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6 Things to Consider Before Registering a Sdn Bhd Company in Malaysia

Updated: May 3, 2021

A Private Limited Company, also known as a Sendirian Berhad (Sdn Bhd) company, is the most common type of business entity incorporated in Malaysia. If you have been thinking about starting a business, chances are you have considered registering a Sdn. Bhd.

In this article, we’ll explore the top six items that you should figure out before you register a Sdn Bhd company in Malaysia:

1. Company names

Business owners are advised to stick to the rules and regulations while deciding on the proposed company names. Suruhanjaya Syarikat Malaysia (SSM) sets out the following criteria for the selection of a suitable company name:

  • It should not be misleading, offensive, or blasphemous.

  • It should not represent any association with the Royal families or government authorities.

  • It should not mislead the nature of the company.

  • It should not resemble another registered company.

  • It should not mention government-controlled activities such as insurance unless proper approval has been received from the relevant authority.

The name of each and every company plays an important role in its success, and is therefore very important that you spend a considerable amount of time carefully choosing the right name for your company. All relevant details must be explained in the incorporation form.

2. Nature of the Business

The nature of business of companies are classified using The Malaysia Standard Industrial Classification (MSIC) codes. During the company’s registration with SSM, it is necessary that you mention the type of business nature the company will adopt, using the appropriate description as well as MSIC codes.

There are hundreds of MSIC codes to choose from, therefore it is highly advisable that you engage and consult a qualified and licensed company's secretary to handle the process on your behalf.

3. Business Address

When you are registering a Sdn Bhd company in Malaysia, you will need to disclose your business address, if any. Generally, a business address is a location where the business activities take place. However, if you do not yet have a business address, the company can always update SSM at a later time.

4. Company Directors and Shareholders

Directors and shareholders play important roles in a Sdn Bhd company in Malaysia. When registering a company in Malaysia, you should ensure that the potential shareholders and directors meet the eligibility requirements set by the law. The eligibility requirements for being a company director in Malaysia are:

  • Malaysians and foreigners can become the sole director of a Sdn Bhd company in Malaysia.

  • The director of the company must be at least 18 years of age.

  • At least one Director should be residing in Malaysia.

  • The candidate should not be disqualified as per Section 198 of the Companies Act 2016.

If you are a foreigner who does not live in Malaysia, you must appoint at least one resident, local director to hold position in your Sdn Bhd company. On the other hand, a Sdn Bhd company in Malaysia can have up to 50 shareholders. The shares held by each shareholder are declared during the company registration process. Similarly, the value of each share is evaluated on the basis of the total capital of the business.

Once the company is fully registered as Sdn Bhd in Malaysia, the shareholders will transfer the amount into the business bank account according to the number of shares they have in the company.

5. Paid-up Capital

If you want to register a Sdn Bhd company in Malaysia, you must have at least RM1 as paid-up capital. It is necessary to declare the paid-up capital in company registration.

Note that it is entirely illegal to declare the amount of paid-up capital that you do not have at the time of company registration.

6. Company Secretary

It is compulsory under the Companies Act 2016 for all companies to engage a licensed Company Secretary within 30 days of its incorporation. Choosing your Company Secretary (and therefore your Secretarial team) is of utmost importance, as they are the team who will assist you in managing and mitigating risks of corporate non-compliance.

Principally, the company secretary ensures the company complies with company law, maintains certain statutory registers and makes the necessary filings with the Registrar of Companies such as annual returns, financial statements and certain forms with respect to changes to share capital.

Furthermore, most companies often engage Company Secretaries to handle the incorporation of their Sdn Bhd on their behalf, as a company secretary can quicken the process of a company incorporation.

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