Are you trying to start your own business in Malaysia? How far you know about various business entities in Malaysia? Do you have sufficient knowledge about different types of company in Malaysia and the key features of various company structures in Malaysia?
Well, you eventually have to face queries like these every now and then when you are determined to set up a company in Malaysia. Keeping in mind that, you need to know several aspects when business setup is under consideration. One of such important aspect is to have knowledge about different business entities in Malaysia.
Before hopping directly into the main subject, that is getting an over view of different company types in Malaysia, you must know that any company you try to start in Malaysia asks for sufficient capital backup, a confined strategic planning which should be dynamic enough, courage to think big and finally punctuality to make thing done on time.
If you think that you possess all these attributes to involve with one of the business entities in Malaysia, read this piece of content till the end. As this article is all about various types of companies that you can start in Malaysia.
Types of companies in Malaysia
When you are up for registering a business in Malaysia, you will come across 7 types of business. There are requirements and limitations each type of business possesses. You have to select your business type when registration procedure is underway. Following are the 7 business entities in Malaysia:
- Sole proprietorship
- Limited Liability Partnership (LLP)
- Private Limited Company, commonly known locally known as Sendirian Berhad (Sdn Bhd)
- Public Limited Company, locally known as Berhad (Bhd)
- Company limited by guarantee
- Foreign company
We will evaluate each of these company types throughout the article. The advantageous features to start each of these companies will also be listed here for readers convenience.
Describing different types of companies in Malaysia
This type of company formation is the most basic state of Malaysian company entity. It is the cheapest and least demanding form of an entrepreneurship in Malaysia. To register for this type of company, one need to have certain characteristics. Below are the basic requirements for sole proprietorship in Malaysia:
- For sole proprietorship an entrepreneur required to pay a onetime yearly fee to the SSM (Suruhanjaya Syarikat Malaysia), also known as Company commission of Malaysia. This annual fee has to be paid just to keep the business renewed.
- This type of company is reserved only for native residents of Malaysia. that is the permanent residents or native Malaysian individual. No foreign invest can invest in this type of company.
- It is managed by a single individual, therefore, if the company goes bankrupt, that individual has to bear all debts and liabilities.
- If bankruptcy occurs in this type of company, the owner himself has to deal with the full liabilities and debts which may include personal persona income, assets and bank balance as well.
How to register for Sole proprietorship company? Full guidelines here.
Partnership company has some similarities with sole proprietorship business. The big difference lies in the ownership distributions. Where in case of sole proprietorship only an individual owner is all it needs, for partnership company there has to be more than one partner present to build the company.
Following are the basic features for a partnership company in Malaysia:
- Partnership comprises of minimum two to maximum 20 members as company partners.
- Companies like professional firms, or electronic manufacturing industries, ride sharing industries etc. prefers partnership business structure.
- Similar to the sole partnership company, partners in a partnership company are exposed to unfortunate liability.
- Any one, whether local residents or foreign investor can invest under this type of company formation.
How to establish a partnership company in Malaysia? Full guidelines here.
Limited Liability Partnership (LLP)
When looking for a rather mashed up company formation, that has both the characteristics of a partnership business and a Limited Liability company (LLC) features, LLP is the right choice for you. This types of business in Malaysia has typical partnership company attire but also has some advantageous features of an LLC. Here are some key features of LLP company in Malaysia:
- This company formation has a permanent succession
- The company offers benefits of limited liability for its members.
- LLP company follows partnership company taxation process.
- The LLP has organizational flexibility of a partnership business.
- An LLP company has comparatively fewer compliance requirements, which makes this type of company in Malaysia more affordable for investors.
Private Limited Company /Sendirian Berhad (Sdn Bhd)
It is the most popular accepted company type among investors in Malaysia. This is also referred as a private limited company (PLC), or locally called Sendirian Berhad (Sdn Bhd). This type of trade plan can possess multiple shareholders and the company itself is a separate legal entity from its owners. Which makes the owner relaxed from any probable legal objections and personal debts. The company itself behaves like an entity and deals with any legal complications.
This type of company provides various commercial advantages to investors. The key features below highlighted glimpse of LLC company facilities:
- The company acts like a separate entity from the owners.
- This type of company allows investors to keep their company accounts and personal assets separated. In spite of legal claims, personal assets of owners can remain unharmed. This is because shareholders are liable for any possible debts up to a certain limit only.
- It is widely embraced by the foreign investors interested to start corporate venture in Malaysia.
- Most of the foreign LLC Sendirian Berhad or (Sdn Bhd) company allows 100% ownership to the foreign investor. Although some listed companies reserve 50% ownership for Malaysian natives.
- Private limited company is mostly preferable for B2B companies in Malaysia for its maximum credibility.
How to register a Limited Liability Company in Malaysia? Full guidelines here.
Public Limited Company /Berhad (Bhd)
This type of company structure in Malaysia is pretty much similar to the Private limited company except the shares in public limited company can be offered to the public for a certain period of time. A public limited company in Malaysia is governed and listed by the Security Commission of Malaysia. This type of business structure is preferable for large business or industries in Malaysia. There are certain characteristics in a public limited company. These key characteristics are highlighted below:
- A Public limited company or Berhad(Bhd) is required to have at least 2 shareholders and the upper limit of members can be unlimited.
- This company is listed and governed by the Securities Commission of Malaysia.
- This type of business structure is favorable for large business establishments, where public can by shares of the company.
Company Limited by Guarantee
As the name suggests, this type of company structure is similar to Limited liability company in Malaysia. Like LLC, members have limited liability, however unlike LLC these limited liabilities are subjected to guarantee. In other word, fixed liabilities have to be under guaranteed contributions. Such business structure often embraced by non-profit organizations, such as foundations and charity organizations. You may want to know about how to set up a foreign company in Malaysia.
One last type of business entities that are valid in Malaysia is the foreign company formation. A foreign company in Malaysia is simply resembles the brunch office of an offshore company. This type of workplace is rather registered as the branch office or extension of the foreign parent company and not a separate legal entity like a Limited Liable Company in Malaysia.
Four main company types in Malaysia are:
1. Limited Liability Company (LLC) /Sendirian Berhad (Sdn Bhd)
2. Public Limited Company /Berhad(Bhd)
3. Partnership company
4. Sole proprietorship company
Private limited company (PLC) also known as Limited Liability company (LLC). Locally known as Sendirian Berhad (Sdn Bhd).
3 legal formations of business in Malaysia are sole proprietorship, Limited Liability Company (LLC) and Partnership business.
A company registration fee of RM1,000 has to be payed to the SSM office for incorporating a company in Malaysia.
Company registration process is governed and handled by the SSM or Company Commission of Malaysia. You can collect all incorporation related forms and submit completed documents directly to your nearest SSM office in Malaysia. This setup process can also be done through ezBiz online business registration portal. Government website for this portal is ezbiz.ssm.com.my.