Sdn Bhd stands for Sendirian Berhad and is private limited company in Malaysia. All locally incorporated companies must carry with “Sdn Bhd”, and for public company, with “Bhd” or “Berhad” only.
Currently, most companies in Malaysia are only allowed to be incorporated limited by shares. It means a company formed with its shareholders’ liabilities limited by capital that invested in the company.
A Sendirian Berhad (Sdn Bhd) company in Malaysia is a private limited business entity which can be started by both locals and foreigners. All businesses in Malaysia are required to be registered with the Companies Commission of Malaysia (SSM). The SSM is the governing body which oversees the companies operating in Malaysia, and an Sdn Bhd in Malaysia is no exception to the rule.
Why Register a Sendirian Berhad, Company, Sdn Bhd in Malaysia?
There are several benefits to starting a Sdn Bhd business in Malaysia. Aside from the country’s strategic location which places it in close proximity to several other major Asian markets, Malaysia was also ranked by the World Bank in 2016 as the 18th easiest country in the world to do business.
100% foreign ownership is also allowed in for a company Sdn Bhd in Malaysia, which has appealed to many foreigners. Additionally, there are no restrictions in Malaysia when it comes to the repatriation of capital gains, dividends, royalties and profits. With double taxation treaty agreements with 68 countries, low start-up costs and premise rentals, Malaysia is one of the most promising business hubs in Asia for foreigners who are looking for their next big opportunity.
An Sdn Bhd company is among the most popular business entity options in Malaysia because it is considered a separate legal entity from its owners. As one of the most established business entities in the country, its excellent reputation has made acquiring a loan much easier.
Sdn Bhd companies in Malaysia come with business continuity, which means the business can carry on until such time when there is a valid reason as to why it needs to cease its business operations. Since an Sdn Bhd company is considered a separate legal entity, the owner’s personal wealth is protected, which is one of its major advantages. As a separate entity, the ownership of the business is transferable, which contributes to its continuous existence.
This business entity also has low-income tax risk exposure, which is many entrepreneurs consider this among the best business entities to go for when incorporating a company in Malaysia. With proper tax planning, it is easier to reap the tax benefits that Malaysia has to offer if you were to set up an Sdn Bhd company.
Sdn Bhd companies in Malaysia have a much better market perception, as it is viewed as a stable and transparent type of business entity, thanks to the stringent reporting requirements that it needs to abide by.
Is A Sendirian Berhad Company Different from a Berhad Company?
Yes, it is. An Sdn Bhd company in Malaysia differs from a Berhad (Bhd) company in several ways. For one thing, an Sdn Bhd company can have anywhere from 2 shareholders to a maximum of 50 shareholders. Sdn Bhd companies are also made up of small or medium companies, also known as SMEs, whereas Bhd companies are typically comprised of much larger organisations.
Sdn Bhd companies in Malaysia must also disclose their financial statements to the public.
You may see here the difference between Sdn Bhd Vs enterprise.