Singapore Company Incorporation with Paul Hype Page
Company Registration at Paul Hype Page Singapore

Many foreigners are interested in starting a Sendirian Berhad (Sdn Bhd) company in Malaysia. Such is the case because there are many benefits which accompany the ownership of such a company. This article contains much information for all foreigners who are planning to do so.

Sdn Bhd Company Setup by Foreigners in MY

 

Malaysia is a country which is full of business opportunities. Thus, it should come as no surprise that Malaysia is today one of the leading destinations in Asia for the registration of a company. Those who plan to start a company in Malaysia should know that if everything is done in the proper manner, they may stand to gain tremendous benefits. According to the World Bank’s rankings, it is among the countries in the world which are most conducive for business activities. Malaysia’s many double taxation treaties ease many taxpayers’ tax burdens. Company startup costs are also relatively low, as are rental costs. Dividends, capital, and profits can also be easily repatriated.

Foreigners who choose to start a company in Malaysia must have an adequate plan for doing so. They must also decide upon the industry which they will enter, receive any necessary licenses and permits for business operation, and pay all necessary costs. They must also be aware of any obstacles faced by foreigners who plan to start a particular business in Malaysia.

It is easy for foreigners to own a company in Malaysia because they can have complete ownership of the company if it has been registered as a Sdn Bhd (Sendirian Berhad) company. An important benefit of owning a Sdn Bhd company lies in the fact that its owner lacks personal liability for any losses or damages which may have been suffered. Those who are planning on registering a company in Malaysia are to do so with the assistance of a certified company secretary.

Definition of a Sdn Bhd Company

A Sdn Bhd company is a legal business entity in Malaysia that has its liability limited by shares. It is a private limited company which can also be identified by its name; the phrase “Sdn Bhd” will be appended to the company’s name. Those who register a Sendirian Berhad company will be incorporating a private company. Due to the fact that a Sdn Bhd company is limited by shares, it is a separate entity from its shareholders. The limited liability which comes with this status has caused Sdn Bhd companies to become an extremely common business entity in Malaysia. A Sdn Bhd company’s status as a separate entity allows it to enter into a contract, sue, or be sued itself in a Malaysian court of law.

Reasons Why a Foreigner Should Register a Sdn Bhd Company in Malaysia

There are many benefits from which Sdn Bhd company owners in Malaysia benefit. This is especially true of foreigners who own a Sdn Bhd company. One such advantage lies in the fact that Sdn Bhd companies are the only business entity in Malaysia which permit complete foreign ownership. This makes owning such a company appealing to many foreigners. However, only Sdn Bhd companies in certain industries can be completely owned by foreigners. Additionally, there are no restrictions in Malaysia when it comes to the repatriation of capital gains, dividends, royalties and profits. Furthermore, Malaysia’s numerous double taxation agreements with 68 countries as well as its low startup and rental costs make the country an intriguing prospect foreigners who are seeking a new opportunity.

Sdn Bhd companies in Malaysia have business continuity. This means that the business can carry on until a time when there is a valid reason requiring it to cease its business operations. Since a Sdn Bhd company is considered a separate legal entity, the owner’s personal wealth is protected. Furthermore, due to the fact that the business is a separate entity, the ownership of the business is transferable. This also contributes to its continuous existence. The revenue of a Sdn Bhd company is also less likely to be affected by income tax. Sdn Bhd owners who have made suitable plans with regard to income tax will find it easier to reap the tax benefits that exist Malaysia as compared to owners of other business entities. Sdn Bhd companies in Malaysia have a much better market reputation because they are viewed as stable and transparent business entities. This is due to the fact that there are strict reporting requirements which apply to Sdn Bhd companies. Those who own a Sdn Bhd company also benefit from significant tax savings. They may save up to 20% on their total tax bill when compared to what they would ordinarily pay in personal income tax.

Want to Start business in Singapore
Want to Start business in Singapore

Differences Between a Bhd and Sdn Bhd Company

In Malaysia, there are significant differences between a Bhd company and a Sdn Bhd company. A Bhd company must have a minimum of two shareholders; there is no maximum number of shareholders. On the other hand, a Sdn Bhd company can have anywhere two to 50 shareholders. Sdn Bhd companies are typically small or medium-sized enterprises (SMEs) while Bhd companies are usually among the largest companies in Malaysia. Bhd companies have stricter financial reporting standards than do Sdn Bhd companies because they must disclose their financial statements to the public. Bhd firms also find it easier to access sources of capital than do Sdn Bhd companies. This is because they are allowed to use public equity and debt financing whenever they require any funding. Although the process of incorporation for both types of companies is almost the same, there are stipulations in the Articles of Association of a Sdn Bhd company which do not apply to Bhd companies. These include restrictions on company share transfers, a maximum of 50 shareholders, a ban on public subscriptions to the company’s debentures or shares, and a ban on the collection of public deposits. Although most Bhd companies list their shares and trade on a stock market, they are not required to do so and may instead choose to stay unlisted.

Having read this article up to this point, you may have become interested in starting a Sdn Bhd company of your own. If such is the case, we at Paul Hype Page & Co will be of service to you. Our incorporation experts will ensure that your company will be set up in the proper manner. We will also manage all matters which require communication with government authorities on your behalf.

100% Foreign-Owned Sdn Bhd Companies

These companies are completely owned by foreigners. If the owner holds any of the necessary licenses, such companies may enter the import, export, hospitality, or trading businesses. The minimum paid-up capital for these companies is RM500,000. The authorities have to assess the idea behind the business and the benefits to the Malaysian economy that such a business would create before granting a trading license.

Joint Venture Sdn Bhd Companies

A foreigner can also choose to set up a joint venture Sdn Bhd company. In this company, the foreigner controls a minimum of 50% of the company’s shares in a joint venture with a Malaysian partner or partners to participate in business activities. The minimum paid-up capital to set up a joint venture Sdn Bhd company is between RM350,000 and RM500,000.

How a Foreigner May Set Up a Sdn Bhd Company

The first step which a foreigner who plans to set up a Malaysia-based Sdn Bhd company is that of a name search and reservation. The application for a name search is done in front of the Registrar of Companies. The charges are imposed per name submitted for search. There are also company incorporation documents to be submitted to the SSM. These include the company’s memorandum, the company’s Articles of Association, and five forms which are Forms 6, 22, 24, 48, and 49A. Other documents which are also to be submitted include the personal details of the shareholders and directors of the company, copies of the identity cards of any Malaysian directors and shareholders, copies of the passports of any foreign directors and shareholders, SSM’s official approval of the company’s name as stated in Form 13A, the address of the company’s registered office, and a declaration of compliance as stated in Form 6. Once these documents have been filed, the SSM will issue Form 9. Form 9 is a certificate of incorporation. The company will also receive post-incorporation items such as statutory books, the company seal, and the share certificate register.

The next step to be taken is that of opening a bank account. Before a Sdn Bhd company may commence operations, it must have a Sales and Services Tax (SST) number. The Sdn Bhd company must have a bank account before it may obtain an SST number. A foreigner is only allowed to own a bank account if the foreigner is in Malaysia via a business visa or a work permit. An account may not be opened in the company’s name if there is a foreign shareholder or director is on a student or social visit visa or if a Malaysian shareholder or director is either a ‘bad cheque offender’ or bankrupt. An SST number is obtained from the Royal Malaysian Customs. There are certain documents required for the obtaining of an SST number. These are the company’s registration number, the company’s email address, the estimated value of all of the company’s taxable supplies, the industry codes of the industry in which the Sdn Bhd operates, and all bank account information.

Applications for registration as a taxpayer in Malaysia are submitted to the Inland Revenue Board of Malaysia (LHDN). An application can either be made online or in person. The documents needed for such applications are the certificate of incorporation (Form 9) as well as the personal details of managers, the company secretary, shareholders, and managers (Form 49).

Within seven days of the company’s hiring of the first employee, the Sdn Bhd company must register with the Employees’ Provident Form (EPF). The documents required to do so are the application, a certified copy of the identity card or passport of one of the directors or company’s authorized people, a certified copy of Forms 9 and 49, and evidence of the first month’s contribution in either the form of a a cheque or bank draft. The Sdn Bhd must also register for social security if it plans to hire eight employees or more. Social security registration in Malaysia is done under the auspices of the Social Security Organization (SOCSO).

Sdn Bhd Company Setup by Foreigners in Malaysia FAQs

Can a Foreigner who owns a Sdn Bhd Company cede control of it to a Malaysian?2020-04-28T17:41:18+08:00

Foreigners are allowed to register a Sdn Bhd company in Malaysia with complete foreign ownership. However, this does not mean that such a company cannot be controlled by locals. Therefore, it is possible for a foreigner to cede control of a Sdn Bhd company to a Malaysian.

In which Industries in Malaysia do the most Foreigners Work?2020-04-28T17:40:30+08:00

The industries in which the most foreigners work are those in which the Malaysian government is attempting to increase foreign investment. These industries are tourism, agriculture, education, oil and gas, and banking and finance. However, as Malaysia’s economic conditions change, so will the industries in which the most foreigners work.

What Corporate Taxes are Imposed on a Sdn Bhd Company?2021-02-09T09:21:18+08:00

Ever since the 2018 year of assessment, Malaysian Sdn Bhd companies which have resident status are taxed at 19% if their net profit is below RM500,000 and 24% otherwise. Non-resident Sdn Bhd companies, which are those with over 50% of their shares owned by foreigners, are taxed at a flat rate of 24%.

2020-12-21T12:18:11+08:00November 1, 2019|0 Comments
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