MALAYSIA Law and Practice Contributed by: Natalie Ooi and Nicholas Ooi, Ooi & Ooi
structure. Private companies are governed by their constitution, which outlines their purpose and powers, and the rights of shareholders. REITs, on the other hand, are structured as trusts, requiring a management company, a trus - tee and a trust deed. For the assessment year 2024, Malaysian com - panies with paid-up capital of not more than MYR2.5 million and gross business income of not more than MYR50 million are taxed progres - sively from 15% to 24%. Companies other than the above category are taxed at a flat rate of 24%. Malaysian listed REITs may qualify for tax exemptions on property acquisitions and dis - posals, including stamp duties and RPGT; see 5.3 REITs for more detail. 5.3 REITs REITs are available in Malaysia. Presently, Malaysia has 19 publicly listed REITs on Bursa Malaysia. All REITs, whether public or private, are regulated by the Securities Commission of Malaysia, under the Capital Markets and Services Act 2007 and the Guidelines on Real Estate Investment Trusts. Additional regulations on listed REITs are also provided in the Main Market Listing Require - ments. There is no restriction on foreign ownership of units in publicly listed REITs, but foreigners cannot hold more than 70% of the equity in the REIT’s management company. Private REITs may only target sophisticated investors. Listed REITs are generally exempt from income tax if at least 90% of their total income is dis - tributed to unit holders, and enjoy exemptions
from stamp duties and RPGT when acquiring or disposing of properties. 5.4 Minimum Capital Requirement The minimum capital required to set up an enti - ty for real estate investment in Malaysia varies depending on the type of entity, as follows: • Sdn Bhd (private limited company) – the mini - mum paid-up capital is MYR1; • public limited liability company – the mini - mum share capital is MYR2 million; • trustee (for REITs) – a trustee must have a minimum issued and paid-up capital of MYR500,000 and minimum shareholders’ funds of MYR1 million; • REITs – for listing on Bursa Malaysia, a REIT may need to meet minimum asset value requirements, as well as requirements for the number of unit holders and the minimum offer size; and • limited liability partnership (LLP) – there is no minimum contribution to form an LLP in Malaysia. 5.5 Applicable Governance Requirements Private companies require at least one director, while public companies need at least two. The minimum number of directors must ordinarily reside in Malaysia by having a principal place of residence in Malaysia. For REITs, see 5.3 REITs . 5.6 Annual Entity Maintenance and Accounting Compliance Annual entity maintenance and accounting com - pliance costs vary depending on the complexity of the business, the services needed and the service provider chosen.
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