private limited company — almost by reflex. But it is not the only way a foreign parent can carry on business here. Under Part XI of the Companies Act 2016, a foreign company can register a branch in Malaysia: not a new legal entity, but a registered extension of the overseas parent, trading in Malaysia under the parent's own name. For certain projects, service contracts and short-to-medium-term operations, a branch can be the cleaner structure — no new company to capitalise, no local shareholders, a direct line back to head office. But it carries obligations most people underestimate, and it is the wrong choice for many of the businesses that ask about it. This guide explains exactly how foreign company (branch) registration works under the Companies Act 2016: what "carrying on business" means, the authorised agent requirement, the documents and SSM fees, the tax and compliance profile, and how a branch really compares with a Sdn. Bhd. so you pick the right vehicle the first time.
What a branch actually is
A branch — formally a registered foreign company under Part XI, Division 2 of the Companies Act 2016 — is not a separate legal person. It is the same legal entity as the foreign parent, registered with the Companies Commission of Malaysia (SSM) so it can lawfully carry on business in Malaysia. This single fact drives everything else:
- The branch trades under the parent's name (with its place of incorporation shown), not a new Malaysian company name.
- The parent company is directly liable for the branch's debts and obligations — there is no limited-liability firewall between the Malaysian operation and head office.
- The branch has no shareholders, no directors and no constitution of its own — it is governed by the parent's charter and board.
- It is, by nature, 100% foreign — there is no local equity to introduce, because there is no share capital being issued in Malaysia.
Because a branch is an extension of the parent, it also cannot generally do things that require a locally incorporated company — and Malaysian policy restricts the activities a branch may carry on. In practice, branches are most often used for defined project or service contracts (for example an overseas contractor delivering a specific project) rather than open-ended local trading, retail or businesses that would ordinarily require local equity participation.
"Carrying on business" — when registration is required
Registration is triggered when a foreign company carries on business in Malaysia. Section 561 of the Companies Act 2016 frames what counts — including establishing or using a share transfer/registration office, or administering, managing or otherwise dealing with property in Malaysia as agent or otherwise. Equally important is what generally does not amount to carrying on business: merely maintaining a bank account, holding property, or being a party to legal proceedings does not, by itself, require registration. The line matters — a foreign company that crosses it without registering commits an offence, while one that only does passive or preparatory acts may not need to register at all.
If the intended activity in Malaysia is purely liaison or market research with no trading, the right vehicle is usually a representative office rather than a branch — a non-trading presence that cannot invoice or earn income locally. We cover that path in detail in our representative & regional office guide. A branch is for a foreign company that will actually carry on business and earn income in Malaysia.
The authorised agent — the one mandatory local role
Every registered foreign company must, at all times, have at least one authorised agent who is a natural person resident in Malaysia. This is the branch equivalent of a Sdn. Bhd.'s local director/secretary requirement, and it is non-negotiable:
- The agent is answerable for all acts, matters and things the foreign company is required to do under the Companies Act 2016 — filings, notices, and compliance.
- The agent is personally liable to penalties for the company's defaults in the same way as if they were the foreign company itself.
- The appointment is made through a memorandum of appointment or power of attorney executed by the parent.
For a foreign parent with no one on the ground, the authorised agent is typically a qualified local professional or corporate services firm — the same practical solution foreign-owned Sdn. Bhds. use for the local-presence requirement. Choosing an agent who genuinely understands SSM obligations matters, because they carry real statutory responsibility for the branch's compliance.
Documents and the registration process
Registration is lodged with SSM. The process, at a high level:
- Name search & reservation — the branch must use the parent's name; SSM checks and reserves it (RM50; reserved 30 days from approval).
- Prepare and certify documents — the core set below, with foreign documents certified/notarised and translated into English or Malay where needed.
- Lodge the application for registration of a foreign company with SSM and pay the registration fee.
- Receive the notice of registration — the branch can then lawfully carry on business, open a bank account and apply for any activity-specific licences.
| Document | What it is |
|---|---|
| Certificate of incorporation | Certified copy from the parent's home registry |
| Charter / statute / constitution | Certified copy of the parent's constitutional documents (M&A) |
| List of directors | Particulars of the parent's directors (and, if any are Malaysia-resident and on a local board, their powers) |
| Memorandum of appointment / power of attorney | Appointing the authorised agent(s) resident in Malaysia |
| Statutory declaration by agent | Declaration by the authorised agent that the particulars are correct |
| Registered office | A registered office address in Malaysia |
Once registered, the foreign company must show its name and place of incorporation on its documents and at its Malaysian place of business, and notify SSM of changes (directors, agent, registered office, charter) within the statutory timelines.
SSM registration fees — based on share capital
The registration fee for a foreign company is tiered by the parent's share capital, converted to Malaysian ringgit at the prevailing rate. This is markedly higher than a Sdn. Bhd. incorporation (which is a flat RM1,000):
| Parent's share capital (converted to RM) | SSM registration fee |
|---|---|
| Not more than RM1 million | RM5,000 |
| Over RM1m – RM10m | RM20,000 |
| Over RM10m – RM50m | RM40,000 |
| Over RM50m – RM100m | RM60,000 |
| Over RM100 million | RM70,000 |
| No share capital prescribed | Flat RM70,000 |
Tax and compliance: the branch's ongoing profile
A branch is taxed in Malaysia on its Malaysian-source income. The key points that surprise people:
- Corporate tax rate: a branch is generally taxed as a non-resident company at 24%, and does not qualify for the SME preferential rates (15%/17% on the first bands) that a qualifying resident Sdn. Bhd. can access — see our corporate tax & SST guide.
- Financial statements: the foreign company must lodge, annually, audited accounts of the Malaysian branch together with a copy of the parent's (head office) audited financial statements — meaning head-office numbers become part of the Malaysian public record.
- Changes and notices: changes to the parent's directors, charter, registered office or authorised agent must be notified to SSM within the statutory periods.
- Treaty relief: where the parent's home country has a tax treaty with Malaysia, the branch may be a permanent establishment under that treaty — the interaction is set out in our DTA & Certificate of Residence guide.
The requirement to file the parent's audited financials is often the deciding factor for groups that prefer to keep global numbers confidential — a Sdn. Bhd. subsidiary only files its own Malaysian accounts.
Branch vs Sdn. Bhd. — choosing the right vehicle
The two structures serve different purposes. A quick comparison of the features foreign companies weigh most:
| Feature | Branch (registered foreign company) | Sdn. Bhd. (subsidiary) |
|---|---|---|
| Legal personality | None — same entity as parent | Separate legal person |
| Liability | Parent fully liable | Limited to the company; parent shielded |
| Local presence | Authorised agent resident in Malaysia | ≥1 director ordinarily resident in Malaysia |
| Name | Parent's name | New Malaysian name ("Sdn. Bhd.") |
| Registration fee | RM5,000 – RM70,000 (by parent's capital) | Flat RM1,000 |
| Corporate tax | 24% (non-resident); no SME rate | SME 15%/17% then 24% if qualifying |
| Accounts filed | Branch + parent's audited accounts | Company's own accounts only |
| Activity scope | Restricted; often project/contract-based | Broad, subject to sector rules |
As a rule of thumb: a branch can suit a foreign company delivering a specific project or service contract in Malaysia, where the parent is comfortable being directly on the hook and does not mind filing head-office accounts. A Sdn. Bhd. is the default for anyone building an ongoing local operation — it ring-fences liability, unlocks the SME tax rates, keeps the parent's global accounts private, supports Employment Pass sponsorship cleanly, and projects a local corporate identity to banks and customers. We compare all the vehicles side by side in our Sdn. Bhd. vs sole proprietor / LLP / branch guide.
Deregistering a branch when the work is done
When a branch ceases to carry on business in Malaysia, the foreign company must notify SSM (within the statutory period after ceasing), and the registration is eventually struck off the register. As with a Sdn. Bhd. closure, tax clearance from LHDN and settlement of any liabilities come first. If your Malaysian presence is a fixed-term project, plan the exit at the outset — a clean deregistration is far easier than unwinding a branch that kept filing obligations running long after the work stopped. For the company-closure equivalent, see our Section 550 strike-off guide.
Getting the structure right
The branch-versus-subsidiary decision is one of the highest-leverage choices a foreign company makes on entry — it fixes liability exposure, the tax rate, what accounts become public, and how cleanly you can hire and grow. A branch is a genuine option for the right, defined-scope situation, but for most foreign companies building something ongoing in Malaysia, a Sdn. Bhd. is the better fit. The costly mistake is choosing on habit or on a headline fee without modelling the full picture — registration cost against your parent's capital, the 24% versus SME rate, and the head-office accounts you would have to file.
ONEKEY BIZ registers both branches and Sdn. Bhds., and — more importantly — advises on which one actually fits your activity, capital and plans before you commit. If you are deciding how to bring a foreign company into Malaysia, talk to our team or explore our company setup service to get the vehicle right the first time.
Frequently asked questions
What is a branch of a foreign company in Malaysia?
A branch (a registered foreign company under Part XI of the Companies Act 2016) is not a separate legal entity — it is the same legal person as the overseas parent, registered with SSM so it can carry on business in Malaysia under the parent's name. The parent is directly liable for the branch's debts, and the branch has no shareholders, directors or constitution of its own.
Does a foreign company branch need a local agent?
Yes. A registered foreign company must at all times have at least one authorised agent who is a natural person resident in Malaysia. The agent is answerable — and personally liable to penalties — for the company's obligations under the Companies Act 2016. Foreign parents with no one on the ground typically engage a qualified local corporate services firm as agent.
How much does it cost to register a foreign company branch with SSM?
The registration fee is tiered by the parent's share capital (converted to ringgit): RM5,000 up to RM1m, RM20,000 up to RM10m, RM40,000 up to RM50m, RM60,000 up to RM100m, and RM70,000 above that — or a flat RM70,000 if no share capital is prescribed. Name reservation is RM50. This is far higher than a Sdn. Bhd.'s flat RM1,000 incorporation fee.
How is a branch taxed compared with a Sdn. Bhd.?
A branch is generally taxed as a non-resident company at 24% on Malaysian-source income and does not qualify for the SME preferential rates (15%/17%) a qualifying resident Sdn. Bhd. can access. A branch must also lodge both the branch's and the parent's audited accounts annually, so head-office numbers become public.
Should I choose a branch or a Sdn. Bhd.?
A branch can suit a foreign company delivering a specific project or service contract where the parent is comfortable being directly liable. For an ongoing local operation, a Sdn. Bhd. is usually better — it ring-fences liability, unlocks SME tax rates, keeps the parent's global accounts private, and supports Employment Pass sponsorship and a local corporate identity.
Sources & references
This article is general information only, not legal, tax or immigration advice. Policies, thresholds and official fees are set by the relevant Malaysian authorities and may change. Talk to our consultants about your specific situation.