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What is a Private Limited Company in Malaysia?

In Malaysia, there are vast opportunities to establish a business due to its robust economy and government initiative to promote entrepreneurship, competition and innovation in the workforce. Not only limited to locals, but foreigners are also allowed to set up a company here.

There are different type of company or business entity in Malaysia and a business entity is an organization formed voluntarily to carry out activities of trading goods or services to consumers for profitable gain or charitable purpose. Each organization is determined by its business plan which include the outcome of its operation and main activity.

Most of the business entities are privately owned and administered by few individuals. In Malaysia, one of the most common type of business entity is the private limited company.

 

Private Limited Company or Sendirian Berhad (Sdn Bhd 

A private limited company by shareholding is known as Sendirian Berhad (Sdn Bhd) Company. This type of company is a separate legal entity from its owners, which means this company is considered as a legal ‘person’ that can buy or sell property, present into legal contracts, sue or get sued in courts of law.  

Choosing this type of entity allows an entrepreneur to keep their finances and assets separately from the business. This means that the people who have invested in the business, namely the shareholders, are only responsible for any company debts up to the amount that they have invested and no more. Hence, this type of entity is a good way for a company to get investment without risk to a personal wealth.  

While a private limited company is a viable option for most businesses, this one of the most common type of business recommended for foreign owners. Foreigners are allowed to register a SendirianBerhad (SdnBhd) here with 100% foreign ownership, but some industries will need to have 50% Malaysian ownership and these industries include oil and gas, education, tourism, agriculture and banking. If your business falls outside of these industries, then you are eligible to be a 100% foreign owned Sdn Bhd.  

 

Requirements of Establishing a Private Limited Company  

In this case, you will still need to fulfil several financial requirements. As for consultancy and advisory business, having a minimum paid-up capital of RM500,000 is required whereas for import, export, restaurant or trading business you will need a paid-up capital of RM1,000,000. 

As the Malaysian government is fuelling the need to encourage export growth, knowledge-transfer and employment opportunities in the country, your trade licence will only be approved if your business can promise that it is beneficial to the Malaysian economy. The government also encourages all business owners to employ local citizens.  

Like all business types, a SdnBhd comes with stringent requirements whereby the company is required to have a minimum of 2 shareholders and 2 directors. Two of the company directors must be permanent residents in Malaysia and the private limited company should have at least 2 to 50 members.  

 

Advantages of a Private Limited Company  

On the plus side, incorporating your company as SdnBhd comes with advantages such as: 

  • Company shareholders are not liable for any company debts beyond their share capital  
  • Shares are easily transferable  
  • There are no restrictions on the increase of share capital  
  • Business continuity, as a SdnBhd company will not expire 
  • It is easier to acquire a loan  
  • Company is considered as a separate legal entity  
  • Low risk exposure for income tax  
  • Up to 20% of tax saving compared to personal income tax 

Upon successful registration, once can expect to reap benefits from this lifelong investment. It is, therefore, important to take note of the key features, requirements, benefits and limitations of having a private limited company before you decide to set up one.  

 

 

Paul Hype Page & Co – SSM service provider and Asean Chartered Accountant.

Paul Hype Page & Co. have 3 physical offices in Singapore, Malaysia and Indonesia

Our Firm Goal is to assist Foreigner and Foreign Companies to set up business in Asean.

 

How we can help you:

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Step 1- Listen to your Business plan and Relocation needs.

Step 2- Analysis your Malaysia Tax Planning

Step 3- Recommend the most suited type of Company Incorporation, Open Bank account and Work Visa

Step 4- Arrange for your Spouse and Children Visa

Step 5- Assist as your company to hire staffs and handle all HR matters

Step 6- Every financial year end, we assist you with your yearly SSM Finanical and Tax Compliance

Step 7- Assist you to expand business to Malaysia, Indonesia, Vietnam and Thailand.

Get in Touch with Us Today.

 

Paul Hype Page

Website: www.paulhypepage.my

Posted on April 5, 2019 at 10:42 am
Categories: Company Formation
2 comments

[…] For private companies limited by shares, there are usually more than one director, as a minimum of 2 directors are required. A company of this kind is owned by its shareholders, but the responsibility for the management of the company’s business lies on the board of directors. Directors of the company have special legal position as those with responsibility and authority within the company for the acts and omissions of the company.   […]

[…] are eligible for Private Limited (Sdn Bhd) Companies business entities, and also eligible for the Labuan International Company (LIC) entity. […]

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