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What We Need to Know Before Setting Up Sdn Bhd

Author: Riki William
by Riki William
Posted: Mar 09, 2020
sdn bhd

The Sdn Bhd Company in Malaysia is the legal business entity whose liability gets limited by the shares. Sdn Bhd, or a Sendirian Berhad Company, at the time of registration, gets incorporated as a private venture. The words Sdn Bhd come alongside the name of the company in this case. It has become a highly popular business entity in the country, as many of the local and foreign entrepreneurs register their businesses as an Sdn Bhd Company.

The popularity of an Sdn Bhd Company comes from the fact that it’s a separate legal body from the shareholders. Setting up Sdn Bhd would lead the directors to have limited liability for the losses and debts of the company.

The process of registering an Sdn Bhd Company

Any company in the country has to get registered through a legally authorized Company Secretary. So, you will need to have a Company Secretary appointed, as well. The companies will have to register with the government body known as the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia or SSM). This statutory body is responsible for regulating the businesses and companies legally operating in the country.

Before moving on to the next few steps of registration, the entrepreneurs will have to get the proposed or intended business name approved from the SSM. The SSM will reserve the company for three months after granting its approval. MyCoID system of SSM is the only way of registering any company in the country. It is the responsibility of your Company Secretary to register it following the system. After the registration documents are prepared and signed by all shareholders and directors, it is to get submitted to the SSM within three to five days.

The requirements for registering an Sdn Bhd Company

You need two shareholders and at least two directors residing in Malaysia for registering an Sdn Bhd Company. The directors should not be less than eighteen years of age, should not be declared bankrupt before their appointment, or have any records of a criminal conviction in the last five years.

Given below are the details you need to provide:

  • The intended company name
  • The intended business activities (maximum three is allowed)
  • Photocopies of the IC (for Malaysians) or the passport (for foreigners) for all shareholders and directors
  • Complete residential address of all shareholders and directors
  • Details about the paid capital of the business
  • The structure of shares in the new company

Benefits of setting up an Sdn Bhd Company

Successful registration of an Sdn Bhd Company ensures lifelong benefits for the entrepreneurs. It is important to stay aware of the benefits you can derive from the venture before setting up the company.

Limited liability

The personal wealth of an entrepreneur stays safe, thanks to this feature of limited liability. The shareholders of the company are only responsible for the debts accumulated by the company according to the amount they have invested, and nothing more than that. Anyone involved in the company can only lose as much money as they have invested as capital. This level of financial security offered by an Sdn Bhd Company makes it lucrative.

Separate entity

An Sdn Bhd Company is a separate legal entity from the owners. It stays in operation irrespective of the identities of the shareholders, directors, and founders. Any retirement or death will not have any bearings on the existence of the company. It will continue its operations till it's dissolved voluntarily. This is what makes Sdn Bhd Companies different from sole proprietorship and partnership companies, and also makes it more stable.An Sdn Bhd Company reserves the right to get into contracts, acquire assets, and sue.

Ownership transferability

The shareholders of limited companies in the country can transfer or sell shares to anyone the shareholders choose, provided the chosen buyer has the financial capability to purchase the shares. It is different from sole proprietorship and partnership companies because, for them, it means discontinuing their operations or selling their entire business.

Tax Advantages

The Sdn Bhd Companies also get a couple of tax advantages. The taxes are only levied on them as per their profits, and there are no additional taxes to be paid by them for Malaysia company incorporation.

The World Bank has ranked Malaysia fifteenth in terms of simplicity of doing business. Thus, business opportunities abound in the country, and an Sdn Bhd Company gives you the scope to make the most of those opportunities. When the regulations are followed, and the company is successfully set up, the entrepreneurs can enjoy several advantages from it.

About the Author

Ricky is a graduate of computer science engineering, a writer and marketing consultant. he continues to study on Nano technology and its resulting benefits to achieving almost there.

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Author: Riki William
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Riki William

Member since: Feb 11, 2017
Published articles: 1617

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