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).