If you take a snapshot of the business landscape of company in Malaysia, you will see that most of the medium sized enterprises are private limited liability or Sendirian Berhad companies.
The main reason why private limited liability companies are so prevalent in Malaysia is that the shareholders are protected from the liabilities and are not completely accountable for the debts accrued by the companies.
Among its salient features, the limited liability company (LLC) is separated from its shareholders or members as a legal entity.
The limited liability company in Malaysia falls into two categories in Malaysia: a company limited by shares and a company limited by guarantee.
In a company limited by shares, the nominal value of the shares a person holds will define his or her personal liability by law. For a company limited by guarantee, the personal liability will not exceed the amount stipulated in the Memorandum and Articles of Association.
The provisions of the Companies Act 1965 deal exclusively with the prerequisites for registering a company limited by shares in Malaysia.
In a private limited liability company in Malaysia, the general public is not permitted to own the shares of the company in Malaysia.
When you intend to register a company limited by shares in Malaysia, you must remember that the business form must be up to the standards spelled out in the Companies Act 1965.
Your company’s trading name must have the words “Sendirian Berhad” since you are applying for a private limited liability company in Malaysia (This is the berhad company requirements).
The prerequisites of registering a company limited by shares state that: your company is obliged to have a minimum of two shareholders as specified in the Section 14 of the Companies Act. As per Section 122 of the Companies Act, you must appoint a minimum of two directors for your company.
The Companies Act 2016 states that at least a single director and a promoter’s main place of residence must be in Malaysia and should generally live in the country.
It is legally binding to employ a company secretary and that person must be approved by the Companies Commission of Malaysia or SSM. A member of a professional body can also be your company secretary if only the body is approved by the Minister of Domestic Trade Cooperative and Consumerism.
How to register a Company Limited by Guarantee (CLBG)?
For a company limited by guarantee (CLBG), the most important liability of the members is restricted by the constitution to the amount members agree to provide for the assets in case the company faces termination.
As a public company in Malaysia, a CLBG needs a license from the Ministry of Domestic Trade, Cooperatives and Consumerism to own land or property in Malaysia.
You can register a company limited by guarantee with or without the word “Berhad” or “Bhd” according to the Companies Act 2016 (CA 2016). If a CLBG intends to remove the word “Berhad” or “Bhd” from its business name, an application must be sent to the Minister to attain a license for this purpose.
The word “Berhad” or “Bhd” must be removed if the CLBG wants to have the words “Yayasan” or “Foundation” in its name. It is the Minister’s discretion to enforce any terms and conditions necessary while the application is approved.
The license will be cancelled if the CLBG violates the terms and conditions imposed by the Minister.
To register a company limited by guarantee, you need to file an application with a constitution to the office of the Registrar under section 45 of the Companies Act 2016. The purpose of establishing a CLBG is clearly defined by the Act.
As a result, the objective of your CLBG will be to promote science, or art, or religion, charity, commerce or industry, pension programs or any activity beneficial for the country in the context of health, education, environment, research, sports or society as a whole.
The CLBG can also offer amusement or recreation and for clarification, the objectives mentioned above cannot be accomplished by any other type of company in Malaysia.
You can become a director or founder of a CLBG if you are deemed fit and appropriate by the Registrar and must be considered eligible under the Companies Act 2016.
The Registrar holds the exclusive authority to judge whether your experience and aptitude are appropriate for the role you intend to fulfill.
The Registrar would take in account your reputation in the society as well as your character. Finally, you will need to pass the security test conducted by the Register as well as the safety filter carried out by the Royal Malaysian Police or other organizations to be a founder or director of a CLBG.
The Registrar will approve your application as a director only after it is satisfied that you are fit and suitable for the post and possess the necessary credentials.
Generally speaking, any company must contain the basic features as outlined by the Companies Act 2016. First and foremost, the company in Malaysia must have a name.
It should be consisted of a single or multiple members. For a company limited by shares, it must have one or multiple number of shares. Lastly, company should feature one or more than one directors to operate lawfully in the country.
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