What is a Private Limited Company ("Sdn Bhd") in Malaysia?

Anyone who wants to start running a business in Malaysia must go through the business registration process with the Companies Commission of Malaysia ("SSM", Suruhanjaya Syarikat Malaysia).

Before you start, you must clearly understand the functions performed by Malaysia's various forms of entities.

In general, there are four common types of business entities available to you:

• Sole Proprietorship,

• Partnership,

• Limited Liability Partnership (LLP), or

• Private Limited (i.e. Sendirian Berhad. or Sdn Bhd).

The first two kinds of businesses, sole proprietorships and partnerships, are the most common businesses chosen by entrepreneurs because they are simple to establish and do not require a significant initial investment.

It has been well over ten years since Malaysia first established limited liability partnerships (LLPs). Since then, LLPs have become an increasingly popular option among business owners attracted by less onerous compliance requirements.

Suppose you wished to establish an entity that exists as a separate legal entity from its owners. In that case, another popular choice is to incorporate a private limited company (i.e. a company that can acquire assets, go into debt, enter into agreements, and sue or be sued in its own name).

The Advantages of a Private Limited Company ("Sdn Bhd")

Separate Legal Entity with Limited liability

• The Private Limited Company is deemed a "legal person" because it can buy assets in its own name, bind a contract, and even file a lawsuit against another business.

• Shareholders' assets are safe because they are not personally responsible for the company's debts and losses.

• As long as the company is a "going concern," stakeholders do not have the legal right to claim any assets the company may own.

Foreign Ownership

• A Private Limited Company can be owned entirely by foreign equity for most business activities.

Shares Transferable

• Transferring existing shares to new investors or issuing additional shares to existing/new investors is simple.

• Suppose there is a change in the company's stockholders. In that case, it will not immediately affect how the company does its business.

Perpetual Succession

• has a perpetual succession, which means that it won't stop existing until it is formally dissolved in the eyes of the law.

• It will not affect the Company's survival if any shareholder decides to leave or stop participating.

Reputation and Better access to funding

• In addition to the facilities provided by banks, private limited companies can readily accommodate equity capital. Venture capitalists and private equity companies are extremely unlikely to invest in any other business structure than Private limited companies.

Relaxed Tax Liability

• The company will only be taxed based on the chargeable income, with the first RM 600,000 subject to a rate of 17% and any other balances subject to 24%.

• Various tax incentives are available, including pioneer status, an investment tax allowance, the SME Digitalisation Grant Scheme, and the Automation Grant.

The Disadvantages of a Private Limited Company ("Sdn Bhd")

• The limited ability to share transfers.

• The number of shareholders must not exceed 50.

• It is impossible to issue a prospectus to the public, hence, is unable to raise funds from the public.

• Shares can not be quoted.

Eligibility of a Private Limited Company ("Sdn Bhd")

To establish a Private Limited company in Malaysia, there must be at least the following:

• One director;

• One shareholder; and

• Minimum paid-up capital is RM 1

Both of which may be the same. Both roles may also be held by different people.

Who can become the Director

Anyone can become a director of a Private Limited Company ("Sdn Bhd") company if they fulfil the following requirements:

• Over 18 years old.

• A resident of Malaysia.

• Fulfil the other requirements of the Companies Act 2016 to hold the position.

Procedures of Incorporation

• Name Search and Application of Name

  • A name search must be made to ensure the proposed name is available.

• Lodgement of application to incorporate the company, particulars required:

  • The proposed name of the company

  • The status of the private or public company

  • The proposed type of business

  • The address of the registered office

  • The business address

  • Complete detail of director(s) and promoter(s)

  • Declaration from the director(s) or promoter(s) that he/she:

    • ➢ is not an undischarged bankrupt either in or outside Malaysia; and

    • ➢ has not been convicted of any offence, whether in or outside Malaysia

• Incorporation Fee

  • Each application to incorporate the company should be lodged together with a fee as follows:

    • Company limited by shares - RM1,000

    • Company limited by guarantee - RM3,000.

• Verification of Incorporation

  • If the Registrar is satisfied that all information provided is complete and complies with the required procedures—

    1. a notice of approval and registration will be issued; and

    2. a certificate of incorporation will only be issued by SSM upon request, together with the prescribed fee.

• Post Incorporation

  1. The company shall appoint a Company Secretary within 30 days after incorporation. The company secretary shall be registered with SSM and possess a valid practicing certificate issued by SSM.

  2. If required by the company, it may file the constitution of the company after the incorporation of the company.

And, of course, once incorporated, the Private Limited Company ("Sdn Bhd") is advised to obtain the necessary license/permit/approval from the relevant authorities before commencing business.

In a Nutshell

Following the abovementioned processes will make it simple for you to register your Private Limited Company ("Sdn Bhd") in Malaysia.

But you can save time using Tac Pro's services to incorporate a Private Limited Company ("Sdn Bhd").

In general, the process does not present any significant challenges. It takes 1-2 business days for which you will receive the Notice of Registration upon approval from SSM.

To Summarise:

• At least one director and shareholder that has a legitimate local residential address

• The minimum paid-up capital is MYR 1

• The Companies Commission of Malaysia's registration cost is RM 1,060

• Must engage a licensed Company Secretary within 30 days after incorporation is done

• Can venture into almost all types of businesses available in Malaysia

Please do not hesitate to contact us if you have any questions.

Get in touch with us immediately for a free consultation with no fees to discover more.

In General:

Private limited companies (Sdn Bhd) are a popular choice for entrepreneurs in Malaysia because they offer several benefits over other business structures, such as sole proprietorships and partnerships. Here are some reasons why private limited companies are a better choice in Malaysia:

1. Limited Liability Protection: Private limited companies are separate legal entities from their owners, which means that the owners are not personally liable for the company's debts or obligations. This provides significant protection to the owners' personal assets and wealth.

2. Credibility: Private limited companies are generally perceived as more credible and professional than other types of businesses, which can help attract investors, customers, and suppliers.

3. Tax Benefits: Private limited companies in Malaysia are eligible for several tax benefits, including lower tax rates, deductions, and exemptions.

4. Easier to Raise Capital: Private limited companies can easily raise capital by issuing shares to investors or borrowing money from banks or other financial institutions.

5. Succession Planning: Private limited companies are easier to transfer or sell to new owners or investors, which makes them a better choice for long-term planning and succession.

6. Perpetual Existence: Private limited companies can exist indefinitely, even if the owners or shareholders change or leave the company. This provides stability and continuity for the business and its stakeholders.

Overall, private limited companies offer many advantages that make them a popular choice for entrepreneurs in Malaysia. However, it's important to consider your business's specific needs and goals before choosing a business structure.

在马来西亚，私人有限公司（Sdn Bhd）是创业者的首选，因为它们相对于其他业务结构，如独资企业和合伙企业，提供了几个优点。以下是私人有限公司在马来西亚是更好的选择的一些原因：

有限责任保护：私人有限公司是业主的独立法律实体，这意味着业主不承担公司的债务或义务。这为业主的个人财产和财富提供了重要的保护。

可信度：私人有限公司通常被认为比其他类型的企业更可信和专业，这有助于吸引投资者、客户和供应商。

税收优惠：马来西亚的私人有限公司有资格享受几种税收优惠，包括较低的税率、扣除和豁免。

更容易筹集资本：私人有限公司可以通过向投资者发行股票或向银行或其他金融机构借款来轻松筹集资本。

继承规划：私人有限公司更易于转让或出售给新业主或投资者，这使它们成为长期规划和继承的更好选择。

永续存在：私人有限公司可以无限期存在，即使业主或股东变更或离开公司。这为企业及其利益相关者提供了稳定性和连续性。

总体而言，私人有限公司提供许多优势，使它们成为马来西亚创业者的热门选择。但是，在选择业务结构之前，重要的是考虑您企业的特定需求和目标。