Setting up an Indian company as an NRI in Malaysia
Under the Companies Act, 2013, an Indian private limited company needs at least one director who is a
resident of India for a specified minimum number of days in the preceding calendar year -- an NRI
founder based in Malaysia typically brings in an India-based co-director to satisfy this. The NRI
applicant will also need a Director Identification Number (DIN) and a Digital Signature Certificate,
both obtainable without traveling to India, with incorporation itself filed through the Ministry of
Corporate Affairs' SPICe+ portal along with the company's Memorandum and Articles of Association. FDI
into most sectors is permitted under the automatic route, without prior Reserve Bank of India approval,
subject to sector-specific caps and reporting; a handful of sensitive sectors instead require prior
government approval, so an NRI planning a specific sector should confirm which route applies before
committing capital. Foreign investment brought in as equity must also be reported to the RBI through
Form FC-GPR within the prescribed timeline after allotment of shares.
A genuine parallel: Malaysia's own resident-director rule
Malaysia's Companies Act 2016 imposes a structurally similar requirement on the other side: a standard
Sdn Bhd company needs at least one director who is ordinarily resident in Malaysia, administered by the
Companies Commission of Malaysia (SSM). Incorporation of an Sdn Bhd is done online through SSM's MyCoID
system, and typically also requires a registered office address in Malaysia and a company secretary
appointed within thirty days of incorporation. An NRI wanting to be the sole director of a Malaysian
entity without a Malaysia-resident co-director would instead need to consider a Labuan company, a
mid-shore structure regulated by the Labuan Financial Services Authority that explicitly permits full
foreign directorship, subject to its own registered-office and substance requirements. Labuan entities
also benefit from a preferential tax regime under the Labuan Business Activity Tax Act 1990 for
qualifying trading activities, though the specific rate and eligibility should be confirmed directly with
a Labuan-licensed trust company before committing to that structure.
Repatriating business profits and Malaysian foreign-exchange rules
On the Indian side, repatriating dividends or business profits from an Indian company to Malaysia
follows the standard FEMA reporting and NRO/authorized-dealer-bank process described in this platform's
Compliance section, and typically also requires a Chartered Accountant's certificate (Form 15CB) and the
remitter's own declaration (Form 15CA) before the authorized dealer bank will process the outward
remittance, along with applicable TDS on the underlying dividend or profit distribution. On the Malaysian
side, Bank Negara Malaysia's Foreign Exchange Policy (FEP) Notices govern cross-border payments and
investment reporting for funds moving in and out of Malaysia, including thresholds above which
supporting documentation may be required for the receiving Malaysian entity. An NRI routing investment
capital through a Malaysian entity should confirm current FEP requirements with a Malaysia-licensed
adviser, since these notices are periodically updated and can change without a corresponding change on
the Indian FEMA side.
