1. INTRODUCTION
1.1 Geography
Malaysia is a country separated by the South China Sea into Peninsular Malaysia and Malaysian Borneo which has for long benefitted from its location at the middle of crossroads of trade between the East and West. It has also profited from being located along the Strait of Malacca which is known as one of the most important shipping lanes in the world.
1.2 Language
The National language is Bahasa Malaysia with English widely used by the population. The major languages are Cantonese and Tamil.
2. SETTING UP A BUSINESS IN MALAYSIA
2.1 Sole Proprietor
A sole proprietor is an owner of an unregistered business that is a one person business. The business is owned solely by one individual and only uses personal name. The liability is unlimited.
2.2 Partnership
Partnership Is a relationship between two or more persons but does not exceed 20 persons which carry on business in common with a view of profit. It is a formal arrangement to manage and operate a business with the profits shared.
2.3 LLP
Limited Liability Partnership (LLP) combines the characteristics of a company and a conventional partnership. It offers limited liability to its partners like limited liability enjoyed by shareholders of a company coupled with the flexibility of internal business regulations and/ or administration through a partnership arrangement like a conventional partnership.
2.4 Private Limited Company
A private limited company comprises of minimum of 2 persons and maximum of 50 persons. It prohibits any invitation to the public to subscribe to any of its share or deposit money with the company for subscription to investment. Any company with Sdn Bhd or Sendirian Berhad refers to a private limited company.
2.5 Public Company
A public company is known as Berhad Company and is usually a listed company which is governed by Bursa Malaysia Securities Berhad and the Securities Commission of Malaysia.It has an unlimited amount of shareholders.
2.6 Representative of a Foreign Company (MIDA)
A Representative Office of a foreign company is established in Malaysia to perform permissible activities for its head office. A foreign company is a company incorporated outside of Malaysia but has set up business premises and operations in Malaysia. It is fully funded from sources outside Malaysia and only undertakes designated functions. It is an office of a foreign company which is approved to collect relevant information on investment
opportunities especially in the manufacturing and services sector, enhance bilateral trade relations, promote the export of Malaysian goods and services and lastly, to carry out research and development.
3. EMPLOYMENT
3.1 Appointment
Employment law is governed mainly by the Employment Act 1955 (EA 1955). The EA requires for employment contracts with the duration of employment exceeding one month to be in writing together with termination provisions included. The terms of employment reduced to writing must not be below the minimum standard set out under the EA 1955.
3.2 Statutory Contributions
Employees Provident Fund is a requirement for every company to contribute to its staffs, the amount depending on the staffs’ pay or salary. The mandatory contributions imposed on the employer of the company are 13% for any wages less than RM5,000 and 12% for any wages more than RM5,000. As for the employee, the contribution is set at a rate of 11%. Failure to do so will lead to a penalty charge by KWSP. Social Security Organization (SOCSO) was established to provide social security protections to employees. It is mandatory on every Malaysian employed.
3.3 Expatriate Employee
There are two stages for employment of an expatriate or a migrant worker. The first stage is to apply for an expatriate post and the second stage is to endorse an Employment Pass. An Employment Pass (EP) acts as a work permit that allows an expatriate to be employed under an organisation in Malaysia, subject to the contract of employment of up to 60 months.
4. DISPUTE RESOLUTION
4.1 Mediation (MMC)
Mediation is facilitated by the Mediation Act 2012 (MA 2012) whereby it is a voluntary process for parties to negotiate first in front of a mediator. The person to be appointed as mediator is up to the discretion of both parties however if neither party can come to a consensus, appointment of a qualified mediator can be made through a request to the Malaysian Mediation Centre of the Bar Council (MMC).
4.2 Arbitration (AIAC)
Arbitration is governed by the Arbitration Act 2005 (AA 2005) whereby it is a private and judicial determination of a dispute by an independent third party. The Asian International Arbitration Centre (AIAC) is the default appointing body. No appeal can be made against the award except an application to set it aside on the grounds of fraud, breach of the rules of
natural justice or where the award is contrary to public policy of Malaysia, to be made within 90 days of the receipt of award.
4.3 Court
A dispute resolution may be done by the court by the commencement of a civil action in the courts either by way of writ or originating summons depending respectively on whether it is a dispute of facts or laws and/ or documents. The Malaysian courts begin with the Magistrates’ Court, Sessions Court, High Court, Court of Appeal and Federal Court. The first two are subordinate courts while the others are superior courts.
Article written by
NIK ERMAN NIK ROSELI
Advocate & Solicitor | Mediator | Notary Public | Company Secretary
Firm Name: Messrs Amir Khusyairi & Associates
Malaysia
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