# Minimum Paid-Up Capital for a Foreign-Owned Malaysian Company

> Where the RM500,000 and RM1,000,000 figures actually come from, traced to the Immigration and distributive trade guidelines that impose them, and which regulator applies which threshold.

- Category: business
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/business/paid-up-capital-foreign-company

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Ask ten Malaysian corporate service providers what the minimum paid-up capital is for
a foreign-owned company and you will get RM500,000, sometimes RM1,000,000, always
stated as settled law. Ask which statute imposes it and the conversation ends.

Here is the answer. **No statute imposes it.** A full-text search of the Companies Act
2016 returns no minimum paid-up capital requirement of any kind — not for a private
company, not for a foreign-owned one, not anywhere. Section 14, which lists what an
incorporation application must contain, does not mention a capital floor. Every figure
in circulation is a **licensing or immigration threshold**, imposed by a regulator with
a specific purpose, and it applies only if you trigger it.

That distinction is worth money. A foreign founder who does not need an expatriate pass
and does not need a sector licence can incorporate with RM1 and be entirely compliant.

## First, get the vocabulary right

Three terms are used interchangeably and mean different things.

| Term | Meaning | Where it bites |
| --- | --- | --- |
| **Authorised capital** | Abolished by the Companies Act 2016 | Nowhere — if a provider still quotes it, their template is pre-2017 |
| **Paid-up capital** | Shares issued and actually paid for | The ESD immigration thresholds; most sector licences |
| **Shareholders funds** | Paid-up capital **plus reserves** | The distributive trade format thresholds |

The third row matters more than it looks. A shareholders-funds test can be satisfied
partly out of accumulated retained earnings; a paid-up capital test cannot. An
established business converting to foreign ownership may already clear a
shareholders-funds threshold it would have had to fund in cash under a paid-up test.

## Where RM500,000 and RM1,000,000 actually come from

They are **Immigration** figures. The ESD Online Guidebook, published by the Expatriate
Services Division, sets the paid-up capital a company must have to register with ESD
and therefore to hire any expatriate at all:

| Equity | Paid-up capital |
| --- | --- |
| 100% Malaysian-owned | RM250,000 |
| Joint venture (minimum 30% foreign shareholding required) | RM350,000 |
| 100% foreign-owned | RM500,000 |
| Foreign-owned at 51% or more, in wholesale, retail and trade, or in unregulated services sub-sectors | RM1,000,000 |

The table expressly does **not** apply to public limited companies, companies limited
by guarantee, or associations and organisations incorporated under specific acts.

Note what this means for sequencing. The threshold is not a condition of
incorporation. It is a condition of sponsoring a work pass. A company that will never
employ a foreign national never has to meet it.

The same figures appear independently in MIDA's distributive trade booklet, under the
heading on employing expatriate professionals: RM250,000 for a wholly Malaysian-owned
company and RM1 million for a foreign-owned company, meaning 51 percent or more
foreign shareholders. Two agencies, one rule, consistently stated. That is as close to
a traceable source as this figure has, and it is good enough to publish.

## The distributive trade thresholds are a different and much larger set

If you are in retail or wholesale, the capital question is not RM1 million. It is set
by format, and it is measured in **shareholders funds, which include paid-up capital
and reserves**:

| Format | Minimum shareholders funds | Equity condition |
| --- | --- | --- |
| Hypermarket | RM50 million | At least 30% Bumiputera equity; a 3-year grace period may be granted; no new branches until met |
| Superstore | RM25 million | No specific equity condition |
| Departmental store | RM20 million | No specific equity condition |
| Specialty store | RM1 million **per outlet** | No specific equity condition |
| Other distributive trade activities | RM1 million **per outlet** | Foreign participation excluded from a listed set of activities |

Direct selling runs on a separate ladder entirely: a Malaysian-owned company needs
RM100,000 for single-level or mail-order activity if Bumiputera-owned and RM500,000 if
not, or RM500,000 and RM1.5 million respectively for multilevel activity — while a
**foreign-owned company needs RM5 million for all direct selling activities**. Joint
ventures with foreign companies are treated as foreign companies.

All distributive trade companies with foreign equity must be locally incorporated
under the Companies Act 2016, appoint a Bumiputera director or directors, and allocate
at least 30 percent of shelf SKUs to Bumiputera SME products.

### The exclusion list matters more than the capital

Foreign participation is not permitted at all in a named set of distributive trade
activities, regardless of capital: supermarkets and mini-markets under 3,000 square
metres of sales floor area, provision shops and general vendors, 24-hour convenience
stores, news agents and miscellaneous goods stores, medical halls, fuel stations with
a convenience store, permanent wet market stores, permanent pavement stores, matters
of national strategic interest, and textile shops, non-exclusive restaurants, bistros
and jewellery shops.

This is the list ESD refers to when it states that companies in restricted
distributive trade sectors cannot obtain any long-term pass exceeding three months. In
those sub-sectors, no amount of paid-up capital produces an Employment Pass.

## Sector regulators set their own figures

Where a licence is required, the licensing regulator sets the capital — not SSM, not
Immigration.

| Regulator | Requirement | Figure |
| --- | --- | --- |
| MCMC | Individual Network Facilities Provider or Network Service Provider licence | Paid-up capital RM2,000,000, net tangible assets at least RM500,000, and at least 30% Bumiputera shareholding |
| MCMC | Individual Applications Service Provider licence | Paid-up capital RM500,000 |
| PETRONAS | Licence under the Licensing and Registration system | RM100,000, and the vendor must be locally incorporated |
| PETRONAS | Registration (rather than licence) | RM10,000 |
| Royal Malaysian Customs | Customs agent under s.90 Customs Act 1967, incorporated under the Companies Act 2016 | RM100,000 (RM50,000 if registered with ROB or a local authority) |
| Ministry of Economy | Local company acquiring property in a transaction requiring approval | RM100,000 if locally owned, RM250,000 if foreign-owned |

Bank Negara Malaysia licensing thresholds are deliberately absent from that table. The
BNM website sits behind a web application firewall that defeats automated retrieval,
and a capital figure for a regulated financial institution is not something to
reproduce from memory. Confirm any BNM figure directly with the Bank.

## How much capital should you actually inject?

Work forwards from the triggers, not backwards from a rumour.

1. **Will you sponsor an expatriate pass?** If yes, meet the ESD threshold for your
   ownership mix before you register with ESD.
2. **Do you need a sector licence?** If yes, the regulator's figure governs and is
   usually higher.
3. **Are you in distributive trade?** Check the exclusion list first. If you survive
   it, the format threshold governs and it is measured in shareholders funds.
4. **Will a bank open an account for you?** No published rule, but banks apply their
   own enhanced due diligence to foreign-owned companies, and a nominal capitalisation
   is a recognised negative signal.
5. **Otherwise, capitalise to the business.** An RM1 company is legal and, for a
   trading business with real creditors, a poor idea for reasons that have nothing to
   do with any of the thresholds above.

## Common mistakes

- **Treating RM500,000 as an incorporation requirement.** It is an Immigration
  requirement for hiring expatriates. No pass, no threshold.
- **Confusing paid-up capital with shareholders funds.** The distributive trade
  guidelines use the broader test, which includes reserves.
- **Quoting authorised capital.** The Companies Act 2016 abolished it.
- **Assuming a token foreign shareholder makes a joint venture.** ESD requires at least
  30 percent foreign shareholding for the RM350,000 rate.
- **Capitalising into a prohibited sub-sector.** In the excluded distributive trade
  activities, capital does not buy entry or a work pass.
- **Reading the RM5,000 expatriate salary in the distributive trade booklet as
  current.** The Employment Pass bands were revised with effect from 1 June 2026.

## What's next

Confirm which of the five triggers above applies to you, then capitalise to the
highest applicable figure in one step. Issuing shares later is straightforward, but
regulators that granted an approval on a stated capital figure treat a subsequent
reduction as a notifiable change — and ESD in particular requires written notice of
any change in shareholder allotment.

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**Verification status.** AI-assisted draft, not yet reviewed by a subject-matter
expert. The Companies Act position was established by full-text search of the Act 777
reprint as at 1 August 2022. Immigration figures are from ESD Online Guidebook version
6 dated 14 April 2025; distributive trade figures from MIDA Booklet 8 (2021), which
itself refers to the KPDN guidelines as amended in 2010. Confirm currency with the
issuing agency before relying on any figure for a live application.

## Sources

- ESD Online Guidebook Version 6 2025 — https://esd.imi.gov.my/portal/pdf/ESD_Online_Guidebook_V6_2025_(14042025).pdf (Expatriate Services Division, Immigration Department of Malaysia)
- Booklet 8 — Distributive Trade Services (2021) — https://www.mida.gov.my/wp-content/uploads/2023/11/Booklet-8-Distributive-Trade-2021.pdf (MIDA)
- Companies Act 2016 (Act 777), reprint as at 1 August 2022 — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)
- MCMC Licensing Guidebook — https://www.mcmc.gov.my/skmmgovmy/media/General/Licence/2025/MCMC_Licensing-Guidebook_150425.pdf (Malaysian Communications and Multimedia Commission)
- PETRONAS Licensing and Registration General Guidelines version 15.0 — https://www.petronas.com/sites/default/files/uploads/content/2026/(English)%20PETRONAS%20L&R%20General%20Guidelines_v15.0.pdf (PETRONAS)
- Guideline on the Acquisition of Properties, effective 13 July 2022 — https://ekonomi.gov.my/sites/default/files/2025-01/GPPH%2013%20Julai%202022.pdf (Ministry of Economy)

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