Starting a Sdn Bhd (Sendirian Berhad) in Malaysia is a popular choice for entrepreneurs due to its limited liability and ability to separate personal assets from business risks. This structure offers flexibility in management, easier access to capital, and credibility in the market.
With a business-friendly environment and clear incorporation steps through the Companies Commission of Malaysia (SSM), it's an ideal option for both local and foreign investors.
However, it also requires careful planning, compliance with regulations, and proper management to ensure long-term success.
Step 1: Understand What a Sdn Bhd Is
The Sdn Bhd business structure ensures that shareholders' personal assets are protected in the event of business debts or legal issues, making it an attractive option for small-to-medium enterprises.
A Sdn Bhd operates as a separate legal entity, meaning it can hold assets, enter into contracts, and face legal actions in its own name.
The company requires at least one director, who must be a resident of Malaysia, and at least one shareholder. Despite being a private entity, a Sdn Bhd can accommodate up to 50 shareholders, offering flexibility for business expansion.
The formation process starts with reserving a company name through the Companies Commission of Malaysia (SSM) for RM50. Once approved, the name is reserved for 30 days, during which you can proceed with the registration.
Within 30 days of incorporation, appointing a licensed company secretary is a must. This secretary plays a crucial role in ensuring that the company complies with Malaysian corporate regulations and fulfils its legal obligations.
A Sdn Bhd also allows for better tax management and access to financing options, making it an appealing structure for both local entrepreneurs and foreign investors looking to enter the Malaysian market.
Step 2: Key Requirements for Incorporation
Understanding the key requirements for incorporation is essential to ensure compliance with local regulations. Let’s take a detailed look at the fundamental criteria you need to fulfil:
1. Directors
You must have at least one director who resides in Malaysia. This director should have a principal place of residence in the country and be at least 18 years old.
2. Shareholders
A minimum of one shareholder is necessary to form the company. Shareholders can be either individuals or corporate entities, with the maximum number limited to 50 for a Sdn Bhd.
3. Company Secretary
Within 30 days of incorporation, your company must appoint a company secretary. The secretary must be a member of a professional organization or hold a license issued by the Companies Commission of Malaysia (SSM).
4. Registered Office Address
A physical registered office address in Malaysia is required for your Sdn Bhd. Note that P.O. boxes are not permitted as registered addresses. This office will serve as the official correspondence address for all legal and administrative matters.
5. Capital Requirements
The minimum share capital required for a Sdn Bhd is only RM1, making it accessible for new entrepreneurs. There is no maximum limit on share capital, allowing your business to grow without restrictions on financial backing.
6. Name Reservation
Before incorporation, you must conduct a name search to verify that your desired company name is available and complies with Malaysian naming regulations. The name should be unique and not similar to existing companies or reserved names.
7. Incorporation Fees
The fee for incorporating a Sdn Bhd is RM1,000, which covers the processing of your application by SSM. This investment is crucial for formally establishing your business.
Step 3: Choosing a Suitable Company Name
Selecting the right name is a crucial step when setting up a Sdn Bhd in Malaysia. Here’s what you need to know:
Come up with several names: It’s best to think of at least three potential names for your company. This gives you backup options in case your first choice isn’t available.
SSM regulations: Your company name must follow the guidelines set by the Companies Commission of Malaysia (SSM). The name must be unique, free from offensive or religious connotations, and any foreign words used must be explained.
Avoid general terms: Terms like "Technology" or "International" are too broad. Choose something more specific that reflects your business activities, like "ABC Software Solutions Sdn Bhd."
Symbols and abbreviations: You can use limited symbols (like &, ., -) in your name, but keep it professional. Abbreviations are generally not allowed unless widely recognised.
Reserve your name: Once a name is chosen, check its availability through the SSM’s MyCoID system. If available, you can reserve it for 30 days, with an option to extend for another 30 days for RM50.
Following these steps ensures your company name meets SSM requirements and represents your business accurately.
Step 4: Preparing Required Documents
It’s essential to have all the required documents prepared to avoid delays. Here’s a checklist that will guide you through the necessary paperwork, from selecting a company name to ensuring compliance with local regulations.
Proposed company name and type
- Finalise your company name, ensuring it meets SSM requirements.
- Specify that the company will be a private limited company (Sdn Bhd).
- Reserve the name for 30 days upon approval through the SSM’s online system.
Identification of directors and shareholders
- Submit a copy of the identification card (IC) or passport for each director and shareholder.
- Ensure that all directors are over 18 years old and are Malaysian residents.
- A company can have one director and one shareholder as a minimum, but the maximum number of shareholders for an Sdn Bhd is 50.
Declaration of compliance
- Prepare a Declaration of Compliance which must be signed by a director or company secretary.
- This document confirms that the company meets all legal requirements set by the SSM and Companies Act 2016.
Directors’ status declaration
- Ensure directors declare that they are not undischarged bankrupts and have no criminal convictions.
- This declaration is a legal requirement and needs to be completed by all directors to avoid legal complications in the future.
Any required additional information
- You may need to submit additional documents depending on the nature of the business or if any foreign shareholders or directors are involved.
- Foreign directors must also provide certified copies of their passports and residency status in Malaysia.
Step 5: Three steps to incorporate your Sdn Bhd
1. Name reservation
Upon submitting your choice of names, the name will be reserved for 30 days, with the option to extend the reservation for an additional 30 days by paying a fee of RM50. This gives you time to finalise other steps while securing your business name.
2. Lodging the application
After securing the name, you'll need to submit the necessary documents. These include the directors’ and shareholders’ identification, a Declaration of Compliance, and potentially a company constitution if you opt to have one.
The incorporation fee for an Sdn Bhd is set at RM1,000, which must be paid when lodging the application. This fee covers the entire registration process under the Companies Act 2016.
3. Document verification and approval
Once the application and documents are submitted, SSM will begin their verification process. They’ll ensure that the documents meet all legal requirements, such as having a valid registered office address and ensuring directors meet the eligibility criteria.
If everything is in order, SSM will issue a Certificate of Incorporation, officially registering your company as a Sdn Bhd in Malaysia.
This certificate serves as proof that your business has been legally formed, allowing you to start operations immediately.
Post-Incorporation Formalities
After registering your Sdn Bhd, there are a few key steps to complete:
Appoint a company secretary: You must appoint a licensed company secretary within 30 days to handle compliance tasks.
Obtain required licenses: Apply for any industry-specific licenses (e.g., food, environmental permits) needed for your business.
Register for SST: If your turnover exceeds RM500,000, register for Sales and Service Tax with the Royal Malaysian Customs.
Open a corporate bank account: Set up a business account to manage finances and ensure tax transparency.
Set up accounting systems: Establish an accounting system for financial tracking, payroll, and annual reports to SSM.
Ready to take the next step in establishing your Sdn. Bhd. in Malaysia? Douglas Loh is to guide you through the entire process, ensuring everything is done efficiently and in compliance with local regulations.
Don’t navigate this journey alone, contact Douglas Loh today for personalised assistance and make your business dreams a reality!
FAQs
1. How long does it take to register a Sdn Bhd?
The process typically takes 5 to 10 business days, depending on how quickly documents are submitted and approved. Delays can occur if information is incomplete or additional approvals are needed.
2. What are the ongoing compliance requirements for a Sdn Bhd?
You must file annual returns, hold annual general meetings, and maintain proper statutory records. Failing to comply may result in fines or other penalties from SSM.
3. Do I need a local company secretary?
Yes, appointing a licensed company secretary registered with SSM is mandatory. This must be done within 30 days of incorporation to ensure legal compliance.
4. What happens if I don’t comply with post-incorporation requirements?
Non-compliance can lead to fines, penalties, or even the striking off of the company from the SSM registry. Serious violations could also result in legal consequences for directors.
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