Understanding Private Limited Company

A Private Limited Company, known as Sendirian Berhad (Sdn Bhd) in Malaysia, is a popular business structure offering a separate legal identity from its owners. This entity can acquire assets, incur debts, enter contracts, and initiate legal action in its name, ensuring perpetual succession until dissolution by directors and shareholders.

 

Legal and Financial Structure

Owners’ liability is limited to their investment, protecting personal assets against the company’s liabilities. Unlike public companies, Sdn Bhd restricts share offerings to the public, limiting shareholders to a maximum of fifty and ensuring more private control, ideal for small-to-medium enterprises.

 

Foreign Ownership and Registration

Foreigners can fully own a Sdn Bhd, subject to minimum paid-up capital requirements, varying by business nature and potentially requiring ministry approval for certain sectors. This structure supports foreign investment, with specific industries requiring local co-ownership or higher capital for operational licensing.

 

Advantages and Setup Process

Sdn Bhd entities benefit from limited liability, potential for 100% foreign ownership, quick incorporation, ease of share transfer, lower corporate tax rates, and enhanced credibility. Registration involves a unique company name, at least one shareholder and a resident director, a company secretary, a local business address, and a minimum capital of RM1,000 (locally owned) or RM500,000 (foreign-owned).

 

Registration and Compliance

The process includes a name search with the Companies Commission of Malaysia (SSM), company registration, bank account opening, permits and licensing for specific business activities, corporate tax registration, and annual filing requirements to ensure regulatory compliance and operational legitimacy.

In summary, the Sdn Bhd structure in Malaysia offers a flexible, credible, and legally protective environment for both local and foreign entrepreneurs, facilitating business operations through a framework designed to support economic growth and innovation.