When starting a business in Malaysia, understanding the different types of company structures that are available is crucial. Each type of company comes with its own set of advantages, regulations, and applicable scenarios that can directly impact the operation and success of your business. Whether you are a local entrepreneur or an international business owner, choosing the right corporate entity is the foundation of a successful endeavor. Here is a guide that outlines the different types of companies you can incorporate in Malaysia.
Sole Proprietorship
A sole proprietorship is the simplest and most straightforward business entity. It is owned by an individual who is solely responsible for its liabilities.
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Partnership
A partnership is a business owned by two or more individuals. In Malaysia, partnerships are registered under the Partnership Act 1961.
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Private Limited Company (Sdn Bhd)
A private limited company, known as “Sendirian Berhad” or “Sdn Bhd”, is the most common type of corporate entity in Malaysia. It is limited by shares and has its own legal identity.
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Public Limited Company (Bhd)
A public limited company, or “Berhad” (Bhd), is allowed to offer its shares to the public, often listed on a stock exchange.
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Foreign Company (Branch Office)
A foreign company can register a branch office in Malaysia and is treated as an extension of the parent company.
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Limited Liability Partnership (LLP)
The Limited Liability Partnership (LLP) is a business structure that combines the features of a partnership and a company.
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Choosing the right type of company is essential for business success, aligning with your vision, growth plans, and the level of risk you are prepared to accept. It is advisable to seek expert advice to determine the most suitable business structure for your venture.
At InCorp Global Malaysia, we specialize in providing comprehensive incorporation services tailored to the diverse needs of our clients. Our professional team is dedicated to guiding you through the incorporation process, ensuring your business starts on a strong foundation.
Disclaimer: While every effort has been made to ensure accuracy, this article should not be interpreted as legal advice. Please consult with InCorp Global Malaysia or another professional advisor for specific advice on company incorporation in Malaysia.
FAQs on Types of Companies in Malaysia
- A Private Limited Company (Sdn Bhd) restricts the ability to transfer shares and limits shareholders to a maximum of 50, whereas a Public Limited Company (Bhd) can offer shares to the public and may be listed on a stock exchange, facilitating access to capital markets.
- Yes, a foreign company can own property in Malaysia through its branch office. However, it is essential to note that the parent company holds unlimited liability for the operations and debts of the Malaysian branch.
- An LLP in Malaysia offers the partners limited liability, which means their personal assets are generally protected in the case of business failure, unlike in a traditional partnership where partners have unlimited liability for debts and losses.
- A sole proprietorship is beneficial due to its simplicity, ease of setting up, and minimal formalities. The owner has complete control over business operations, and profits are taxed at the individual's personal income tax rate.
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