Private Limited Company Sdn Bhd

Private Limited Company (Sdn. Bhd.)

What is Private Limited Company (Sdn. Bhd.)?

Private Limited Company (Sdn. Bhd.) registration is one of the popular legal business structure option in Malaysia. Private Limited Company (Sdn. Bhd) is governed by Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia) and Companies Act 2016. To register a Private Limited Company (Sdn. Bhd.), a minimum 1 member (shareholder) and 1 director (ordinarily reside in Malaysia by having a principal place of residence in Malaysia) are required. A natural person can be both a director and shareholder, while a corporate legal entity can only be shareholder.

Unique features of a Private Limited Company (Sdn. Bhd.) like limited liability protection to shareholders and directors, lower income tax rate, corporate identity and branding, separate legal entity status and perpetual existence make it the most recommended type of business entity for millions of small and medium sized businesses.

Information Required for Private Limited Company Registration

  • Copy of all partners identity card (I/C) or passport (for foreign partner)
  • Proposed company name
  • Proposed business nature
  • Proposed address of the registered office (place to keep statutory documents)
  • Ordinary place of residence of every shareholder and director
  • Details of class and number of shares to be taken by every shareholder

Advantages of Private Limited Company (Sdn. Bhd.)

There are multiple reasons to choose private limited company:

Separate Legal Entity

Private Limited Company (Sdn. Bhd.) is a legal entity and a juristic person established under the Companies Act 2016. Hence, a company has a range of legal capacities including opening of a bank account, hiring of employees, taking on equity or obtaining licenses and more as an independent corporate entity. The members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company’s debts.

Owning Property

Private Limited Company (Sdn. Bhd.) being an artificial person, can acquire, own, enjoy and alienate, property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., No shareholder can make a claim upon the property of the company – as long as the company is a going concern.

Easy Transferability

Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates is sufficient to transfer ownership of a company. In a private limited company, the consent of other shareholders may be required to effect share transfers.

Uninterrupted Existence

Private Limited Company (Sdn. Bhd.) has ‘perpetual succession’, meaning uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.

Borrowing Capacity

Investors, Venture Capitals, Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns.

Lower Income Tax Rate

The highest income tax rate of Private Limited Company is 24% while highest income tax rate of individual can up to 28%. Distribution of income wisely may help in income tax saving.

Factors to Consider in Private Limited Company (Sdn. Bhd.) Name Selection

The name of your company is very important. It is the first impression to your buyers, suppliers and stakeholders. It should, therefore, be relevant, suggestive and attractive. There are various factors that you should keep in mind while naming for your company

Short & Simple

The name should be concise and not be too long. People should be able to pronounce it easily and they should be able to remember your company’s name the first time they hear or read it.

Meaningful

The name of your company should be related to your business. It should fit the company’s branding and corporate identity.

Unique

Name of your company should not be same or identical to an existing company or trademark. You can go to www.ssm-einfo.my to check if your company name is identical to others. You should ideally avoid plural or changing just letter Case, spacing or punctuation marks in an existing company name.

Suffix

The name of your company should end with the suffix “Sdn. Bhd.” in a case of a Limited Liability Partnership (PLT.) and “Sdn. Bhd.” is a case of a Private Limited Company (Sdn. Bhd.). and “PLT.” is a case of a limited liability partnership.

Should not be illegal / offensive

The name of your company should not be against law. It should not be abusive or against the customs and beliefs of any religion.

Faq

What are the main steps for the incorporation in Malaysia?

All companies opened here are required to register at the Companies Commission of Malaysia. The process begins by proposing a business name, register the company under a legal entity and comply with the requirements of the local authorities (register for taxation, social security, insurance).

Who Will Process My Incorporation Documents?

You should appoint a company secretary to handle the legal paperwork. This is a lawyer appointed by a company to handle its legal affairs. Although appointing the company secretary is not a legal requirement at the point of incorporation, the appointment must be done within 30 days of the incorporation.

What Requirements Will I Need to Fulfill After Company Incorporation?

You will to appoint auditors from a list of auditors approved by the SSM. You will need to supply the shareholders with the audited accounts before the Annual General Meeting. A private company is not required to present the audited accounts at an AGM but a public company is required to. Make an annual report to the SSM. The new Companies Act 2016 requires that the annual returns are made within 30 days of the anniversary of incorporation.

Is it compulsory to open a corporate bank account?

No. It isn’t compulsory, but we will recommend the companies set up in Malaysia open their bank account, in which they will deposit their share capital and use for daily operation.