Those who are interested in starting a business in Malaysia may select one of several business entities which may be used. Prospective business owners may utilize a sole proprietorship, partnership, or private limited company (also known as a Sendirian Berhad or Sdn Bhd company). For most people who conduct business operations in Malaysia, the Sdn Bhd company is the preferred choice because it has numerous advantages with regard to legal matters as well as the raising of financial capital.
A Sdn Bhd company is a private company which is limited by shareholding. This type of company is a separate legal entity from its owners. This means that the company is considered a legal ‘person’ that may buy or sell property, enter into legal contracts, and sue or be sued in courts of law.
One of the primary advantages of a Sdn Bhd company is that of personal wealth protection. Due to the fact that a Sdn Bhd company is a limited liability entity, the owners’ liabilities do not extend beyond those of any other shareholders. They are not responsible for the company’s debts, which means that the owner’s wealth as a shareholder is protected. The owner’s assets cannot be used to pay for the Sdn Bhd company’s debts unless the owner has made a personal guarantee for the debt. This fact sets Sdn Bhd companies apart from sole proprietorships or partnerships in which owners are responsible for the debts of the company.
Sdn Bhd companies also have continuous existence because they are legal entities which are able to buy and sell property. Therefore, a Sdn Bhd may constantly expand its assets and business portfolio even if its owners change. Private companies exist until they are dissolved, which allows owners to achieve their long–term business vision. Conversely, a sole proprietorship or partnership dissolves upon the departure of one or more of the owners.
The ownership of a Sdn Bhd company is transferable and held among several shareholders. These shareholders can transfer shares among one another or sell them to outsiders who subsequently become owners of the business. Owners may transfer ownership to other people or entities without changing the ownership structure of the company. Therefore, business operations are not affected by changes in ownership; such is not true of a sole proprietorship or partnership.
A Sdn Bhd company may raise capital by issuing more shares or bonds which buyers may use to shield themselves against debt. A Sdn Bhd company can also access more capital through the stock exchange by issuing an initial public offering (IPO). These options are unavailable to sole proprietorships or partnerships because such business entities require owners to personally raise funds at a risk to their assets.
Requirements to Be Fulfilled Before Setting Up a Sdn Bhd Company
There are certain requirements related to the setup of a Sdn Bhd company of which prospective business owners must be aware.
A Sdn Bhd company must have at least two directors who live in Malaysia. This means that an owner will have to identify suitable partners before starting the company. A Sdn Bhd company must also file tax returns, complete annual returns, and be audited; this is true even if the company has become dormant. For such purposes, a Sdn Bhd company must engage a tax auditor and a company secretary every year to remain compliant with corporate requirements regarding corporate tax and governance regulations. Sdn Bhd companies must spend significant sums of money to remain compliant with regulations due to the fact that they operate under close government inspections. There are many corporate regulations and laws to be observed; failure to do so will result in the imposition of fines and other punishments.
A Sdn Bhd company must undergo a name search and reservation through the MyCoID online portal. There are also certain documents required to be shown to the relevant authorities. These documents include the company’s memorandum and Articles of Association. They also include five different forms; they are Forms 48A, 6, 24, 49, and 44
There are certain incorporation documents which are also required to be filed. One of these is Form 48A, which contains the company’s memorandum and Articles of Association as well as the statutory declaration of compliance. The personal details of any two shareholders who hold a minimum of one share of RM1 each as well as those of at least two directors who live in Malaysia. The original version of Form 13A and as well as the notice of approval of the name from the Companies Commission of Malaysia (SSM) are also to be filed. Other important documents to be filed include the address of the registered company office, the Declaration of Compliance as stated in Form 6, and a copy of the identity card of the company secretary and each director.
All Sdn Bhd companies are required by law to have a Goods and Services Tax (GST) number. However, before a Sdn Bhd company may receive a GST number, it must first open a corporate bank account in Malaysia. Registration with the Employees’ Provident Fund (EPF) is also necessary. Every company owner in Malaysia must register with the EPF within seven days of the hiring of the company’s first employee. All employers in Malaysia are also required to register for social security for their employees. This is done with the Social Security Organization (SOCSO).
Everyone who owns or plans to own a Sdn Bhd company must fulfill all necessary requirements before the company can be incorporated. Owners may use the services of a company incorporation service provider to expedite the process of incorporation. Such providers also supply company owners with valuable advice which will aid in the incorporation and operation of the Sdn Bhd company.
What are the Advantages of a SDN BHD Company FAQs