How to Increase Paid-Up Capital of a Sdn Bhd: Steps, Approvals and SSM Filing

By Axecta Management Services, Kuala Lumpur · Last verified: 29 October 2026

What “increasing paid-up capital” actually means

A Sdn Bhd does not “increase registered capital” by filing a form to raise a ceiling, because the Companies Act 2016 removed authorised capital and par value (see paid-up vs authorised capital). Instead, paid-up capital goes up when the company allots new shares and receives payment for them, or when members pay up a balance owing on partly paid shares.

There are four common routes:

• New shares for cash from existing members or a new investor.
• Shares issued to capitalise a loan owed to a shareholder or director, treated as an allotment for a non-cash consideration.
• Bonus issue, where reserves are applied to issue shares to members in proportion to their holdings.
• Shares issued as consideration for assets or another business.

Each has the same core legal skeleton, with extra paperwork for non-cash issues.

The legal framework in plain terms

All references are to the Companies Act 2016.pdf).

For private companies the AGM rule matters: public companies must hold an AGM (section 340), so a private company’s section 76 approval is limited to not more than 12 months. See does a Sdn Bhd need an AGM.

Step-by-step: issuing new shares for cash

1. Define the deal. Agree the number of shares, the price, the class (ordinary or another class permitted by the constitution) and who subscribes. SSM’s FAQ suggests pricing by reference to financial performance, prospects and risks, in the company’s best interest.
2. Read the constitution. Look for pre-emption wording, limits on classes of shares, and whether any special approvals are needed. If the company has more than one class, check the voting rights described under section 90.
3. Offer to existing members first if section 85 applies. Send a notice with the number of shares offered and a deadline. Unsubscribed shares can then be placed elsewhere by the directors.
4. Pass the resolution. A shareholders’ resolution gives the section 75 authority. For a private company this can be a written resolution (see written resolutions in a Sdn Bhd). Then the board resolves to allot on the terms. Understand which decisions belong where in directors’ vs shareholders’ resolutions.
5. Lodge the section 76 approval with SSM within 14 days of the date of the approval.
6. Receive payment into the company’s bank account and keep the bank evidence.
7. Allot the shares by board resolution and update the register of members within 14 days.
8. Lodge the return of allotment within 14 days of the allotment date with a statement of capital as at that date and the name, address, number and class for each allottee.
9. Issue share certificates if the member asks, within 60 days of the application.
10. Update the accounts and tax file. Tell your accountant the amount and date, and diarise the effect on the PR 8/2025 tests described below.

Capitalising a director or shareholder loan

Converting a loan into shares is common when a company needs a stronger balance sheet or banks ask for it. Treat it as a share issue with extra care:

• Obtain a written agreement from the lender agreeing to apply the debt to subscribe for shares.
• Pass the same resolutions as for a cash issue.
• Section 78(4) requires that where shares are allotted as fully or partly paid otherwise than in cash under a written contract, the contract (or a certified copy) is lodged with the return. Other non-cash situations, such as shares allotted on application of reserves or in satisfaction of a dividend, require a statement with the particulars the Registrar determines (section 78(6)).
• Reconcile the director’s loan account to the amount capitalised so the accounts and SSM record agree.

Confirm tax and accounting treatment first.

Bonus issues, splits and other changes to share capital

• A bonus issue pro-rata to members falls within an exception in section 75(2), but the register and return of allotment steps still apply.
• Under section 84, a company can consolidate and divide share capital, convert paid-up shares into stock, or subdivide shares, by passing a resolution. SSM’s FAQ says this needs a special resolution unless the constitution specifies an ordinary resolution. The notice of alteration is lodged within 14 days.
• Reducing share capital is separate. Under section 117, it needs a special resolution, a solvency statement by all directors and notice to the Inland Revenue Board and the Registrar within seven days of the resolution.

What to lodge with SSM and how

SSM’s updating company information page lists the return of allotment of shares (section 78) among the services available through MyCoID. SSM’s earlier FAQs said only a company secretary registered as a MyCoID user could lodge it.

Two time-sensitive points as at October 2026 (see also SSM’s FAQ on shares):

• Practice Directive 11/2026 (issued 14 July 2026, revised 5 August 2026) applies to local companies whose members hold more than one type of share and to all foreign companies. Such a company must first lodge a notice updating its shares and shareholders information (Annexure B for local companies) before it can use the listed share services, which include the return of allotment, section 76 approvals and notices of alteration of share capital. The directive says lodgement is over the counter at SSM’s Head Office or State offices, gives a window from 14 July 2026 to 14 January 2027 (the Registrar may extend it), and says no fee is imposed for that update. Read the directive and ask your secretary whether it applies.
• Fees. SSM’s table of fees for registration of company/Table-of-Fees.aspx) as fetched for this article lists incorporation and name reservation but no separate entry for the return of allotment. It does list a general item for lodgement of documents not specifically mentioned. We could not confirm from the page which fee, if any, applies to a return of allotment, so confirm the current position with SSM before budgeting.

Tax: time your issue around the basis period

LHDN’s rate page and PR 8/2025 tests paid-up ordinary share capital of not more than RM2.5 million at the beginning of the basis period for the year of assessment. It also tests ownership: from YA 2024, the rates are lost if more than 20% of paid-up ordinary share capital is held, directly or indirectly, by foreign companies or by individuals who are not Malaysian citizens. Also, a company that has just started operations may be exempt from submitting CP204 only if it keeps its paid-up ordinary share capital at or below RM2.5 million at the beginning of the basis period and for the following two years (paragraph 6.6.2 of the ruling).

Illustrative timing example

All figures are invented; the RM2.5 million threshold is from the ruling.

• A company has a 31 December year end and RM2,000,000 of paid-up ordinary share capital on 1 January 2027.
• On 1 October 2027 it issues shares for RM1,000,000, taking paid-up ordinary share capital to RM3,000,000.
• Reading the ruling literally, the capital test for YA 2027 is applied at the beginning of the basis period (1 January 2027), when the figure was RM2,000,000. At 1 January 2028 the figure is RM3,000,000, so YA 2028 would fail the capital test.

Whether to stage the investment or accept the 24% rate is a commercial and tax decision, so take advice. See share capital and the small company tax rate and the corporate tax rate guide.

Common mistakes

• Allotting first, approving later. A section 75 breach makes the issue void.
• Missing the 14-day clocks in sections 51, 76, 77 and 78.
• Forgetting pre-emptive rights (section 85).
• Capitalising a loan without a contract. The return may need to be accompanied by the contract, and the numbers in the director’s account must match.
• Ignoring the tax tests. An allotment that looks harmless commercially can alter the following year’s tax rate.

What it means for different companies

• Private Sdn Bhd with a few shareholders. Written resolutions make approvals quick, but the filing deadlines still apply.
• Foreign investor taking a stake. Check sector or licence conditions, and run the 20% foreign-ownership test in PR 8/2025 before agreeing the percentage. For the first allotment at incorporation, see how to register a Sdn Bhd.

How Axecta helps

Axecta’s incorporation and secretarial team drafts the section 75 resolution, offer notice and allotment minutes, lodges the filings, updates the registers and prepares share certificates. We also coordinate with your accountant so the capital shown in the accounts, the register and the SSM record agree.

Next steps

1. Write down the deal: shares, price, class, subscribers, date.
2. Ask your secretary to check the constitution and whether PD 11/2026 applies.
3. Run the PR 8/2025 tests before fixing the allotment date.
4. Approve, receive payment, allot, update the register and lodge within 14 days.

Frequently asked questions