Quick answer: A foreign-owned company can hold Malaysia Digital (MD) status. MD status exempts companies from local ownership requirements, so no local shareholder is required for the status. The company must still be incorporated under the Companies Act 2016 and resident in Malaysia, carry out an approved MD activity, keep at least RM1,000 paid-up capital, and within 12 months employ two full-time knowledge workers at RM5,000 average base salary and spend at least RM50,000 a year on the MD activities.
- MD status exempts the company from local ownership requirements.
- The company must still be incorporated in Malaysia under the Companies Act 2016.
- The conditions are the same for foreign-owned and local companies.
- Foreign knowledge workers need passes through MDEC's Expats Service Centre.
- Other agencies and licences can set their own rules on ownership and capital.
What Foreign Owners Get
| Benefit | What it means |
|---|---|
| Ownership | Exemption from local ownership requirements |
| Capital | Freedom to source capital and funds globally |
| Foreign talent | Access to a foreign knowledge worker quota and passes |
| One-stop agency | MDEC as the agency for MD matters |
What Does Not Change
| Requirement | Applies to foreign-owned companies? |
|---|---|
| Incorporation under the Companies Act 2016 and residence in Malaysia | Yes |
| MD activity | Yes |
| RM1,000 paid-up capital | Yes |
| Two full-time knowledge workers at RM5,000 average base salary | Yes |
| RM50,000 annual operating expenditure | Yes |
| Annual Self-Declaration Form | Yes |
Steps for a Foreign Investor
Test the plan
Check the activity, hiring plan and cost base against MDEC's conditions.
Incorporate
Set up a Malaysian company under the Companies Act 2016.
Apply for MD status
Apply online to MDEC.
Hire
Recruit knowledge workers, including foreign talent through MDEC's Expats Service Centre.
Operate and report
Run the activity in Malaysia and submit the annual declaration.
Points Foreign Investors Often Miss
Assuming a branch qualifies
The company must be incorporated under the Companies Act 2016.
Thinking exemption covers everything
The exemption covers local ownership requirements for MD status, not other agencies' rules.
Forgetting the local team
Two full-time knowledge workers must be employed for the MD activities.
Delaying the check
Test eligibility before committing capital.
Not sure where you stand? WhatsApp us. We will check it before you apply.
Three Scenarios
Scenario 1. A US founder owns 100% of a Malaysian company building a cybersecurity product. No local shareholder is needed for MD status, but the company must meet the same operating conditions.
Scenario 2. An overseas group wants to run its Asian data analytics from Malaysia. It incorporates a subsidiary, applies for MD status and hires locally and abroad.
Scenario 3. A foreign company plans to operate through a branch. Because the status requires incorporation under the Companies Act 2016, it plans a subsidiary instead.
How We Help
What we handle for you
Before you apply
- Test your activity, hiring plan and cost base against MDEC's conditions.
- Advise whether MD status, a tax incentive or both make sense for your business.
- Prepare your business plan and financial plan based on your company idea or business model.
Application
- Prepare and submit the application and answer MDEC's questions.
Why companies choose us
End-to-end under one roof
- We handle company incorporation, accounting and payroll, as well as MD status and expatriate pass applications, so your structure, records and hiring plan stay aligned.
- The company is set up correctly from day one.
We check before you invest
- We confirm eligibility, including whether you can hire the expatriates you need, before a foreign investor decides to incorporate in Malaysia.
- Neutral Consulting PLT is a Kuala Lumpur firm led by a Managing Partner who is a member of the Malaysian Institute of Accountants.
Frequently Asked Questions
Quick answers.
Can a foreign-owned company get Malaysia Digital status?
Yes. MD status exempts companies from local ownership requirements.
Do I need a local shareholder?
Not for MD status, which exempts companies from local ownership requirements. Other agencies or licences may have their own rules.
Can a foreigner own 100% of an MD company?
Yes, subject to other approvals the business may need. The company must be incorporated in Malaysia.
Does the company need to be incorporated in Malaysia?
Yes, under the Companies Act 2016, and be resident in Malaysia.
What is the minimum paid-up capital?
RM1,000 for MD status. Other agencies, such as those handling work passes or licences, can ask for more.
Can an overseas company apply through a branch?
The guidelines require incorporation under the Companies Act 2016, so plan a Malaysian subsidiary.
Can I hire foreign employees?
Yes. MD status gives access to a foreign knowledge worker quota and passes, with each hire approved individually.
Do I still need two local knowledge workers?
You need at least two full-time knowledge workers, with no nationality requirement stated in the guidelines.
Can I bring funds in freely?
MD status gives freedom to source capital and funds globally, subject to applicable laws.
Do foreign-owned companies get a tax incentive automatically?
No. The tax incentive is a separate application.
How long before I must meet the conditions?
Within 12 months from the date of award.
Can you advise before we incorporate?
Yes. We check eligibility, including whether you can hire the expatriates you need, before the investor commits capital.
Sources
Official sources
This page is general information, not legal advice. Agencies change their requirements, so confirm the current rules with MDEC, or with us, before you act. Checked November 2026.
Talk To Us Now
Thinking of applying for MD status? We will assess it first. All consultations are by video call.