How to register a Private limited company in Malaysia

Updated time: 04 Nov, 2023, 09:17 (UTC+08:00)

Malaysia's diverse economy spans manufacturing, services, agriculture, and tourism, with a strong focus on exports in electronics, petroleum, and palm oil. The nation is a manufacturing hub for global corporations. Tourism plays a significant role, although the COVID-19 pandemic impacted this sector. Among the various business structures available, the private limited company has emerged as a popular choice for both local and foreign investors. In this article, we will explore what a private limited company in Malaysia is, its characteristics, and the steps to register one in Malaysia.

See more: Setting up a company in Malaysia for foreigners

Overview about Private limited company in Malaysia

The private limited company is the prevailing business structure in Malaysia. Unlike a sole proprietorship, a private limited company possesses distinct legal status. It can amass assets, incur debts, engage in contracts, initiate legal actions, and maintain its existence indefinitely unless its directors and shareholders opt to terminate it.

The Private Limited Company, commonly referred to as Sdn Bhd, represents the most prevalent business entity in Malaysia. Authorities regard a private company as a distinct legal entity, granting it the capability to initiate legal actions, acquire or dispose of properties, conduct transactions under its own name, and maintain perpetual succession.

Private company limited by shares in Malaysia

In Malaysia, a private limited company is commonly referred to as a "private company limited by shares." This Private company limited by shares in Malaysia structure limits the liability of its shareholders to the amount invested in the company's shares. Private companies can have a minimum of one and a maximum of fifty shareholders. This structure provides a clear distinction between personal assets and company assets, shielding shareholders from excessive financial risk.

In Malaysia, companies limited by shares in Malaysia come in two primary variants: the public limited company (Berhad) and the private limited company (Sendirian Berhad). The distinction lies in ownership rights; a public company permits investors to hold shares in the company, while this is prohibited for the other legal entity type. Typically, the private limited company is favored for medium-sized businesses, while larger enterprises operating in Malaysia opt for the public company.

Characteristics of private limited company in Malaysia

Private limited companies in Malaysia possess several distinctive characteristics that contribute to their popularity among entrepreneurs and investors. These characteristics of private limited company in Malaysia include:

Limited Liability: Shareholders' liability is limited to the amount invested in the company's shares, protecting personal assets.
Separate Legal Entity: A private limited company has a distinct legal identity from its shareholders, allowing it to own property, enter contracts, and sue or be sued in its name.
Perpetual Succession: The company continues to exist despite changes in its ownership, providing long-term stability.
Ease of Transfer of Ownership: Shares can be easily transferred, facilitating changes in ownership.
Attractiveness to Investors: This structure is often favored by investors as it provides a structured and transparent environment for capital investment.
Corporate Taxation: Private limited companies are subject to corporate tax rates, which are often more favorable than personal income tax rates.
Minimal Capital Requirement: There is no minimum capital requirement for setting up a private limited company in Malaysia, making it accessible to a broad range of entrepreneurs.

Characteristics of private limited company in Malaysia

How to register a private limited company in Malaysia

Registering a private limited company in Malaysia involves several steps and compliance with legal requirements. Here is a detailed guide on how to establish your private limited company:

Step 1: Name Reservation

Choosing a unique name for your company is the initial step in the registration process. The proposed name should not be identical to any existing company name in Malaysia. It is advisable to check the availability of your desired name through the Companies Commission of Malaysia (SSM) portal. Once you've determined an available name, you can reserve it for a fee.

Step 2: Prepare Company Documents

Before registering your private limited company, you need to prepare several essential documents, including:

Memorandum and Articles of Association (M&A): These documents outline the company's objectives, the rights of shareholders, and its internal regulations.
Form 24 (Return of Allotment of Shares) and Form 49 (Return Giving Particulars in Register of Directors, Managers, and Secretaries).
Statutory Declaration by a Director or Company Secretary.
Declaration of Compliance.

Step 3: Appoint Company Officers

Every private limited company must appoint at least one director who is ordinarily a resident in Malaysia. Additionally, you must appoint a company secretary who is licensed by the SSM. The company secretary is responsible for ensuring statutory compliance and maintaining the company's registers and records.

Step 4: Share Capital

Decide on the share capital structure for your company. Private limited companies often have authorized share capital and issued share capital. Authorized share capital is the maximum value of shares the company can issue, while issued share capital represents the shares that have been allocated or issued to shareholders.

Step 5: Register Your Company

To complete the registration process, you will need to submit the required documents and pay the registration fee to the SSM. After successful registration, you will receive a Certificate of Incorporation, which officially recognizes your private limited company as a legal entity.

Step 6: Open a Bank Account

With your Certificate of Incorporation, you can now open a bank account in your company's name. This is essential for financial transactions and business operations.

Step 7: Licenses and Permits

You might need to get certain licenses or permissions from appropriate authorities depending on your business operations. It's crucial to research and ensure compliance with all applicable regulations.