Benefits of setting up a LLC in Malaysia

Before you get to know the benefits of setting up an LLC in Malaysia, you first need to understand briefly about the Private limited company, how it is registered in Malaysia and finally why you would choose Malaysia for registering your new company. The article here will give you a clear concept about all these aspects and more. Therefore, if you are one of an individual who is eager to be a potential investor in Malaysia, stick with the article till the end.

How much do you know about Private limited company (LLC)?

Before hop into a venture, it is always advisable to have a clear concept on the particular field you want to put your hard earned money on. There are many types of businesses. For instances:

  • Sole proprietorship
  • Private limited company
  • Partnership company
  • Public limited company etc.

But, the most popular company type among foreign investors in Malaysia often seems to be the Private Limited Company (PLC). So what is a private limited company or Limited Liability Company?  Private limited company also referred as the Limited Liability Company (LLC).

A Limited Liability Company or LLC is a type of business structure where owners have limited liabilities based on their activities in the company. As the name suggest this type of company has concessions when it comes of facing liabilities and taxations.

So, once a LLC is registered you will get some level of relaxation on your corporate taxation similar to a sole proprietorship or partnership business and limited liability characteristics of corporations. Let’s dig deep into the features of an LLC in Malaysia.

Features of a Limited Liability company

  • It is a legal form of company structure that acts like a hybrid of both corporations and sole proprietorship; with legal liability properties of a corporation and taxation properties of partnership or sole proprietorship.
  • Provide various flexibilities to the business owners; especially in case of taxation and undertaking liabilities.
  • The Limited Liability company itself has its separate individuality and carries right to sue an individual or company as well as subject to liabilities.
  • Owners of a Limited Liability company are relaxed of any liabilities that go from their personal assets.
  • This type of company formation is operated under state law. The dissolution of this type of company also governed by the same state law.
  • Owners are referred as members in a LLC structure.
  • The formation is simpler than those of partnership or public limited businesses.

How to register a Private Limited company in Malaysia?

Now as you got a brief idea about LLC, understanding the incorporation process of private limited company in Malaysia is the next priority. The process is much simple and convenient if you know the process, but if you don’t than the company setup process is much complex, time and money consuming. Below are the steps in brief about company registration in Malaysia:

Steps of Company Registration

  1. Recruit a company secretary
  2. Propose more than one trade name in the recommended form. Name approval fees in RM 60 which need to be paid to the SSM during name proposal form submission.
  3. Set paid up capital. RM 5000 should be the minimum amount at the initial level.
  4. Mean this time company secretary need to prepare MoA and AoA Forms for the company
  5. Submit company registration papers along with all other documents prepared by the company secretary to SSM by online.
  6. Pay government fees in RM 1010.
  7. Company Incorporation will take 2 days to complete, mean that time your company secretary has to buy a super form from mydata ssm.
  8. The next step is to prepare board resolutions. This is conducted by the secretary of the company.
  9. A corporate bank account need to be opened at this stage. It is advised to open this account in an international bank instead of local banks of Malaysia.
  10. In this stage of company incorporation you should arrange an office premises with appropriate tenancy agreement for at least one year.
  11. Apply for business licenses. In Malaysia you need to have several licenses to conduct your business. License like signboard and Halal is compulsory for most businesses However; you might need to apply for other licenses in case of import export, medical or other business purposes.
  12. At this phase of company setup you need to apply for ESD to check and verify your company setup progress.
  13. The last step of company setup process is to apply for Employment Pass (EP) behalf of the foreign employees you would like to hire for your new company.

With the completion of that step you will be done with all incorporation process of private limited company in Malaysia. Although the company setup is considered completed once you got the incorporation certificate from the SSM and have collected all the license and approval certificates. However, when talking about a new LLC in Malaysia, all steps should be followed for a flawless beginning of a business. 

Advantages of LLC registration in Malaysia

As mentioned earlier, LLC is much hyped among foreign investors in Malaysia. There are multiple reasons behind this. SDN BHD or Private limited company has several advantage points before other company structures available in Malaysia. Apart from tax reduction and limited liability these business structure gives sever other benefits to the investors in Malaysia. This part of the article will list out the advantages of LLC registration in Malaysia.

Benefits of LLC incorporation in Malaysia

Limited liability as separate entity- The initial benefit of LLC is it acts like separate entity. The benefit of this is that it actively protects owners’ personal assets from any business liabilities. This therefore provides a financial security to the members of the company.

Opportunity to inject more capital fund- Fortunately SDN BHD has the opportunity to raise money in various ways to facilitate business expansions. For instance, LLC in Malaysia can raise money by giving share certificates to the investors or by issuing bonds. Moreover, SDN BHD is allowed to take loans from banks with much lower interest rates compare to other types of business type.

Much more transparent- Private limited company or SDN BHD has an impressive review in Malaysia. This is due to its business transparency. Thanks to the company flexibility in nature, more benefit schemes from the bank and government and comparatively less requirements for business process when compared with partnership or other types of businesses.

Convenient travel and rental cost- LLC in Malaysia has several benefits. Conducting business from a convenient location is one of that. Here owner can choose to run their SDN BHD from a convenient geographical location convenient for the owner and the business.

The next benefit is that rental cost can be minimized for a private limited company in Malaysia. It must be noted that premises expense is high here in Malaysia. Fortunately in case of private limited company, owner can always rent a premise which is economic and affordable for the owner to run the private limited company in Malaysia.

There are several other benefits of a private limited company in Malaysia other than tax reductions and limited liability features for instance, financial distribution is much convenient in SDN BHD business and share and ownership transfer process is comparatively less complex in Limited Liability Company.

In summary, there are several benefits of starting a private limited company in Malaysia. Once you choose to start your business in Malaysia, you will eventually come across these advantages of setting up a SDN BHD company in Malaysia.

Related Articles:

Private limited company in Malaysia – Registering an Sdn Bhd

Limited Liability Partnership in Malaysia – LLP Company

Public limited company in Malaysia – Berhad (BHD)


Company Registration Expert Since 2012