When planning to set up a business in Malaysia, selecting the appropriate structure is one of the most crucial decisions you’ll make. For many entrepreneurs—both local and foreign—the Sendirian Berhad (Sdn Bhd) company stands out as the most practical and secure option. It’s a business model that provides legal protection, a clear framework for governance, and access to tax advantages not available to informal setups.
An Sdn Bhd company in Malaysia operates as a separate legal entity, meaning it can own assets, sign contracts, and assume liabilities independently of its owners. Perhaps more importantly, it offers limited liability, ensuring that your wealth is safeguarded if the company faces financial difficulties.
Whether you’re starting fresh or expanding into Malaysia, understanding how to register an Sdn Bhd company—and doing it correctly—is crucial. This guide will walk you through every step of the process, from name reservation and regulatory requirements to statutory compliance and ongoing obligations. If you’re looking for a professional, long-term setup, this guide will show you why the Sdn Bhd structure is the gold standard in Malaysia.
What is an Sdn Bhd Company in Malaysia?
A Sendirian Berhad (Sdn Bhd) company is a private limited company registered under Malaysia’s Companies Act 2016. It is governed by the Companies Commission of Malaysia (SSM) and operates as a separate legal entity, distinct from its shareholders and directors.
This means the company can own property, incur debts, and sue or be sued—all in its name. More importantly, the liability of shareholders is limited to the capital they have invested.
Why Choose an Sdn Bhd Over Other Business Structures in Malaysia?
| Feature | Sole Proprietorship | Partnership | Sdn Bhd |
|---|---|---|---|
| Legal Identity | Not separate | Not separate | Separate legal entity |
| Liability | Unlimited | Unlimited | Limited liability |
| Tax Rate | Personal rate (up to 30%) | Personal rate | Corporate rate (as low as 15%) |
| Funding Access | Limited | Limited | High – attractive to investors |
| Professional Image | Low | Medium | High |
| Ownership Flexibility | One owner only | 2–20 partners | 1–50 shareholders |
| Continuity | Ends with the owner | Ends with partner exit | Perpetual succession |
An Sdn Bhd structure offers better protection and is more suitable for businesses aiming to scale.
What are the Benefits of Incorporating an Sdn Bhd in Malaysia?
Here are some compelling reasons to consider choosing Sdn Bhd in Malaysia:
- Limited Liability: Protects personal assets from business debts.
- Separate Legal Entity: Can own property, sign contracts, and file lawsuits.
- Access to Capital: Easier to raise funds through share issuance.\
- Tax Benefits: Corporate tax as low as 15% for the first RM150,000 in profit.
- Professional Reputation: Enhances business credibility.
- Perpetual Succession: Continuity despite changes in ownership or management.
- Foreign Ownership: 100% foreign shareholding is allowed in most sectors.
- Flexible Structure: Allows customised management and profit distribution.
What are the Disadvantages of an Sdn Bhd in Malaysia?
While Sendirian Berhad (Sdn Bhd) companies offer numerous benefits, they also have certain disadvantages to consider.
1. Ongoing Compliance:
Annual returns, audited accounts, and a company secretary are required.
2. Higher Costs:
Initial and ongoing costs are more than those of a sole proprietorship.
3. More Regulation:
Must comply with the Companies Act 2016 and SSM guidelines.
4. Limited Control:
Decisions may need board or shareholder approval.
What are the Requirements to Register a Sdn Bhd Company in Malaysia?
To incorporate an Sdn Bhd, you need to meet these conditions:
| Requirement | Details |
|---|---|
| Minimum Shareholders | At least 1 (max 50) |
| Minimum Directors | At least one director who is a Malaysian resident |
| Minimum Paid-Up Capital | RM1 (recommended RM2,500 or more for practical reasons) |
| Company Secretary | Must be appointed within 30 days of incorporation |
| Registered Office | Must have a local registered address in Malaysia |
| Business Activities | Must comply with the approved business codes by SSM |
How do you incorporate an Sdn Bhd Company Step-by-Step in Malaysia?
The registration process is done through the MyCoID portal under the Companies Commission of Malaysia (SSM):
Step 1: Reserve a Company Name
Search and reserve your company name online via the MyCoID Portal. Ensure the name complies with naming rules.
Step 2: Prepare Incorporation Documents
This includes the Super Form, Constitution (optional), director/shareholder details, and declaration of compliance.
Step 3: Submit Application Online
Log in to MyCoID and submit the incorporation application with the required documents.
Step 4: Pay the Registration Fee
The standard fee is RM1,010. Once payment is made, your application will be processed.
Step 5: Receive Notice of Incorporation
Upon approval, SSM will issue a Certificate of Incorporation via email.
What Are the Statutory Compliance Obligations for Sdn Bhd?
Here’s a breakdown of the key statutory obligations that every private limited company in Malaysia must observe:
| Obligation | Frequency/Deadline |
|---|---|
| Appoint Company Secretary | Within 30 days of incorporation |
| Hold AGM (if required) | Within 18 months of incorporation, then yearly |
| Annual Return Filing | Within 30 days of the incorporation anniversary |
| Audited Financial Statements | Submit annually to SSM |
| Tax Filing with LHDN | Annually, within 7 months of the financial year-end |
| Maintain Registers and Records | Ongoing |
| Notify SSM of Changes | Within 14 days of any change in details |
What Documents are Needed for the Incorporation of Sdn Bhd in Malaysia?
The following is the list of documents needed for the incorporation of an Sdn Bhd company in Malaysia.
- Proposed Company Name
- Business Description and Codes
- Identity Cards/Passports of Shareholders and Directors
- Residential Address of Directors
- Paid-Up Capital Declaration
- Company Secretary Appointment Letter
- Constitution (optional, can use default template)
Conclusion
Forming an Sdn Bhd company in Malaysia isn’t just about registering a business — it’s about building something with structure, credibility, and legal protection. While the process involves several steps, it’s far from difficult when you’ve got the right help.
The Sdn Bhd model offers limited liability, tax benefits, and a professional image that appeals to both clients and investors. But it also comes with responsibilities — from annual filings to compliance with the Companies Act. That’s where many business owners struggle, especially in the early stages.
At 3E Accounting Malaysia, we don’t just register your company and leave you to it. We walk you through every step — preparing your documents, handling SSM, and ensuring you stay on the right side of the law once you’re up and running.
Want to set up your Sdn Bhd without the guesswork?
Let us handle the formalities so that you can focus on the business.
Reach out today and let’s get started.
Ready to Incorporate Your Sdn Bhd the Right Way?
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Speak with our team for a tailored incorporation package.
Frequently Asked Questions
Yes, in most sectors, foreigners can fully own an Sdn Bhd, though some industries require local equity participation.
Yes, an Sdn Bhd may engage in more than one business activity, but you must declare the business codes during registration.
Yes, once your Certificate of Incorporation is issued, you can open a business account with any Malaysian bank, subject to their requirements.
Yes, many businesses start as sole proprietorships and later register an Sdn Bhd for scalability and protection.
You can increase paid-up capital by issuing additional shares, subject to approval from the directors and proper lodgement with SSM.
Abigail Yu
Author
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
