Quick answer: In most cases, yes. The Companies Act 2016 sets no equity conditions on a Malaysian company, so a foreigner or a foreign company can hold 100% of a Sdn Bhd. You still need one director who ordinarily lives in Malaysia and a company secretary who is a Malaysian citizen or permanent resident. Some activities, such as wholesale and retail trade, need KPDN approval, and other licences can carry their own conditions.
- Company law sets no cap on foreign ownership of a Sdn Bhd.
- Limits come from the activity: manufacturing allows up to 100% in new projects, and distributive trade needs KPDN approval.
- There is no general 51% local ownership rule under current law.
- You still need a resident director and a local company secretary.
- Hiring foreign staff needs RM500,000 or more in paid-up capital for a 100% foreign-owned company.
Foreign Ownership at a Glance
Find your activity in the table.
| Business activity | Foreign ownership | Where it comes from |
|---|---|---|
| Sdn Bhd in general | No equity conditions under the Companies Act | MIDA, Companies Act 2016 |
| Manufacturing (new projects) | Up to 100% foreign equity | MIDA equity policy |
| Wholesale, retail and other distributive trade | KPDN approval needed. No general percentage cap. Conditions by format. | KPDN, MIDA distributive trade booklet |
| Hypermarket | At least 30% equity for Bumiputera | MIDA distributive trade booklet |
| Direct selling and franchise | No specific equity condition. Licence or registration applies. | MIDA distributive trade booklet |
| Other services | Check the regulator. Conditions can attach to licences and permits. | MIDA equity policy |
Policies change. Confirm the current rule for your activity with the regulator or with us before you commit money.
Which Activities Limit Foreign Ownership?
From company registration to sector rules.
Does company registration cap foreign ownership?
No. MIDA states that the Companies Act 2016 does not impose equity conditions on Malaysian-incorporated companies. A foreign individual or a foreign company can therefore hold shares in a Sdn Bhd. SSM's comparison of business entities says a Sdn Bhd needs at least one shareholder and can have up to 50, and it lists no nationality condition.
Where do the limits come from?
The limits come from the activity you want to carry out, not from company law. MIDA says specific equity conditions may be imposed for specific approvals, operating licences, permits or registrations. The regulator for the activity decides, so the same company can face different rules for different businesses.
Can foreigners own 100% of a manufacturing company?
MIDA states that, since June 2003, foreign investors can hold 100% of the equity in all investments in new projects, including expansion or diversification projects by existing companies, regardless of the level of exports and without excluding any product or activity. Equity and export conditions imposed before 17 June 2003 remain, although a company can ask for their removal, which is decided case by case.
What about wholesale, retail and other distributive trade?
All proposals for foreign involvement in distributive trade need the approval of KPDN. MIDA's distributive trade booklet sets no general percentage cap on foreign equity. It sets conditions by format instead.
- Hypermarket (5,000 sq m or more): minimum shareholders' funds of RM50 million and at least 30% equity for Bumiputera.
- Departmental store: minimum shareholders' funds of RM20 million. The Government encourages joint ventures between Malaysian and foreign investors.
- Superstore (3,000 to under 5,000 sq m): minimum shareholders' funds of RM25 million, with no specific equity condition.
- Specialty store: minimum shareholders' funds of RM1 million per outlet, with joint ventures encouraged.
- Other distributive trade: RM1 million per outlet. Foreign participation is allowed except in the formats the booklet lists, such as supermarkets under 3,000 sq m and 24-hour convenience stores.
- Direct selling and franchise: no specific equity condition. Direct selling is licensed by the Direct Selling Controller and franchises are registered under the Franchise Act 1998.
What about other services?
For services, MIDA does not state a single foreign ownership figure. It refers readers to its Services Sector Guidebook and the regulating ministries or agencies. Check the licence for your activity before you incorporate.
Is there a 51% local ownership rule?
No. On 5 March 2026, the Minister of Domestic Trade and Cost of Living said proposals for 51% local ownership in sensitive sectors are not provided for under current legal provisions. Rules can change, so confirm the position when you apply.
Planning to own 100% of a Sdn Bhd? We will check your activity and tell you what applies.
What a Foreign-Owned Sdn Bhd Still Needs
What the company needs
Required by SSM
- At least one director who ordinarily lives in Malaysia, with a principal place of residence here.
- A company secretary who is a Malaysian citizen or permanent resident, appointed within 30 days of incorporation.
- A registered office in Malaysia, open to the public during ordinary business hours.
Reported to SSM
- A register of beneficial owners, kept up to date and lodged with SSM.
- An annual return and financial statements every year.
What the owner may still need
Depending on your plan
- Paid-up capital of RM500,000 or more to register with Immigration and hire foreign staff.
- KPDN approval if you will trade in goods.
- A licence or permit from the regulator of your activity.
- A consent document if a foreign company is a shareholder.
Steps to Set Up as a Foreign Owner
Confirm your activity and its rules
Find the regulator for your activity and ask whether it sets equity or capital conditions. For wholesale or retail, that means KPDN.
Do this before you incorporate, so you do not set up a structure that the licence will not accept.
Decide who will hold the shares
Shareholders can be individuals or companies. If a foreign company holds the shares, SSM asks for a consent document from that company.
Decide the percentages early, because licences may look at them.
Name your resident director and secretary
You need one director who ordinarily lives in Malaysia and a company secretary who is a Malaysian citizen or permanent resident.
The director does not have to be a shareholder.
Incorporate with SSM
SSM charges RM1,000 for direct registration, which combines the name search and incorporation. Reserving a name alone costs RM50 per name.
Appoint the company secretary within 30 days of incorporation.
Apply for approvals and passes
Apply for KPDN approval or any licence your activity needs. If you will hire foreign staff, register with Immigration's Expatriate Services Division, which asks for paid-up capital based on ownership.
Common Mistakes
Assuming 100% foreign ownership works for every business
Companies law sets no cap, but your activity may need approval with conditions.
Registering first and checking the licence later
Check the activity's rules before you incorporate and pay in capital.
Forgetting the resident director
SSM needs one director who ordinarily lives in Malaysia.
Planning with RM1 capital
If you will hire foreign staff, Immigration asks for RM500,000 or more.
Frequently Asked Questions
Quick answers on foreign ownership.
Can a foreigner own 100% of a Sdn Bhd in Malaysia?
Yes, in most cases. The Companies Act 2016 does not set equity conditions on a Malaysian-incorporated company. Some activities, such as wholesale and retail, need government approval or licences that can carry their own conditions.
Do I need a Malaysian partner to set up a Sdn Bhd?
Not under the Companies Act. You need at least one director who ordinarily lives in Malaysia, but that director does not have to be a shareholder. Some licences may require local equity, so check your activity first.
Can a foreigner be the sole shareholder of a Sdn Bhd?
Yes. SSM allows a company to have a minimum of one shareholder, and a Sdn Bhd can have up to 50. SSM's comparison of business entities lists no nationality condition on shareholders.
Can a foreign company be a shareholder of a Sdn Bhd?
Yes. SSM's incorporation guidance covers corporate shareholders and says they need a consent document from their own corporate body.
Does a foreign-owned Sdn Bhd need a Malaysian director?
Yes. At least one director must ordinarily live in Malaysia, with a principal place of residence here.
Can foreigners own 100% of a wholesale or retail company in Malaysia?
Foreign involvement in distributive trade needs the approval of KPDN. MIDA's distributive trade booklet sets no general foreign equity cap, but it sets conditions by business format, such as minimum shareholders' funds. Hypermarkets must provide at least 30% equity for Bumiputera.
Can foreigners own 100% of a manufacturing company in Malaysia?
MIDA states that foreign investors can hold 100% of the equity in new manufacturing projects, regardless of export level. Manufacturing licence conditions may still apply.
Is there a 51% local ownership rule for foreign companies?
No general rule exists under current law. In March 2026 the Minister of Domestic Trade and Cost of Living said proposals for 51% local ownership in sensitive sectors are not provided for under current legal provisions.
Do I need a Bumiputera partner?
Not as a general rule. The distributive trade booklet requires at least 30% Bumiputera equity for the hypermarket format only. Other formats and sectors have their own conditions, if any.
How much capital does a 100% foreign-owned company need?
SSM sets no minimum. To register with Immigration's Expatriate Services Division and hire foreign staff, a 100% foreign-owned company needs RM500,000 in paid-up capital. Foreign-owned wholesale, retail and trade or unregulated service companies need RM1,000,000.
Where do equity conditions come from if not the Companies Act?
They come from the regulator of each activity. MIDA says specific equity conditions may be imposed for specific approvals, operating licences, permits or registrations.
About This Guide
This guide was prepared by Neutral Consulting PLT, a Kuala Lumpur firm of chartered accounting and advisory professionals with 10 years in practice. We help foreign and local companies set up, stay compliant and hire talent in Malaysia. Every figure and rule here was checked against the official sources listed below in November 2026.
Sources
Official sources
- MIDA, Equity Policy
- MIDA, Distributive Trade booklet (2021)
- SSM, Comparison of Business Entities in Malaysia
- SSM, Submitting Incorporation Particulars for a Company
- Immigration Department of Malaysia, ESD Online Guidebook V5 (September 2024)
Background
This page is general information, not legal advice. Agencies change their requirements, so confirm the current rules with SSM, MIDA, Immigration and KPDN, or with us, before you act. Checked November 2026.
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