When establishing a company in Malaysia, investors and organisations should note that Malaysian companies must have a minimum share capital of RM$2.

Establishing a company in Malaysia can be difficult due to the bureaucratic incorporation procedures. The government cost of establishing a company in Malaysia varies from US$300 to US$21,000, depending on the company's authorised and issued share capital. Highlighting this, the World Bank ranked Malaysia as the world's 23rd easiest place in which to do business in it's Doing Business 2010 Survey.

Entrepeneurs interested in establishing a company in Malaysia should note that a Malaysian company is obliged to register for sales tax of 10% if company sales exceed RM100,000 (US$29,600) in a calendar year. Thereafter, all sales invoices issued by the Malaysia company will add a sales tax to total invoice value.

When establishing a business in Malaysia, each company must appoint at least two local resident directors and two shareholders. Both local and international, corporate and individual shareholders are allowed.

The private limited company is the most popular investment vehicle for foreign investors establishing a company in Malaysia. In 2006, over 750,000 private limited companies were registered in Malaysia.

Several alternative corporate entities are available in Malaysia, including the branch office, representative office and sole proprietorship. A branch office is the preferred option for foreign companies wishing to retain executive management functions outside Malaysia for cost and efficiency purposes.

Malaysia's economic restrictions are noted in the 2010 Index of Economic Freedom by The Heritage Foundation, where it ranks 59th globally. Entrepreneurs establishing a company in Malaysia to conduct international trade are restricted by Malaysia's limited trade agreements. For example, Malaysia has signed free trade agreements (FTAs) with only Japan and Pakistan, despite being a member of the World Trade Organisation (WTO). Free Trade Agreements with Australia, Chile, New Zealand, South Korea and the USA are under negotiation.

After establishing a company in Malaysia, annual audited financial statements and an annual corporate tax return must be submitted to the Inland Revenue Board of Malaysia.