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.
NOTE: Foreigners can own a Private Limited Company (Sdn. Bhd.) 100% as long as they have a local residential address.
There are different types of business entities available in Malaysia. A business entity is an organisation formed voluntarily to carry out activities of trading goods or services to consumers for profitable gain or charitable purposes.
Most of the business entities are privately owned and administered by a few individuals. One of the most preferred types of business entity is the private limited company. A private limited Company otherwise known as “Sendirian Berhad” or “Sdn. Bhd.” is typically a small or medium-sized enterprise with a straightforward registration process.
Private Limited Company (Sdn. Bhd.) in Malaysia
Malaysia has become one of the prime destinations in Asia for company registration amongst foreigners. It offers many advantages as an investment destination, favourable tax regime as well as strong government support.
With the revision of the Company Act 1965 to the Company Act 2016, foreign investors are now allowed to solely own a Company (becoming a director and shareholder) without the need to appoint a local nominee director. This allows the vast of industries available in the country except for strategic sectors for the national interest. The best structure to start a business is by incorporating a private limited Company (Sdn. Bhd.).
Advantages of a Private Limited Company (Sdn. Bhd.) in Malaysia
There are a lot of advantages incorporating a private limited Company (Sdn. Bhd.) in Malaysia can have and some of them:
Separate Legal Entity
- This business structure is considered as “legal person” which can purchase assets under its own name, bind a contract as well as sue another entity in courts
- Stakeholders’ wealth is guarded and not personally liable towards debts accumulated by business
Owning Property
- As a “legal person”, a private limited Company (Sdn. Bhd.) can purchase assets such as buildings, land, vehicles, and many more under its name
- Stakeholders have no rights to claim upon an asset owned by the Company as long as the Company is undergoing concern basis
Ease in the transfer of ownership
- The shareholders are at liberty to purchase, sell or transfer their shares to other existing shareholders or potential investors.
- There will be no direct impact towards the Company’s daily operation if changes in shareholders
Uninterrupted Existence
- The private limited Company (Sdn. Bhd.) has a perpetual succession which means it will only cease to exist once it is legally dissolved
- If any stakeholder departs or ceases, it will not affect the Company’s existence
Better access to funding
- As a “legal person”, the private limited Company (Sdn. Bhd.) can initiate a bank account opening and opt for the loan packages the banker has to offer under its name
- The Company may also encourage third-party investor to fund the business by offering their shares and planning the dividend pay-out