How to Set Up Sdn Bhd Company
The process to set up Sdn Bhd company in Malaysia requires careful consideration of legal and administrative requirements. Starting a business in Malaysia offers a plethora of opportunities for both local and foreign entrepreneurs. Among the most popular business structures in the country is the Sendirian Berhad, or Sdn Bhd company.
This article delves into the intricacies of Sdn Bhd company registration in Malaysia, guiding you through the key steps, eligibility criteria, and costs associated with the process. Whether you’re a seasoned entrepreneur or a first-time business owner, understanding these fundamentals is essential for a smooth and successful company incorporation.With these complexities in mind, follow RS 36 Solutions to delve into the intricacies of Malaysia’s accounting landscape to help you navigate this financial terrain effectively.
Understanding Sdn Bhd Companies
An Sdn Bhd Company, short for “Sendirian Berhad,” denotes a Private Limited company in Malaysia and is notably favored by entrepreneurs in the region.
Under the provisions of the Companies Act 2016, a key requirement to set up Sdn Bhd company is to have at least one director and one shareholder. This sets it apart from other company registration types in Malaysia, which typically demand a minimum of two directors.
What makes Sdn Bhd companies particularly attractive is that even if you lack business partners, you can establish a Sdn Bhd company with yourself as the sole director and shareholder. Remarkably, a Sdn Bhd company can accommodate up to 50 shareholders.
Crucially, the Companies Act 2016 stipulates that a Sdn Bhd Company can only be registered with the appointment of one director and one shareholder. This means you can easily register a Sdn Bhd company in Malaysia without the need for a business partner.
Here are some salient characteristics to set up Sdn Bhd Companies:
-
Sdn Bhd companies operate on a “limited by shares” basis. This means that in the event of significant financial losses, the shareholders and the company secretary are not personally liable for the company’s debts or obligations.
-
Sdn Bhd Companies have the legal capacity for perpetual succession, allowing them to exist indefinitely until the shareholders, directors, or company secretary decide to dissolve the company.
-
These companies possess the ability to initiate legal action against individuals or other businesses, and conversely, they can be sued by external parties.
-
Sdn Bhd Companies are free to enter into contracts with other businesses and engage in legitimate commercial activities.
Understanding the Differences Between Berhad and Sdn Bhd
The distinctions between Sendirian Berhad (Sdn Bhd) and Berhad (Bhd) companies encompass a variety of factors, including size, transparency requirements, and structural aspects. If you’re seeking clarity on the key variances between these two company types, consider the insights below.
To begin, let’s delve into the nomenclature and their meanings.
“Sendirian Berhad (Sdn Bhd)” translates to “Private Limited Company.”
“Berhad (Bhd)” company is categorized as a “Public Company,” typically listed on a stock exchange, thereby making it a publicly traded entity.
Here are the primary disparities between Sdn Bhd and Bhd companies:
| Aspect | Public Company (Bhd) | Private Limited Company (Sdn Bhd) |
|---|---|---|
| Availability of Shares to the Public | Public can purchase shares without prior approval | Individuals can acquire shares with agreement of existing shareholders |
| Number of Shareholders | Unlimited number of shareholders | Maximum of 50 shareholders |
| Publication of Financial Information | Financial information accessible to the public; quarterly earnings calls | Not obliged to disclose financial information to the public |
| Standards for Financial Reporting | Adhere to more rigorous financial reporting standards | Less stringent financial reporting standards |
| Ease of Buying Shares | Shares can be freely purchased | Shares can be acquired only through a shareholders' agreement |
| Financial Reporting Standards | Mandated to publicly disclose financial statements | Not required to publicly disclose financial statements |
| Maximum Number of Shareholders | Unlimited number of shareholders | Maximum of 50 shareholders |
| Size of Business | Larger corporations, often the largest in Malaysia | Typically small or medium-sized enterprises (SMEs) |
Advantages of Company Incorporation in Malaysia
Types of Company Incorporation in Malaysia
| Type | Description | Incorporation Process | SSM Incorporation Fee | Key Advantages |
|---|---|---|---|---|
| Company Limited by Shares | This is the most common type of company incorporation and is particularly popular among small and medium-sized enterprises (SMEs). One of the key advantages is that liabilities are limited to the amount of shares paid up, providing a safety net for shareholders. This type of company can be either a Sdn Bhd (Sendirian Berhad) or a Berhad. A Berhad company can be listed on a stock exchange or remain unlisted. Furthermore, it’s possible to convert a Sdn Bhd into a Berhad and vice versa. Additionally, a Sdn Bhd can be transformed into a Limited Liability Partnership (LLP), although the reverse is not possible. |
1-2 days | RM 1,000 | Liabilities limited to the amount of shares paid up, flexibility in conversion. |
| Company Limited by Guarantee (CLBG) | This type is exclusively incorporated as a Berhad. Interestingly, the “Berhad” in the name can be removed through an application and a pledge of RM1 million. |
More than a month | RM 3,000 | Suitable for community promotion or non-profit projects, the option to remove "Berhad" from the name. |
| Unlimited Company | An unlimited company can be registered as either a Sdn Bhd or a Berhad. Berhad companies can be listed or unlisted. These companies can have a share capital or operate without one. |
Varies | N/A | Rarely incorporated due to unlimited liabilities. |
In this article, our primary focus will be on the incorporation process of an Sdn Bhd company in Malaysia under the "Company Limited by Shares" incorporation type. For a comprehensive understanding, we recommend reading our explanation of the Advantages of Setting Up an Sdn. Bhd. Company as well.
Requirements To Set Up Sdn Bhd Company in Malaysia
Documents Required for Malaysia Company Registration (Sdn Bhd)
In the process of incorporating a company in Malaysia, specifically as an Sdn Bhd (Sendirian Berhad), it is vital to gather and prepare the necessary information and documents in advance to ensure a seamless registration process. Registering your business as an Sdn Bhd company in Malaysia involves a thorough and comprehensive procedure. Here are the essential details and documents you need to have ready:
- Company Name: You must propose a unique company name for registration. If the name is similar to another company’s name, you’ll need an approval letter from the owner of that name to use it. Certain words are controlled and may require approval from the relevant ministry or be limited to the nature of business, such as schools, universities, finance, banks, etc. Refer to the “Guidelines for Naming Your Company” for more details.
- Nature of Business: Define the nature of your business and provide further details about your business model. This includes business nature codes (limited to three), which should be selected to best represent your industry. If the available business codes do not precisely match your industry, choose the closest relevant code and provide a detailed description of your company’s activities.
- Business and Registered Address: You’ll need to specify your business address, which is the physical location of your company’s operations. The registered office address is typically where secretarial records, minutes books, register books, share certificates, and common seals are kept.
- Details of Directors and Shareholders: Provide information about the director(s) and shareholder(s), including their names, identification details (NRIC or passport), nationality, race (if not foreign), email addresses, telephone numbers, and current residential addresses. If the shareholder is an entity, you’ll need to provide the company’s name, registration number, place of incorporation, registered address, corporate representative details, and contact information.
- Passport/MyKad for Verification: While SSM (Companies Commission of Malaysia) no longer verifies passports/MyKads, it’s recommended to provide one soft copy to the company secretary to ensure the accuracy of names and identification details.
- Authorization Letter: If your proposed company name contains controlled words or trademarks, you’ll need to provide an authorization letter.
- Paid-Up Capital: The concept of authorized capital has been removed under the new Companies Act 2016. Most companies typically begin with RM1,000 paid-up capital, as this amount covers the incorporation fees payable to SSM.
By having these documents and information readily available, you can streamline the process of registering your Sdn Bhd company in Malaysia and ensure that all necessary details are provided for a successful incorporation.
How to Register an Sdn Bhd Company in Malaysia: A Step-by-Step Guide
In Malaysia, you have the option to independently register your Sdn Bhd company by following these step-by-step instructions:
Step 1: Begin by visiting the MyCoID portal and register for an account. This involves creating an individual user account on the MyCoID portal.
Step 2: Activate your account by visiting the nearest SSM counter for account verification after receiving instructions via email.
Step 3: Upon successful activation by SSM, you will receive an email containing your login credentials for the MyCoID portal.
Step 4: To initiate the registration process, visit the Direct Incorporation Application and perform a name search for your proposed company name. Ensure that the name is unique and not already in use or prohibited.
Step 5: Utilize the specific search option for Sdn Bhd companies, selecting the following information under name search:
- Purpose: N – NEW INCORPORATION
- Type: S – LIMITED BY SHARES
- Company SubType: SDN. BHD.
You will be prompted to complete information related to your proposed company name, the company’s status, type of business, registered office address, business address, director(s), shareholder/promoter(s), and compliance declarations.
Step 6: You will need to complete a “Super Form” that explains the meaning behind your proposed company name. If the name contains controlled trademarks, you must attach a letter of authorization from the relevant authority.
Step 7: Select a suitable business code that aligns with your company’s nature and description. Provide a description, along with the registered and business addresses.
Step 8: Enter the names and details of the director and shareholder(s) of the company. While you will be automatically listed as a director and shareholder, you can add additional names if necessary.
Step 9: Review all the provided information and make any required changes on the preview page. Once you’re satisfied, submit the application, and you will be directed to the transaction page.
Step 10: Pay the incorporation fee of RM1,010 (inclusive of tax) and receive a transaction receipt.
Step 11: Upon approval by SSM, you will receive a Notice of Registration as proof of incorporation via email within one business day. If queried by SSM, you will be notified via email, and you can edit and resubmit your application.
Additional Notes:
- Within 30 days of receiving the Notice of Registration, appoint a company secretary.
- A registration notice will be issued automatically.
- A certificate of incorporation can be obtained by submitting an application with the prescribed fee.
- The company certificate of incorporation can also be purchased through SSM’s official websites.
How Long Does It Take to Register an Sdn Bhd Company in Malaysia?
| Registration Step | Estimated Time Frame |
|---|---|
| Account Registration & Activation and Company Name Search | This step usually takes 1 working day to complete. |
| Preparation of Registration Documents | Allow 2 to 3 days for the preparation of all necessary registration documents. |
| Obtaining Signatures | Getting signatures from directors and shareholders typically takes 1 working day. |
| SSM Document Submission | Submitting all required documents to the Companies Commission of Malaysia (SSM) usually takes 3 to 5 days. |
| SSM Digital Incorporation Certificate | SSM typically issues the Digital Incorporation Certificate within 1 day. |
Please note that these timeframes are estimates, and delays can occur if the SSM requires additional information or clarification. It’s crucial to provide accurate and detailed information during the registration process to minimize potential delays. Even minor errors can lead to requests for additional information and result in extended processing times.
Minimum Annual Costs for Your Business
| Cost Category | Annual Cost |
|---|---|
| Secretarial & SSM Filing Fee | Approximately RM1,200 for secretarial services and necessary SSM (Companies Commission of Malaysia) filings. |
| Audit Fee | Depending on your company’s size and financial intricacies, annual audit fees may range from RM1,200 to RM3,500. |
| Tax Filing Fee | Allocate a budget of RM1,000 to RM2,500 for your annual tax filing needs. |
| Bookkeeping | Depending on the volume of financial transactions and complexity, budget for bookkeeping costs ranging from RM2,400 to RM9,000 per year. |
Should You Incorporate Your Company Yourself or Engage a Company Secretary?
You can undertake the entire company incorporation process, from creating a MyCoID account to obtaining the Notice of Registration, independently without external assistance.
The SSM provides comprehensive information about company incorporation on their website, and their officers are available to assist with any queries you may have. However, there are several challenges you might encounter if you choose to go through the incorporation process yourself:
Company Secretarial Services for Sdn Bhd Registration
To successfully register an Sdn Bhd company in Malaysia, you must appoint a competent company secretary in Malaysia who plays a crucial role in ensuring the company’s compliance with various regulations and standards. The responsibilities of a company secretary include:
- Managing regulatory matters
- Formulating company policies
- Adhering to industry standards
- Overseeing the company’s code of ethics
- Ensuring compliance with the Malaysia Companies Act 2016
Conclusion:
In conclusion, establishing an Sdn Bhd company in Malaysia offers a valuable avenue for business growth and expansion. The step-by-step guidance provided here can help you navigate the intricate process of company registration, from creating a MyCoID account to obtaining the coveted Notice of Registration. While self-registration is an option, enlisting the assistance of a company secretary can streamline the process and ensure compliance with regulatory standards.
The critical takeaways on Sdn Bhd registration emphasize the importance of attention to detail and understanding the legal requirements involved. With this knowledge in hand, you can embark on your entrepreneurial journey with confidence, knowing that your business is on the path to success.
Frequently Asked Questions (FAQs)
What is an Sdn Bhd company in Malaysia?
An Sdn Bhd company is a private limited company that can be established by both locals and foreigners.
How many shareholders are allowed in an Sdn Bhd company?
A Sdn Bhd company can have a minimum of one shareholder and a maximum of 50.
What are the director’s eligibility requirements in Malaysia?
Directors must be at least 18 years old, reside in Malaysia, and not be disqualified under Section 198 of the Companies Act 2016.
How can I register my Sdn Bhd company in Malaysia?
Company registration is done through Suruhanjaya Syarikat Malaysia (SSM) via their MyCoID portal.
What is the cost of registering an Sdn Bhd company?
The registration fee for an Sdn Bhd company in Malaysia is RM1,010, inclusive of tax.
How long does it take to register an Sdn Bhd company?
Typically, it takes 1 to 2 weeks to complete the registration process, but additional time may be required if there are any issues with the documentation.
Can I register my company myself or should I hire a company secretary?
While it is possible to self-register, hiring a company secretary can provide guidance, saving time and ensuring compliance.
What are the minimum yearly costs for an Sdn Bhd company in Malaysia?
Minimum yearly costs include secretarial and SSM filing fees (RM1,200), audit fees (RM1,200-RM3,500), tax filing fees (RM1,000-RM2,500), and bookkeeping (RM2,400-RM9,000).
What is the significance of appointing a company secretary in Malaysia?
A company secretary handles regulatory compliance, company policies, and adherence to industry standards, among other critical tasks.
What are the key takeaways for Sdn Bhd registration in Malaysia
Sdn Bhd registration offers business opportunities, can be initiated digitally, and must follow specific documentation and legal criteria, making it essential to consider experienced assistance for a smooth process
