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

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.