Foreign Companies

Foreign company means any company incorporated at outside Malaysia which carry on business
or has an established place of business in Malaysia. It mean does not have its principal place or
head office of business in Malaysia. The scope of business has considered by The Court which
has to be carried on to make a place of business for the aim to establish a sufficient presence
within the jurisdiction for service of process. A company has an established place of business in
Malaysia if it has a specified place at which it carries on business such as a warehouse, office, or
other premises with some visible indication premises.

According to CA 1965 Section 332, every foreign company wishes to commence to carry on
business or establish a place of business within Malaysia shall lodge with the Registrar for
registration. Registration of a foreign company requires the lodgment with the Registrar of
Companies of, inter alia, the names and addresses of two or more natural persons resident in
Malaysia who are authorised to accept on its behalf service of process (such persons being
referred to as agents of the foreign company). Furthermore, such a foreign company must have
a registered office in Malaysia and notice of the situation of this office in Malaysia must also be
lodged. Failure to register before carrying on business or establishing a place of business attracts
an offence (penalised by a fine) under Section 349. Nevertheless, some provisions of the
Companies Act are relate to foreign companies, which particular in sections 329 to 349 CA 1965.

For an example, Apple Inc. is an American multinational technology company which

headquartered in Cupertino, California, that develops, design and sells consumer electronics,
computer software, and provides online services. Apple Inc is a foreign company and carry out
business around the world include our country Malaysia. Therefore, Apple Inc should lodge with
the Registrar for registration before carrying on business or establishing a place of business in
Malaysia under CA 1965 Section 322. However, if Apple Inc fail to register it will be penalty and
prohibit carry on business according to Malaysia CA 1965. This act will apply not only Apple Inc
but also for all foreign company which carry on business or has an established place of business
in Malaysia.

There is a supporting case law for this scenario which is Hopewell Construction Co. Ltd v.
Eastern & Oriental Hotel (1951) Sdn Bhd. The fact of this case is where the plaintiff company
incorporated in Hong Kong entered into a contract for construction of a building in Penang. The
issue before the High Court whether the contract was void on account of the fact that the
plaintiff, being a foreign company, did not register itself in Malaysia as required by the
Companies Act 1965. Zakaria Yatim J. (defendant) in applying the principle addressed these two
questions:
i) Whether the Companies Act prohibits the making of a contract of the type in question; and
ii) Whether the Companies Act provides that one of the parties must satisfy certain requirements
before making such a contract.

His Judge noted that in order to render the contract void under section 24(b) of the Contracts Act,
there must be a sufficient nexus between the provisions of the Companies Act and the contract in
dispute. His Judge could find no such connection: the Companies Act neither prohibited the
making of such contracts nor laid down any requirement for foreign companies to comply in
respect of such contracts. The question of public policy under section 24(e) of the Contracts Act
was also considered and rejected as not applicable to the contract in dispute.

Reference
Tripod, Type of Companies, view at 8 November, available from
(http://syarikat.tripod.com/essential2.html)
Hawksford, Incorporation Procedure, view at 8 November, available from
(http://www.guidemesingapore.com/country-reports/malaysia/company-setup-singaporevs-malaysia)
COMPANIES ACT 1965 (REVISED - 1973), view at 8 November, available from
(https://www.ssm.com.my/acts/fscommand/CompaniesAct.htm)
Selangor Law Courts Official Website, Case law, view at 9 November, available from
(http://selangor.kehakiman.gov.my/sites/selangor.kehakiman.gov.my/attachments/Civil_s
uit_22-1509-2008.pdf)