Doing business in Johor

Doing business in Johor

Johor is strategically located due to its proximity to Singapore. The high cost of living and the escalating overheads in Singapore propel businesses to look elsewhere. Johor may be the solution. The Malaysian workforce is educated, skilled and trainable making it attractive for relocation and investment. 

Malaysia’s diversified economy, richness in multitude of resources and developed infrastructure offers abundance for businesses.

Relocation to Johor requires some planning.  One of your first questions would be land. 

Purchase/lease of land

Although the general law is prescribed by the National Land Code, however as land matters are State matters, Johor State government has its own laws and policies.

Our experience is that you would inevitably require the services of local lawyers whom are more familiar with the policies and guidelines of the Johor land laws.

Our services include negotiation, land searches, advising on various tax issues, relevant government approval, guidelines on foreign acquisition and application for successful approval, conversion of land use, due diligence as well as crafting and reviewing an option to purchase, purchase agreement or lease agreement.

Type of business vehicle

This article is not meant to go into the details of each of the business models, but as a starting point to explore the idea of relocation or investing in Johor.

You may consider one of the following models:


-Limited liability partnership

-Private limited company

-branch office

-representative office

Are there government incentives, business grants or special status?

We are able to assist and direct you to the relevant authority or agency. The Malaysian government together with its agencies are making the application as seamless as possible to attract investors.  Some of these incentives are conditional of Malaysian participation whereby we are able to structure them by shareholders’ agreement or joint venture agreement should you able to identity a synergetic partner.

Doing business in Johor

Practical Aspect of Companies Act 2016- FAQ

Q1. What does it mean when there is no Constitution?

Under the Companies Act 2016, a company incorporated is not required to have a crafted/formal constitution. Under the previous Companies Act 1965, all companies’ constitution are crafted by the promoters/company secretary and mostly adopted the form under Third Schedule (Memorandum of Association) or Fourth Schedule (Table A/Articles of Association). The new Act intends to modernize and simplify the workings of companies. As such, having a formal constitution is now optional so long as the provisions of the Companies Act 2016 is adhered to. Essentially, the Companies Act 2016 is sufficient to regulate the operations of a company without a crafted “constitution”.

Q2. Do I have to change my existing Memorandum & Articles of Association to Constitution?

It depends on what you would like to do. You can opt to do nothing about your existing Memorandum & Articles of Association, as they are still valid as your company’s formal constitution. However, you may decide to revoke it altogether or amend them to harmonies with the Companies Act 2016. Essentially, the amendment will take place as a new form “Constitution” which is a merged Memorandum & Articles of Association. It is advised that a new Constitution is optimal so as to be clear and informative to all shareholders and potential shareholders.   

Q3. I like the idea of 1 director and 1 shareholder and no crafted constitution. Will it pose a problem if the company were to purchase a property? 

Technically it should not pose a problem. The National Land Code Section 210 provides that the execution of an instrument of dealing shall be in accordance with a corporation’s constitution or by any law for the time being in force. It does not mandate the use of common seal on its instruments of dealings. If the company has no constitution and no common seal and with only 1 director, the director’s signature which is witnessed by a solicitor, in accordance with Companies Act 2016 and the NLC, is legal. 

However, various land registry seems unable to do away with the old style practice of having an instrument signed by way of common seal (2 directors or 1 director with its company secretary) without regard as to what is the company’s constitution. As a result, legal firms are required to produce the M&A/constitution and questioned as to why no common seal is affixed on the instrument of dealing.  

Q4. Can you explain why there is no par value to the share capital and how does it affect a shareholder?

Par value is not the market value. It was probably created initially as a baseline so that each investor is confident that the Company shall not issue under-valued shares. However, in modern times, this deems archaic as one investor would sell the shares to another, often based on market value. The difference between with or without par value is an accounting one. Should your company only offered/allotted par value share previously, e.g. of RM1.00 it should not make any difference. Should your company had issued and allotted denominated par value shares above the nominal value, you should consult your accountant on the transitional provision since you would have a share premium account and the transitional period of 24 month would apply

To avoid confusion, you may wish to revoke the M&A which states of such par value and adopt a Constitution to harmonise it with the Companies Act.  

Q5. Is it possible for me to not have a company secretary?

No, every company must appoint at least 1 resident company secretary. As of March 2019 all company secretary must also be registered with the Companies Commission of Malaysia and possesses a valid practicing certificate.

Q6. Does a company get exemption for filing of annual return and audited accounts? 

CCM acknowledges that the audit costs can be unjustifiable for small set-ups, Practice Directive No. 3/2017, exempts dormant, zero-revenue and threshold-qualified private companies to elect for audit exemption. However, note the word “qualifies” as such, exemption is subject to application. Our advice is best to seek company secretary to get such qualification sorted if your company falls under the exemption .