Why and how to increase paid-up capital
Increase Paid-Up Capital / Issued Share Capital
How much of paid-up capital should I have for my new company?
Any amount from at least RM2 up to the maximum of the authorised capital as stated in the M&A (Memorandum & Articles of Association) of the Company, 100,000 for normal new company.
We recommend paid-up capital of RM1,000 for all new companies upon the registration with SSM.
Why should I increase my company’s paid-up capital?
Normally, there are FOUR (4) REASONS where the company may find itself in the situation it needs to increase its paid-up capital:
1. Requested by Bank
2. A project tender requirement
3. License requirement
4. Corporate image
Reason 1 to increase paid-up capital : Requested by Bank
As part of the terms and conditions in the Letter of Offer from Bank for business loan application submitted by the Company, the company is required to increase its paid-up capital as required by the Bank.
For example, a company is required to increase its paid-up capital from RM1,000 to RM200,000 as part of the requirement for the RM1,000,000 bank loan application from a bank.
Reason 2 to increase paid-up capital : Project Tender
As one of the qualification requirement, the company is to have at least certain amount of paid-up capital before it can submit any project tender document.
For example, a company is required to have at least RM100,000 paid-up capital to be pre-qualified for certain projects from Petronas.
Reason 3 to increase paid-up capital : License application
A company operating in certain industries may be required to have certain licenses before they can commence its business operations. For example, Agensi Pekerjaan Business.
Or a company need to have at least RM500,000 paid-up capital before they can apply working visa for its foreign staff with Immigration Department.
Reason 4 to increase paid-up capital : Corporate Image
A 2-dollar company is not better than a company with paid-up capital of RM100,000!
In Malaysia, any increase in paid-up capital by a company will normally be required to produce some proof or evidence that the company has received the relevant amount of money from respective shareholders, that is why your company secretary will request “bank-in slip” from director before proceed to prepare any relevant documents.
Why increase of capital need bank-in slip from you, as directors of the Company?
It is stated clearly in the Section 48, the Companies Act of which has been extracted as follows:
-No allotment shall be made of any shares of a company unless the sum payable on application for the shares has been received by the Company.
-If a cheque for the sum has been received by the company, the sum shall be deemed not to have been received by the company until the cheque is paid by the bank.
-Every director of a company who knowingly contravenes or permits or authorises the contravention shall be guilty on an offence against this Act.
-Penalty: Imprisonment for three years or one million ringgit or both
For full content of this section, please refer the following link.