Those who have chosen to set up a Sdn Bhd company in Malaysia should prepare adequately and possess suitable resources for doing so. A Sdn Bhd company is a company which has limited liability. It allows entrepreneurs to separate their finances and assets from those of the business. After a successful registration, owners expect to reap benefits from this lifelong investment. It is, therefore, important to be aware of the advantages and benefits of having a new Sdn Bhd (private limited) company in Malaysia before setting one up.
The concept of limited liability protects business owners’ personal wealth. This has led to many Malaysians choosing to start a limited liability company; the financial security is an appealing benefit. The company’s shareholders are only liable for debts accrued by the company in accordance with their levels of investment and not any more than what they are able to pay. No one involved with the company can possibly lose any amount of money beyond the capital which they have invested in the company. Therefore, those who have invested in a Sdn Bhd company also receive financial security.
Status as a Separate Entity
A Sdn Bhd company is a separate legal entity from its owners. Its status as a separate legal entity allows it to be in operation regardless of the identities of its founders, directors, and shareholders. Any deaths or retirements will have no effect as the company will continue to exist and operate unless it is dissolved; this fact separates Sdn Bhd companies from partnerships and sole proprietorships. It also increases the stability of a Sdn Bhd company. A Sdn Bhd company has the rights to acquire assets, enter into contracts, and sue or be sued.
Transferability of Ownership
A shareholder of a limited company in Malaysia is allowed to sell or transfer shares to any person of the shareholder’s choice as long as the potential buyer can afford the shares. This is not the case with partnerships or sole proprietorships because doing so would involve selling the entire business and discontinuing business operations.
Sdn Bhd companies benefit from certain tax advantages. They are only taxed based on their profits and are therefore not required to pay any additional taxes.
Increased Access to Capital Funding
Any business needs an adequate supply of financial resources. Fortunately for those who own a Sdn Bhd company, it is relatively simple for such companies to raise money either by issuing bonds or share certificates to investors. This allows the business to expand. Sdn Bhd companies are allowed to borrow money from banks at lower rates when compared to rates paid by other business entities. Financial institutions tend to view loans for Sdn Bhd companies as less risky compared to loans for other business entities.
The general business community and investors perceive Sdn Bhd companies in Malaysia to be more stable and transparent when compared to sole proprietorships and partnerships because they operate more openly. They also have stringent reporting requirements and are therefore less fraudulent.