The legal structure of Sendirian Berhad offers significant advantages over others, such as a limited partnership or sole proprietorship. Maximum protection for the funds invested and personnel assets is just one of the advantages that incorporating a private limited company a popular choice, especially for start-ups, when they open company in Malaysia.
As a limited liability company is its own legal entity, owners and shareholders of the Sdn Bhd are not personally liable for the debts and liabilities of the company, in the wake of a bankruptcy situation. Their loss is limited only to the share capital subscribed by them. Taking a carefully calculated risk and keeping personal assets separate and protected give a stronger sense of security, and perhaps also promote a more robust and forthcoming entrepreneurial spirit.
Distinct Legal Identity
Until a company is unanimously dissolved or liquidated by legal order, it exists as a perpetual entity, which implies that change in ownership does not affect its existence, assets or investments, nor the contracts it has entered into. The use of similar identity or name by any other business is also legally prohibited.
Compared to the sole proprietorship and partnership structure, a businesses that register Sdn Bhd command a stronger image in terms of responsible governance and commitment for long-term development and growth. As a result, the business will be taken more seriously by clients, suppliers, bankers and other stakeholders, opening up more opportunities for investment and capital injection.
Sole proprietorships and partnerships are taxed at the owner’s personal income tax rate, which could be as high as 28% in Malaysia. Private limited companies are taxed at the country’s corporate rate, which is capped at 24%.
Ease of Share Transfer
Shareholders of a Sdn Bhd, for their own reasons, can exit the business when they choose to do so by selling their shares to exisiting or new shareholders, with minimal disruption to the business or its operations.
Transferring of shares with ease is also proven to aid access of capital, by attracting new investors.
Open Company in Malaysia
For more information on register Sdn Bhd, bookkeeping and accounting, annual compliance and business licences in Malaysia, visit our Information and Resources page.