Understanding Limited Liability Company (LLC) in Malaysia
A Limited Liability Company (LLC) is one of Malaysia’s most popular business structures. It is a separate legal entity from its shareholders, meaning that shareholders’ personal assets are protected in the event of the company facing debt or losses. In Malaysia, there are primarily two types of LLCs:
Foreign-Owned Company (Sdn Bhd)
A Sdn Bhd (Sendirian Berhad) is the preferred option for foreign investors looking to establish a presence in Malaysia. It allows foreign businesses or individuals to own shares within the company, either fully or partially, depending on the industry sector. However, certain sectors may have restrictions on foreign ownership, requiring Malaysian partners to meet regulatory requirements.
To determine eligibility and the permissible level of foreign ownership, investors must refer to the Negative List of Investment issued by the Malaysian government.
Local Company
A Local Malaysian Limited Liability Company (Sdn Bhd) typically requires 100% Malaysian ownership and is free from any business activity restrictions. There are capital requirements based on the size of the company:
- Small Size: RM 1 – RM 500,000
- Medium Size: RM 500,001 – RM 10,000,000
- Large Size: Above RM 10,000,000
Advantages of Establishing a Limited Liability Company (LLC) in Malaysia
- Limited Liability: Shareholders’ personal assets are protected, limiting their liability to the amount of their investment.
- 100% Foreign Ownership: Possible in non-restricted sectors, allowing complete control by foreign investors.
- Investment Incentives: Malaysia offers various tax incentives, especially in sectors like technology and manufacturing, to attract foreign investment.
- Transferable Shares: The ownership structure allows easy transfer of shares among shareholders.
