Requirements To Setup MLM Company In Malaysia

Compliance with Direct Sales Act 1993

The company must comply with the Direct Sales Act (DSA) 1993 and the Direct Sales Regulations 1993. These regulations are design to protect consumer rights and interests, govern distributor, promoting ethical sales activities, and ensure no company involved in pyramid schemes or 'get-rich-quick' scheme

Company Incorporation

The company must be incorporated under the Companies Act 1965 and obtain a valid license as per Section 6 of the DSA 93 from Companies Commission of Malaysia (SSM). This is a prerequisite for carrying out any direct sales business in Malaysia

Multilevel Marketing Plan Design

In MLM, the company recruits members or distributors to sell its products or services. These members then appoint others to form their network, known as downlines, and are entitled to commissions or incentives from their sales

Paid-Up Capital Requirements **

The paid-up capital for a Multi-Level Marketing license must be at least RM500,000 for Bumiputera companies and RM1,500,000 for non-Bumiputera companies

Marketing Plan Compliance **

The marketing plan of the company must not include misleading presentations or overemphasize high bonuses to mislead participants. It should comply with the Direct Sales (Scheme and Conduct) Regulations 2001, ensuring incentives are based on sales volume and not recruitment, and preventing mandatory high purchases of products by members

Application Process

The application process involves preparing necessary documents, submitting the application to the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP), undergoing a review and site inspection, and finally receiving approval or rejection. This process can take up to 90 working days and above.

License Fee

The annual license fee is RM 500, payable to the Secretary General of the Ministry of Domestic Trade, Cooperatives, and Consumerism via bank draft or money order

Additional Requirements

The company must be registered with the Companies Commission of Malaysia (SSM) or the Registrar of Societies (ROS), have a registered office in Malaysia, and have a local director who is a Malaysian citizen. The paid-up capital requirement for a private company is at least RM100,000 and RM200,000 for a public company.

Establishment and Capital Requirements

• The business must be established according to the Companies Act of 1965/2016.
• Paid-up capital requirements vary based on the marketing category, with RM1,500,000 for non-100% Bumiputera and RM500,000 for 100% Bumiputera in Multi-Level Marketing. For companies with foreign ownership, the requirement is RM5,000,000【14†source】.