Yes — in most sectors. The Companies Act 2016 imposes no equity condition on a Malaysian-incorporated company, so a Sdn Bhd may be wholly owned by foreign shareholders. The limits sit elsewhere: in the licences, permits and approvals a specific activity needs, and in the paid-up capital thresholds set by the agencies that issue them, not by SSM.
Key takeaways
- MIDA states that the Companies Act 2016 “does not stipulate any equity conditions on Malaysian incorporated companies” — no Malaysian or Bumiputera shareholder is required.
- There is no minimum paid-up capital: section 74 gives shares no par value, and a Sdn Bhd can be formed with RM1.
- The RM500,000 figure quoted all over the internet is an Employment Pass threshold set by Immigration’s Expatriate Services Division; RM1,000,000 applies only in distributive trade, via KPDN’s WRT licence. Neither is an ownership rule.
- Section 196(1) needs one director ordinarily resident in Malaysia, not necessarily a citizen — but under section 235 the secretary must be.
Can a foreigner own 100% of a Sdn Bhd in Malaysia?
Malaysia permits 100% foreign shareholding in a Sdn Bhd as a matter of company law. MIDA states plainly that the Companies Act 2016 does not stipulate any equity conditions on Malaysian incorporated companies. Nothing in the Act requires a Malaysian or Bumiputera shareholder, and a private company may be formed with a single shareholder of any nationality.
The clearest statement comes from the agency that courts the investment. On its equity policy page, the Malaysian Investment Development Authority (MIDA) confirms that equity conditions are not a feature of the Companies Act, but that “specific equity conditions may be imposed for specific approvals, operating licences, permits or registrations by the regulating Ministries/Agencies, depending on the activities undertaken.” MIDA also records that in the manufacturing sector, “since June 2003, foreign investors could hold 100% of the equity in all investments in new projects …” Ownership and licensing are separate questions put to separate regulators. Our complete guide to Sdn Bhd incorporation and the step-by-step incorporation process cover what SSM asks for.
Is there a minimum paid-up capital for a foreign-owned Sdn Bhd?
No. The Companies Act 2016 prescribes no minimum paid-up capital, and section 74 gives all shares no par or nominal value; a Sdn Bhd can be incorporated with RM1. The RM500,000 and RM1 million figures repeated online are not incorporation requirements at all — they are conditions attached to an Employment Pass and to a distributive trade licence.
This is the most common error in answers to this question, and it is worth stating precisely: the RM500,000 threshold is set by the Immigration Department’s Expatriate Services Division for a company that wants to sponsor an expatriate, not by SSM for a company that wants to exist. A wholly foreign-owned Sdn Bhd that hires only Malaysians is never asked to meet it. Three agencies, each threshold triggered by a different decision.
| What the capital is for | Amount (RM) | Set by | When it applies |
|---|---|---|---|
| Incorporating the company | No minimum (RM1 possible) | SSM — CA 2016: no minimum prescribed | Always |
| Employment Pass — 100% locally owned | 250,000 | Immigration — ESD | EP sponsorship only |
| Employment Pass — joint venture (min. 30% foreign) | 350,000 | Immigration — ESD | EP sponsorship only |
| Employment Pass — 100% foreign owned | 500,000 | Immigration — ESD | EP sponsorship only |
| Wholesale, Retail and Trade (WRT), foreign owned | 1,000,000 | KPDN; also ESD’s WRT figure | Only in distributive trade |
Those figures are ESD’s own, published in its company registration FAQ, which adds that for “foreign owned companies running Wholesale, Retail and Trade (WRT) License is compulsory.” ASEAN Briefing put the incorporation side flatly in February 2026: “A Malaysian private limited company may be incorporated with MYR 1 (US$0.26) in paid-up capital.” If a provider says a foreign-owned Sdn Bhd must hold RM500,000 before registration, ask which statute says so. Our breakdown of Sdn Bhd setup and running costs does the same for fees.
Which sectors still restrict foreign equity?
Equity limits in Malaysia are imposed by sector regulators, not by SSM. MIDA notes that specific equity conditions may be imposed for specific approvals, operating licences, permits or registrations by the regulating Ministries or Agencies. Banking, insurance, oil and gas and distributive trade are among the sectors where a documented condition applies.
The restriction travels with the licence, not with the company. Azmi & Associates’ guide to investment laws in Malaysia observes that “generally, Malaysia does not have legislations, regulations or guidelines that regulate all FDIs” — foreign investment is instead governed by permits, licences and, where they exist, equity ownership limits. The Azmi & Associates guide records a 70% foreign equity ceiling for domestic Islamic banks and takaful operators, and PETRONAS licensing in oil and gas. A foreign founder should identify the licence before fixing the shareholding, because it is the licence that decides whether the 100% is available.
Does a foreign-owned Sdn Bhd need a Malaysian director?
Yes, but the director does not have to be Malaysian. Section 196(1) and (4) of the Companies Act 2016 require a private company to have at least one director who ordinarily resides in Malaysia by having a principal place of residence here. Citizenship is not the test for a director — residence is.
ACCA’s technical overview of the Act states the rule as “a private company shall have a minimum of one director who ordinarily resides in Malaysia” under section 196(1). A founder who lives overseas therefore satisfies section 196(1) by appointing a second director who ordinarily resides in Malaysia, and keeps the whole shareholding. The distinction that trips founders up is what happens one office over: a director must merely reside in Malaysia, while the company secretary must be a Malaysian citizen or permanent resident ordinarily residing in Malaysia under section 235. A foreign founder with a valid pass and a home here can sit on their own board; the same founder cannot be their own company secretary.
What else must a 100% foreign-owned Sdn Bhd have?
Every Sdn Bhd, foreign-owned or not, must appoint a company secretary within thirty days of incorporation under section 236 and keep a registered office in Malaysia. Unlike a director, the secretary must be a Malaysian citizen or permanent resident ordinarily residing here — so this is one role a foreign founder cannot fill personally.
The company secretary obligation does not change because the shareholders are foreign, and the thirty days run from incorporation, not from the day trading begins. Our guide to appointing a company secretary and the 30-day rule covers the qualifying bodies; what to do after incorporating a Sdn Bhd sequences the first ninety days.
What is changing for foreign-owned companies in 2026?
The distributive trade rules are under active review. On 6 February 2026 a special task force led by the Ministry of Finance was formed to detail improvements to the guidelines on foreign participation in the distributive trade sector. A foreign founder planning a retail, wholesale or trading Sdn Bhd should confirm the current conditions with KPDN before committing capital.
The committee’s function is to identify improvements to policy, the legal framework, monitoring and enforcement in addressing concerns about foreign goods flooding the local market — in the original, “Fungsi jawatankuasa berkenaan adalah untuk mengenal pasti penambahbaikan dasar, kerangka perundangan, pemantauan dan penguatkuasaan dalam menangani kebimbangan risiko lambakan barangan asing dalam pasaran tempatan”.
— Datuk Armizan Mohd Ali, Minister of Domestic Trade and Cost of Living, reported by Berita RTM, 3 March 2026.
Distributive trade is where the equity threshold and the capital threshold meet, and it is the area the government has said it is re-examining. PT Corporate Services is a corporate secretarial firm, not a licensing agent — for a WRT application, the regulator is the right first call.
Frequently asked questions
Can a foreigner be the sole shareholder and sole director of a Sdn Bhd?
Only if that person ordinarily resides in Malaysia. Section 196(1) and (4) require at least one director whose principal place of residence is in Malaysia, and a foreign national holding a valid pass and living here can satisfy it. A founder living overseas cannot be the only director, however many shares they hold.
Does a 100% foreign-owned Sdn Bhd need RM500,000 to be registered?
No. RM500,000 is the paid-up capital the Expatriate Services Division requires of a wholly foreign-owned company before registering it to sponsor an Employment Pass. It is not a condition of incorporation, and a foreign-owned Sdn Bhd employing only Malaysians is never asked for it.
Do I need a WRT licence for my foreign-owned Sdn Bhd?
Only if the company is foreign owned and carries on distributive trade — broadly wholesale, retail and trading. ESD states a WRT licence is compulsory for foreign-owned companies running wholesale, retail and trade, and KPDN administers the guidelines. Confirm your activity with KPDN, since those guidelines are under review.
PT Corporate Services Sdn Bhd is a corporate secretarial firm in Kota Damansara, Petaling Jaya. This article is general information, not legal, tax or licensing advice. If you are incorporating a foreign-owned Sdn Bhd and want the company secretary and registered office handled properly from day one, message us on WhatsApp.
Sources
- MIDA, Equity Policy — no equity conditions in CA 2016; manufacturing 100% since 2003.
- Immigration Malaysia, ESD Company Registration FAQ — capital thresholds by ownership type.
- ASEAN Briefing, 16 February 2026 — the RM1 incorporation minimum.
- ACCA, Malaysian Companies Act 2016: an overview — s.196(1) and s.74.
- Azmi & Associates, Guide to Investment Laws in Malaysia — sector-specific FDI regulation.
- Berita RTM, 3 March 2026 — MOF-led task force on the guidelines.
- Companies Act 2016 (Act 777) — ss.74, 196, 235, 236.