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Type of Business Entities in Malaysia

Update Date:2015-9-18 18:15:13 Source:Tannet (Malaysia) Sdn Bhd Views:852

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In Malaysia, there are existing different business entities which suitable for different stages of business or serve different business needs. The start up of Malaysian company rules must first depend on the type of business entities. The type of business entities in Malaysia can be divided into few types as follows:


Sole Proprietor (or Sole Trader)

The "Sole Proprietorship" business entity in Malaysia is owned solely by an individual, as his/her liability is unlimited. Unlimited liability means: If a business fails or declared bankrupt, creditors can bring a lawsuit to the sole proprietor’s owner for all debts owed to respective merchants. This means the personal assets, personal income and employment income are all liable.


Partnerships

The “Partnership” business entity is a joint-entity holder with two or more persons to carry out a legal business in Malaysia. The Companies Commission of Malaysia requires that the partnership entities MUST comprise of at least two (2) members and a maximum twenty (20) members.

Partners in partnership business entities are also bounded by unlimited liability.


Limited Company (SDN BHD or BHD)

1. Sendirian Berhad (SDN BHD) is a private limited company, where it prohibits any invitation to the public to subscribe to any of its shares, deposit money with the company for investment or subscription. Minimum members in a private limited company is ONE (1) and maximum is FIFTY (50).

2. Berhad (BHD) is a public limited company where its shares can be offered to the public for fixed periods and any other forms of subscription. The minimum amount of members’ (shareholders) in a company  are TWO (2) and maximum of unlimited amount of members.


There are three (3) types of limited companies in Malaysia:

- Limited by Shares

- Limited by Guarantee

- Unlimited company with/without share capital


Foreign Companies

Foreigners (non-Malaysian residents) are allowed to register a private limited company in Malaysia, so long as TWO (2) of the company’s directors are permanent (principal place of residence) residents in Malaysia.

Foreign companies are companies ALREADY incorporated (formed) outside of Malaysia but set up its business premises and operations in Malaysia. There are two ways to go about being a ‘foreign company’ in Malaysia:

- Register a branch in Malaysia

- Incorporate a local company 


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