Do you know what A “Sdn Bhd” is?
Sdn Bhd stands for “Sendirian Berhad” in Malay, meaning a private limited company in English. A Sdn Bhd can be established by either Malaysian citizens or foreigners and it must be registered with the Companies Commission of Malaysia (“SSM”).
Why set up A Sdn Bhd in Malaysia?
1️. Your company’s debts are not your personal debts.
- Sdn Bhd is a separate legal entity, so the company’s assets are distinct from the owner’s personal property.
- If the company incurs debts, shareholders are not required to use personal assets to settle them.
⚠ Note: If shareholders/directors are not guarantors, they are not liable for the company’s debts.
2. Lower corporate tax rates.
- Personal income tax rates 📈 can go up to 30%.
- For SMEs (Small and Medium Enterprises), the corporate tax rates for Sdn Bhd are:
- First RM150,000: 15%
- Next RM450,000: 17%
- Balance: 24%
3. Easier to secure bank loans.
- Banks trust Sdn Bhd companies more and are more willing to provide loans and capital investments compared to sole proprietorships (Enterprise).
- Loan amounts for Sdn Bhd are typically four times higher than for Enterprises.
4️. The company doesn’t dissolve easily.
- Unlike Enterprises, A Sdn Bhd does not dissolve even if the owner’s circumstances change (e.g., bankruptcy, death, resignation).
- The company can continue operating through share transfers, making it possible to pass the business to the next generation.
5️. Simple establishment requirements.
- Decide on a Company Name.
- Specify the Business Nature.
- Have at least one Shareholder.
- Have at least one Director.
- Set a Capital Fund of at least RM1 (RM100 is recommended).
⚠ Tip: A shareholder and director can be the same person, and they must be at least 18 years old.
6. Easier to hire foreign talent.
- Compared to other types of businesses, Sdn Bhd companies are more stable and attract more job seekers, including foreign talent.
- Employers of Sdn Bhd companies can apply for work permits for foreign employees through the Immigration Department of Malaysia, unlike Enterprise owners.
7️. Easier to scale your business.
- Sdn Bhd companies generally have better reputations, making it easier to secure funding, participate in tenders, or find partners.
- Selling shares can also help raise significant capital for business operations, offering great growth potential.
8. Access to tax incentives.
- Local Sdn Bhd companies in Malaysia can apply for various tax incentives and grants tailored to specific industries.
- For example, tech companies can apply for Malaysia Digital status through MDEC to enjoy a 5+5 year tax exemption and grants. This benefit is only available to Sdn Bhd companies (subject to conditions).
3 Steps to Register A Sdn Bhd in Malaysia
Step 1: Apply for your proposed company name through bossboleh.com with SSM.
Step 2: Once the name is approved, your company secretary will prepare the necessary documents for shareholders and directors to sign.
Step 3: After signing, the company secretary will submit the documents to the relevant government authorities.
Usually, SSM issues the company registration certificate (Section 17) within 1 to 5 working days, confirming your company’s successful registration!
⚠ Reminder: According to the Companies Act 2016, A Sdn Bhd must appoint a Company Secretary. The Company Secretary serves as the main liaison between the shareholders, directors and SSM.
Are you interested in starting your own company and wondering where to begin or what to consider?
Join the Boss Boleh Free Online Webinar and in just 1.5 hours, gain valuable insights on:
- How to maximize tax savings for your company.
- Why Sdn Bhd offers better loan opportunities compared to Enterprises.
- The essential post-registration steps for companies.
- How to transition your existing Enterprise to Sdn Bhd.
- Strategies for business planning and expansion.
Don’t miss this opportunity! Register now!