International Federation of Female Lawyers

6 types of business entities in Malaysia

However, to apply for a sole proprietorship in Malaysia, you must be either a Malaysian citizen or a permanent resident, as foreign owners are not permitted. For 100% Malaysian-owned companies, MISHU provides a comprehensive package for Sdn Bhd registration with our specialised company registration services. A Company Limited by Guarantee is a public company without share capital for non-profit purposes. There are no shareholders, only members who act as guarantors to run the operation. You and other members do not contribute capital to the company but are responsible to pay debts if it closes down, according to the amount of guarantee as promised.

  1. The registration process can take between five to 10 working days, and there are several documents’ that applicants need to submit to the Companies Commission of Malaysia, or Suruhanjaya Syarikat Malaysia (SSM).
  2. The LLP combines the characteristics of a conventional partnership and a limited liability company (LLC).
  3. You can be a boss in Malaysia by taking advantage of the enormous business potential in this vibrant country.

There is no need to publicly report the financials of the company,
nor is there a need to hold an annual general meeting. A Sendirian Berhad (Sdn Bhd) company is a private limited company that can be started by both locals and foreigners in Malaysia. With the World Bank ranking Malaysia as the world’s 12th easiest and friendliest place to do business, a Sdn Bhd company is becoming a popular what is berhad company business entity. To take advantage of Malaysia’s numerous business opportunities, choosing the company structure is crucial. There is no doubt that embarking on your malaysia company registration as a Sdn Bhd company will allow your company to expand and flourish. As the LLP is a separate legal entity from its members, it suggests that the members are subjected to limited liability.

A Foreign Company is for non-Malaysians who have established businesses in other countries and want to set up a company branch in Malaysia for operation or customer service purposes. This allows foreigners to run businesses in Malaysia without having a director that resides in the country. Non-Malaysians who are not permanent residents have limited options in registering a business entity in Malaysia. It is a separate legal entity which is capable of earning incomes, owning properties, signing contracts, suing another entity, and getting sued on its own name, separating your liabilities from the company itself. Since the updates of the Companies Act 2016 came into effect, you can incorporate a Sdn Bhd as the only director and shareholder of the company without other business partners.

Malaysia is a home of several other public limited companies, which put regular contributions in the national economy. However, when it is about economic growth, every other type of companies have their equal and important contributions. 100% foreign ownership is also allowed in for a company Sdn Bhd in Malaysia, which has appealed to many foreigners. Additionally, there are no restrictions in Malaysia when it comes to the repatriation of capital gains, dividends, royalties and profits.

The suffix denotes for this type of company in Malaysia is Berhad or BHD. When a private limited company in Malaysia has the suffix Sendirian Berhad (SDN BHD), a Public limited company just use Berhad (BHD). Your subsidiary company in Malaysia is required to register the same trading name as the parent company and will be able to hire both local and foreign employees. The parent company is 100% shareholder and is fully liable for the debts incurred by the Malaysia branch office. The subsidiary company will be subjected to corporate taxes, but only for the income earned in Malaysia. It is a statutory body that functions under the auspices of the Malaysian government.

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Berhad company also has a separate legal entity like a normal human being. They can borrow, buy, rent, enter into contracts, sue, be sued, own property and real estate in the company name without involving its owner’s name. BHD, derived from the Malay word “berhad” which translates to “limited” in English, is a business identifier that is commonly used in Malaysia.

If the foreign company does not prescribe any share capital, then the registration fee is charged at the flat rate of 1,000 ringgit (US$238). There are some key characteristics of a private limited company in Malaysia. If you are unsure which types of companies are suitable for your business, contact us for free consultation. In addition, the branch office is also subjected to a withholding tax of 10%.

Examples of Berhad in a Sentence

The process of Sole Proprietorship registration has to be done on your own without going through a third party. As you are the only business owner, you bear all liabilities towards the business in your personal capacity and pays taxes through your personal income tax. The private limited company is a separate legal entity from its shareholders and thus allows the company to operate regardless of if the directors and shareholders have retired, died, or changed unless the entity is dissolved. A company is limited by shares if its shareholders/members (a.k.a. its owners) are legally responsible for the debts of the company to the extent of any unpaid amount of their shares in the company – i.e. limited liability. A company limited by shares can either be a private company or a public company.

#1 Sole Proprietorship

You can be a boss in Malaysia by taking advantage of the enormous business potential in this vibrant country. With the amendment of the Company Act, it has made it easier and unlocked opportunities for businessmen all around the world to expand their business in Malaysia. The entity offers a host of benefits, such as being able to be 100 percent foreign-owned and being relatively quick to setup. Berhad company will continue to exist even with any changes that occur to its owner.

As such, its members/shareholders will be personally responsible for the full extent of any losses it incurs. An unlimited company may convert to a limited company by passing a special resolution and by lodging a notice for conversion with the Companies Commission of Malaysia. In Bahasa Malaysia, a public limited company is
called a ‘Berhad’, hence the abbreviation ‘Bhd’ suffixed to its name. Public
limited companies may or may not be listed on the stock exchange but are usually
listed to obtain the full benefits of being a public company, for e.g. to
accept equity investment in its shares from the public. Berhad (Bhd) is a public limited company which bears similarities to a private limited company.

Hence, it is unable to use its profits for purposes other than those stated as objectives in the constitution. If you are considering converting your Partnership into a Sdn Bhd in the future, request for this free guide on converting your enterprise into a Sdn Bhd. If you are considering converting your Sole Proprietorship into a Sdn Bhd in the future, request for this free guide on converting your enterprise into a Sdn Bhd.

However, its shares can be held by the public, unlike the private limited company. There is no limit on the number of shareholders and at least 2 directors are needed. It is also governed by Bursa Malaysia Securities Berhad and the Security Commission of Malaysia.

Who should register their company as a Foreign Company?

A Partnership is a business entity that consists of at least 2 partners, with a limit of 20 partners. Similar to a sole proprietorship, partners of the partnership share the liabilities towards the business and pay taxes through personal income taxes. If your Partnership is sued by a customer, you and your partner(s) will be personally liable to any damages awarded by the court. This is a common business entity for professionals such as lawyers, accountants, company secretaries, doctors, etc.