Premia TNC Singapore Team
Author
Introduction
Starting a business in Malaysia can be a rewarding venture, and choosing the right company structure is a critical first step. For many entrepreneurs, a Sendirian Berhad (Sdn Bhd) company is the preferred option. This structure, equivalent to a private limited company, provides key benefits such as limited liability and a separate legal identity, safeguarding the personal assets of shareholders. Below is a comprehensive, step-by-step guide to setting up an Sdn Bhd company in Malaysia.
Step 1: Understand the Fundamentals of an Sdn Bhd Company
Before proceeding, it is essential to familiarize yourself with what an Sdn Bhd company entails. In Malaysia, an Sdn Bhd is comparable to private limited companies in other jurisdictions, providing shareholders with limited liability protection. This means that shareholders are not personally responsible for the company’s debts or obligations beyond their investment in the company.
Furthermore, the company functions as a separate legal entity, allowing it to own assets, sign contracts, and initiate or face legal actions independently. Establishing an Sdn Bhd requires at least one shareholder, one director, and a qualified company secretary, making it a flexible yet secure structure for businesses.
Step 2: Choose a Unique and Compliant Business Name
The next critical step is selecting a distinctive name for your company. Your chosen name should reflect the nature of your business and comply with the naming regulations set by the Companies Commission of Malaysia (SSM). It is important to conduct a name search through the SSM’s official website to confirm that your preferred name is not already registered by another entity.
Additionally, the name should not infringe on any existing trademarks or intellectual property rights, which could lead to legal disputes or rejection of your registration application.
Step 3: Appoint at Least One Resident Director
To operate as an Sdn Bhd company in Malaysia, it is mandatory to appoint at least one director who resides within the country on a permanent basis. A resident is defined as someone who ordinarily resides in Malaysia or holds a valid residency pass. To qualify as a director, an individual must be at least 18 years old, must not be an undischarged bankrupt, and must have no prior convictions related to fraud or dishonesty.
The appointed director is legally responsible for managing the company’s day-to-day affairs and ensuring compliance with local laws and corporate obligations.
Step 4: Engage a Qualified Company Secretary
In Malaysia, every Sdn Bhd company is required to appoint a licensed company secretary. The company secretary plays a vital role in ensuring that the company remains compliant with statutory requirements. Their responsibilities include maintaining accurate statutory records, filing necessary documents with SSM, and advising directors on corporate governance matters.
To qualify, a company secretary must hold a license issued by SSM and possess a minimum of three years of relevant experience. Their expertise is essential for smooth corporate administration and avoiding regulatory penalties.
Step 5: Register the Company with the Companies Commission of Malaysia (SSM)
Once your business name is approved and key appointments are in place, the next step is to register your company with SSM. This process requires the submission of several documents, including the Certificate of Incorporation, identification documents for directors and shareholders, proof of the director’s residential address, the company’s constitution, and the company registration form.
You can complete the registration through SSM’s MyCoID online platform or by visiting an SSM office in person. Within one to two business days, the registration process is typically completed efficiently and without unnecessary delays or complications.
Step 6: Apply for the Required Business Licenses
After your company is successfully incorporated, it is necessary to obtain any licenses or permits that are relevant to your business activities. Different industries are subject to different regulatory requirements. For example, businesses in the hospitality, food and beverage, retail, or manufacturing sectors often require specific operational licenses.
Common examples include applying for a business premise license from the local municipal authority, registering for Sales and Services Tax (SST) if your annual revenue exceeds RM500,000, and securing customs permits for import and export operations. Ensuring that your business is properly licensed is crucial to avoid disruptions or legal complications.
Step 7: Open a Corporate Bank Account
A corporate bank account is essential for managing your company’s financial transactions, ensuring transparency, and keeping business and personal finances separate. To open a business bank account in Malaysia, you will need to present key documents such as the Certificate of Incorporation, the Company Constitution, and proof of the registered business address.
Banks may have different requirements, including minimum deposit amounts, which vary depending on the institution. Establishing a corporate account is a necessary step for facilitating payments, receiving revenue, and ensuring smooth financial operations.
Step 8: Register for Tax with LHDN
It is mandatory to register for taxation once your company becomes operational and begins conducting business activities. To comply with corporate tax regulations in Malaysia, you are required to obtain a tax file from the Inland Revenue Board of Malaysia (LHDN) and ensure proper registration. Business profits are subject to a standard corporate tax rate of 24%, which is consistently applied across taxable earnings. All companies are required to file annual tax returns and maintain accurate financial records to meet tax obligations.
To comply with statutory employee welfare and contribution obligations, businesses that plan to hire employees must also ensure they are registered with both the Employees Provident Fund (EPF) and the Social Security Organization (SOCSO). This registration is essential for fulfilling legal requirements related to employee benefits and social protection, and it must be completed before or as soon as employment begins.
Step 9: Fulfill Ongoing Corporate Compliance Obligations
After incorporation, companies are required to comply with ongoing regulatory obligations to maintain a good standing with authorities. This includes conducting annual general meetings (AGMs), filing annual returns with SSM, and preparing audited financial statements if applicable.
These requirements are in place to ensure transparency, protect stakeholders, and support good corporate governance practices. Staying up to date with compliance obligations is essential to avoid fines, penalties, or even the risk of deregistration.
Step 10: Maintain Accurate Company Records
Proper record-keeping is a critical responsibility for directors and management. Your company must maintain accurate financial records, statutory filings, details of shareholders, and minutes of meetings. These records are not only essential for regulatory compliance but also play a key role in supporting business decisions and operational efficiency.
Maintaining complete and updated records builds credibility and ensures that the company is always prepared for audits, inspections, or stakeholder reviews.
Premia TNC Malaysia Team
Author
Premia TNC Malaysia is a dynamic team of experts dedicated to supporting businesses and entrepreneurs as they establish, manage, and grow their presence in Malaysia and across the region. Premia TNC Malaysia specializes in providing tailored corporate services, from company incorporation and compliance to tax planning and accounting. With our extensive experience and deep understanding of the local regulatory environment, we are here to make business operations smoother and more efficient.
