What is a Sdn Bhd and How to Register a Private Limited Company in Malaysia: Understanding Malaysian Business Entities

Understanding the Sendirian Berhad (Sdn Bhd) in Malaysia

A Sendirian Berhad (Sdn Bhd) is a private limited company in Malaysia and remains the most preferred business structure among both local and foreign entrepreneurs. Its limited liability protection, strong corporate credibility, and flexible operational framework make it ideal for business establishment in Malaysia.

Key Characteristics of a Sdn Bhd in Malaysia

Limited Liability

Shareholder liability is limited to the amount of share capital invested in the company.

Separate Legal Entity

A Sdn Bhd exists independently from its owners, ensuring personal assets remain protected.

Shareholding Structure

• Up to 50 shareholders permitted
• Shares cannot be offered to the public
• Distinct from public limited companies (Berhad)

Tax Efficiency and Incentives

A Sdn Bhd may access Malaysia’s competitive corporate tax rates and government incentives designed to support business growth.

Why Choose a Private Limited Company in Malaysia?

Preferred Structure for Foreign Investors

Compared to sole proprietorships or partnerships, a Sdn Bhd offers more flexibility and credibility for foreigners looking to carry out business operations in Malaysia.

Enhanced Business Credibility

Clients, government bodies, and financial institutions generally view a Sdn Bhd as a reliable and stable business entity.

Easier Investment Process

Both Malaysian and foreign investors find it simpler to invest in this structure due to its clear regulatory framework.

Can Foreigners Register a Sdn Bhd in Malaysia?

Foreign entrepreneurs are allowed to fully own and operate a Sdn Bhd in many non-restricted sectors. However:

• Some regulated industries require local equity participation.
• In unrestricted sectors, 100% foreign ownership is permitted.
• All foreign applicants must comply with Malaysia’s Companies Act 2016 and SSM requirements.

Requirements to Incorporate a Sdn Bhd in Malaysia

To register a Sendirian Berhad, the following are required:

Proposed Company Name

Submit a unique company name to the Suruhanjaya Syarikat Malaysia (SSM) for approval.

Director and Shareholder

At least one director must be a Malaysian resident.

Registered Business Address

A Malaysian registered office is mandatory.

Minimum Paid-Up Capital

No statutory minimum, though certain sectors may require specific capital thresholds.

Company Secretary

A qualified company secretary must be appointed within 30 days of incorporation.

Business Nature

Clearly outline business activities during registration.

Step-by-Step Guide to Register a Sdn Bhd

Step 1: Name Reservation with SSM

Submit the proposed company name and ensure compliance with SSM naming guidelines.

Step 2: Document Preparation

Prepare and complete:

• Incorporation form (formerly Form 9)
• Details of directors and shareholders
• Constitution (if applicable)

Step 3: Filing and Approval

Submit all documents to SSM, pay incorporation fees, and obtain the company registration number upon approval.

Step 4: Appoint a Company Secretary

Appoint a licensed company secretary to handle statutory compliance.

Step 5: Corporate Bank Account Opening

Open a Malaysian corporate bank account to manage business transactions.

Managing a Sdn Bhd: Do Foreigners Need a Work Pass?

Foreigners can legally own shares without living in Malaysia.
However, to actively manage or work in the company, a work pass is required.

Available Work Passes

• Employment Pass (EP): For key managerial or specialised roles
• Entrepreneur Visa: For founders who manage their own business operations

Tax Obligations for a Sdn Bhd in Malaysia

Corporate Income Tax

• 17% on the first RM600,000
• 24% on income exceeding RM600,000

Sales and Service Tax (SST)

Applies depending on industry and business activities.

Withholding Tax

Applicable for payments to non-residents.

Directors’ Responsibilities in a Sdn Bhd

Directors must:

• Maintain accurate financial records
• Act honestly and avoid conflicts of interest
• Ensure the company remains solvent

Failure to meet obligations can result in penalties under Malaysian law.

Advantages of Incorporating a Sdn Bhd

A Sdn Bhd offers significant benefits, including:

• Strong limited liability protection
• Easy access to capital and financing
• Credibility for business expansion
• Flexibility for establishing regional branches

Compared to other structures, it remains the most efficient corporate entity for long-term business operations in Malaysia.

Conclusion

A Sendirian Berhad (Sdn Bhd) is the most trusted, credible, and flexible company structure in Malaysia. Whether you are a foreign investor or a Malaysian entrepreneur, understanding how to incorporate and manage a Sdn Bhd ensures a smoother entry into the Malaysian market.