A Guide To Private Limited Companies In Malaysia
A private limited company in Malaysia is known as a Sendirian Berhad, and at over 5,000 new incorporations per month in 2026, the go-to structure for:
- foreigners who want to incorporate a local business entity
- joint ventures between locals and foreigners
- multiple owners who want to clearly define partnership terms
- fundraising / bank loans / grants / government programmes, or
- all of the above!
As the list suggests, they are often the most popular choice for all but the smallest of businesses.
That doesn’t mean a private limited company is perfect for every scenario, and below we explain Sdn Bhds in the context of doing business in Malaysia, covering:
- Suruhanjaya Syarikat Malaysia (SSM)
- The Companies Act 2016
- key characteristics
- advantages
- tradeoffs
- comparison to alternative structures
- our recommendations, and
- registration steps (plus an offer to let us handle things for you 🙂)
So we don’t overwhelm you, we’ll stick to the essentials and link to guides for those who want to delve deeper into specific areas of company ownership and operations in Malaysia.
And of course, you’re welcome to skip the reading and get in touch directly!
Otherwise, let’s begin.
Suruhanjaya Syarikat Malaysia
We’re including this for foreigners and those truly new to entrepreneurship, so if you already know what this is, click here to skip to the practical parts.
The Companies Commission of Malaysia, better known as Suruhanjaya Syarikat Malaysia (SSM, is our federal authority that oversees all companies in Malaysia, namely:
- approving or rejecting new company applications
- setting and enforcing compliance requirements
- peanalising those that breach these requirements
The requirements themselves are set out in the Companies Act 2016, and if you intend to incorporate a company, SSM is the body that reviews your application.
Key characteristics
Like a typical LLC, the five most defining features of private limited companies in Malaysia are:
- profits given corporate tax treatment
- ownership through shareholding
- separate legal entity status, and
- limited liability protection for owners and directors
- can be 100% foreign owned (outside of restricted sectors)
The company exists independently of owners and can own assets, hire employees, and sign contracts in its own name. This also means debts, liabilities, and potential legal action is generally borne by the company.
Main benefits
While some industries require a private limited company to operate, in our experience many will still choose a private limited company because they can:
- pay less tax on business profits thanks to corporate rates
- protect personal assets if the company faces financial issues
- own and operate a Malaysian business as a foreigner
- issue new shares to raise capital from investors
- define ownership rights clearly to prevent disputes
- benefit from exclusive government grants and incentives
Also, while not officially stated, it’s generally easier to open a business bank account as a company due to perceived trustworthiness, which is closely linked to the tradeoffs of a Sdn Bhd!
Main tradeoffs
The core tradeoff of a private limited company is the higher level of compliance, and at a minimum, it must:
- appoint a licensed Company Secretary to advise on CA 2016 compliance
- appoint an independent Auditor to prepare audited financial statements
- file up-to-date company particulars with SSM every year
Failure exposes directors and shareholders to stiff penalties, and as a result, overhead fees to maintain a Sdn Bhd are considerable.
Finally, obligations that apply to all entities like tax submissions and payroll deductions tend to be more closely monitored for private limited companies.
But hey, all that is worth it when the bank approves your loan, right? 🙂
Alternative structures
Besides private limited companies, SMEs can operate in Malaysia as four other structures:
- Labuan company
- Limited Liability Partnership (LLP)
- conventional partnership
- sole proprietorship
A full comparison would make this guide comically long, so we’ve summarised key differences into a table.
Even as a table, it’s pretty big–we hope you’re reading this on a laptop!
| Feature | Sdn Bhd | Labuan Company | LLP | Conventional Partnership | Sole Proprietorship |
| Foreign ownership | Allowed | Allowed | Allowed | Not allowed | Not allowed |
| Formation costs (on average) | RM4,000 | RM5,000 | RM1,500 | RM60 | RM60 |
| Capital contribution | Share capital | Share capital | Partners’ contribution | Partners’ contribution | Owner contribution |
| Owner(s) | Shareholders | Shareholders | Partners | Partners | Sole owner |
| Number of owners | Minimum 1, maximum 50 | Minimum 1, maximum 50 | Minimum 2, no maximum limit | 2 to 20 partners (except certain industries) | Sole owner |
| Legal status | Separate legal entity | Separate legal entity | Separate legal entity | Not separate legal entity | Not separate legal entity |
| Liability for business debts | Company | Company | LLP | Partners | Sole owner |
| Tax on profits | Corporate income tax (15–24%) | Labuan tax regime (3% flat on trading income / exempt offshore income) | Corporate income tax (15–24%) | Personal income tax (0–30%) | Personal income tax (0–30%) |
| Managed by | Board of Directors | Board of Directors | Partners | Partners | Sole owner |
| Personal liability | To extent of share ownership | To extent of share ownership | Liable to extent of capital contribution and conduct | Unlimited liability | Unlimited liability |
| Mandatory appointments | One Director, One Shareholder, One Company Secretary, One External Auditor | One Director, One Shareholder, One Company Secretary | One Compliance Officer | None | None |
| Compliance demands | Annual audited financial statements, Annual Returns, Monthly Tax Estimates | Annual audited financial statements, Annual Returns, Monthly Tax Estimates | Annual Declaration, Monthly Tax Estimates | None | None |
And here’s a list of our in-depth comparisons:
- Labuan company vs private limited company
- private limited company vs limited liability partnership
- sole proprietorship vs private limited company
Our professional thoughts
For context, MISHU is a Company Secretary with years of registering every structure in the table above.
Without knowing your specific circumstances, a private limited company is our general recommendation simply because of its versatility, and limited liability protection allows owners to take calculated risks to grow without having to worry about their personal assets.
Put simply, it is the structure for entrepreneurs who want to grow and scale their business.
Requirements to incorporate
We have a full company incorporation checklist that explains this, but basically you’d need six things sorted out beforehand:
- proposed company names with explanations if not in Bahasa Melayu or English
- up to three MSIC codes and a 200-word nature of business description
- a Malaysian registered address
- one Malaysian resident director (can be a nominee director)
- one shareholder (individual or corporate)
- paid-up capital, share price, number of shares, and ownership proportions
Finally, you’ll need to appoint a Company Secretary within 30 days of incorporation.
Note: While officially just RM1 paid up capital is enough to incorporate a company, in our experience banks only allow account openings for companies with at least RM2,500 in PUC, so treat that as the effective minimum, especially for foreign-owned ventures.
Company registration steps
All applications are done online via SSM’s MyCOID portal, and generally has four main steps:
- Check proposed company name for availability
- Prepare required documents
- Submit incorporation application, and
- Receive registration notice
SSM fees include a RM50 initial name reservation RM1,010 for the incorporation itself.
Business owners can submit one themselves or engage a consultant to do it for them.
DIY enthusiasts can see our guide to company self-registration but note that first-timers must physically visit an SSM counter to verify their identity.
So if you’re outside Malaysia at the moment or don’t want the hassle, get in touch with us!
Let MISHU help register your company
Setting up a private limited company in Malaysia doesn’t have to be complicated, and with MISHU, you get fast, hassle-free, and fully online incorporation services so you can focus on growing your business while we handle the paperwork.
FAQs on private limited companies in Malaysia:
- What is a private limited company?
💡A private limited company in Malaysia is known as a Sendirian Berhad, and is the most popular structure for all but the smallest businesses due to limited liability protection, clear ownership rights, and credibility with investors and banks. - Why would a business choose a private limited company?
💡It offers major advantages like lower corporate tax rates, the ability to raise capital through share issuance, protection of personal assets, 100% foreign ownership in most sectors, and access to grants and incentives available only to private limited companies. - What are the main requirements to incorporate a private limited company?
💡A unique company name, a registered Malaysian address, one resident director, one shareholder, and details of your share capital. A Company Secretary must also be appointed within 30 days. - What are the tradeoffs of choosing a private limited company?
💡Private limited companies come with higher compliance requirements, namely audited financial statements, annual returns, and mandatory appointments like a Company Secretary and Auditor. - What alternative business structures exist?
💡LLPs, sole proprietorships, partnerships, and Labuan companies. Each differs in ownership limits, tax treatment, liability exposure, and compliance demands. - How do I incorporate a private limited company?
💡All registrations are done through SSM’s MyCOID portal. The process involves reserving a name, preparing required documents, submitting the online application, and receiving approval from SSM. - Can foreigners fully own a private limited company?
💡Yes, foreigners can fully own a private limited company, except in specific regulated business sectors. - How much does a private limited company cost to register?
💡The SSM fee is RM1,010. This does not include third-party incorporation service fees. - How long does it take to incorporate?
💡Anywhere from 3–10 days, with most incorporations averaging about a week. - What is the minimum paid-up capital?
💡Officially RM1, but in practice, banks may reject openings for RM1 companies. In our experience, RM2,500 is the practical minimum. - Can private limited companies be registered online?
💡Yes, all incorporation applications are done online—but first-time users must physically visit an SSM office to verify their identity before creating a MyCOID account. - Can I begin operating once I incorporate a private limited company?
💡Not legally. Most businesses must apply for relevant business licenses, and licenses generally require the company to be incorporated first. - What is a Company Secretary?
💡A professional officer responsible for ensuring the company complies with Companies Act 2016 requirements, maintains statutory records, and submits mandatory filings.