A Sdn Bhd is a private company limited by shares, registered with the Companies Commission of Malaysia (SSM) under the Companies Act 2016. Sdn Bhd stands for Sendirian Berhad, which means “private limited” in Malay.
A Sdn Bhd is a legal person in its own right, owned by one to 50 shareholders.
A shareholder’s liability is limited to any amount still unpaid on their shares. That limit separates a Sdn Bhd from an enterprise (a registered sole proprietorship or partnership), where the owner’s liability has no limit.
Owning a Sdn Bhd brings duties from the start. You need at least one director who ordinarily resides in Malaysia, and you must appoint a company secretary within 30 days of registration.
Every year, the company also lodges filings with SSM.
Key Takeaways
- A Sdn Bhd differs from a Berhad (Bhd) mainly in being private. A Berhad may offer its shares to the public, but a Sdn Bhd may not.
- A Sdn Bhd costs about RM3,070 to RM8,400 in each year after its first. The range covers SSM’s fees, a company secretary, a registered office address, and audit and accounting.
- A Sdn Bhd appoints an auditor for each financial year, unless the company qualifies for audit exemption and chooses it. The company also files its own tax return.
- Under the Income Tax Act 1967, a Sdn Bhd that qualifies as a small company pays 15% on its first RM150,000 of chargeable income and 17% on the next RM450,000.
- The owner cannot simply draw on a Sdn Bhd’s account, because the money is the company’s own. Money leaves the company as a salary, a director’s fee or a dividend.
- Limited liability protects a Sdn Bhd’s shareholders, but a director can still be personally liable for the company’s unpaid contributions to the Employees Provident Fund and under any personal guarantee they sign.
What Does Sdn Bhd (Sendirian Berhad) Mean?
Sdn Bhd stands for Sendirian Berhad, which means “private limited” in Malay. A private company limited by shares ends its name in Sdn Bhd. Berhad (Bhd) alone ends a public company’s name. A Berhad may offer its shares to the public. A Sdn Bhd may not.
You will meet the ending written three ways, and all three name the same kind of company.
The Companies Act 2016 writes it Sdn. Bhd., with full stops, or in full as Sendirian Berhad. You will also see it as Sdn Bhd, without the full stops, which is how this article writes it.
A business entity is the legal form a business takes. The Companies Act 2016 recognises three kinds of company: limited by shares, limited by guarantee and unlimited.
In a company limited by shares, members are liable only for any amount unpaid on their shares. In a company limited by guarantee, members are liable up to what they undertook to contribute if the company is wound up. In an unlimited company, members are liable without limit.
A company limited by shares is either private or public, and a Sdn Bhd is the private company limited by shares.
SSM stands for Suruhanjaya Syarikat Malaysia, the Companies Commission of Malaysia. SSM is the registrar under the Companies Act 2016.
You register a company with SSM through its Corporate Registry System (CRS), which you reach through the SSM4U portal. A company or a limited liability partnership (LLP) is registered with SSM wherever in Malaysia it operates, Sabah and Sarawak included.
People often ask whether a Sdn Bhd is an LLC, a Ltd or a corporation. Those labels are not Malaysian company forms, so in Malaysian law a Sdn Bhd is none of them.
Even so, the private company limited by shares does the same job as an LLC, a Ltd or a corporation, because its owners’ liability is limited to any amount unpaid on their shares. Many other countries end the name of a private company limited by shares in Ltd, and use PLC to mark a public limited company.
For a jobseeker, a supplier or a student, a name ending in Sdn Bhd tells you the business is a registered private company, and anyone can check it.
SSM sells a Company Profile through its e-Info and MyData portals. The profile carries the company’s share capital and financial information. Anyone who buys a company’s information from SSM can also look up its directors, shareholders and registered office address.
SSM’s e-Search, free in the MySSM app, confirms whether an entity is registered with SSM. It searches by registration number, not by name.
Private limited companies in Malaysia vary widely.
Kulim Technology Park Corporation Sdn Bhd, for example, develops and manages Kulim Hi-Tech Park, and it is wholly owned by Kedah’s state development corporation (PKNK).
What Makes a Company a Sdn Bhd: The Defining Features of the Sdn Bhd Structure
A Sdn Bhd is governed by the Companies Act 2016, which calls it a private company limited by shares. The Act gives every private company limited by shares the same features.
- A separate legal entity: A Sdn Bhd is a legal person separate from its shareholders. As a legal person, the company can enter into contracts, and it can sue and be sued in its own name.
- Limited liability: A shareholder is not liable for the company’s obligations merely by being a shareholder. Their liability is limited to any amount still unpaid on their shares. Limited liability protection stops short for directors in some cases, which the section on directors’ duties below sets out.
- One to 50 shareholders: A Sdn Bhd may have no more than 50 shareholders, and one person may be its only shareholder.
- Private: A Sdn Bhd must restrict the transfer of its shares. It may not offer its shares or debentures to the public, or invite the public to deposit money with it.
- A public record of its financial affairs: A company’s financial affairs are open to the public, unless it is an exempt private company that lodges a certificate in place of its financial statements.
Who Owns and Runs a Malaysian Sdn Bhd: Shareholders, Directors and the Company Secretary
A Sdn Bhd is owned by its shareholders. It has at least one shareholder and no more than 50. A shareholder can be an individual or a body corporate. A body corporate shareholder gives a consent letter for the registration application.
Directors and company secretaries must be at least 18 years old.
The Companies Act 2016 sets no minimum age for a shareholder. A shareholder under 18, though, may not be bound by a shareholders’ agreement.
The board of directors manages the company. Under the Companies Act 2016, in its text as at 1 August 2022, a private company needs at least one director.
That director must be a natural person aged at least 18 who ordinarily resides in Malaysia, with a principal place of residence here. Some people may not be a director at all: an undischarged bankrupt, a person convicted of certain offences, and a person the Court has disqualified.
The same individual can be both the only shareholder and the only director. So a single person can register a Sdn Bhd.
As the only director, they must ordinarily reside in Malaysia.
Every Sdn Bhd must appoint a qualified company secretary within 30 days of incorporation, and must keep one. A company secretary is the officer who keeps the company’s statutory records and filings in order and advises the board on what the Act requires of it.
Under the Companies Act 2016, a company secretary must be a natural person aged at least 18, and a citizen or permanent resident who ordinarily resides in Malaysia. The company secretary must also be either a member of one of the professional bodies the Act lists, or licensed by SSM.
Failing to appoint a company secretary is an offence, and the Act’s general penalty applies to it.
The Key Benefits and Disadvantages of Sdn Bhd Companies in Malaysia
A Sdn Bhd protects its owners, outlasts them and can bring in investors. It also costs more work and money to keep than an enterprise. The advantages:
- Limited liability and a separate legal entity: The company owns its assets and owes its own debts. A shareholder’s liability is limited to any amount unpaid on their shares.
- Continuity: The company continues to exist until it is removed from the register, whatever happens to its owners.
- Investors: An investor usually expects shares in return for their money. Only a company limited by shares can issue them. A company registered in Malaysia can also raise money through equity crowdfunding, if it is not an exempt private company.
- Small company tax rates: A qualifying Sdn Bhd pays 15% on its first RM150,000 of chargeable income and 17% on the next RM450,000. Above RM157,500 of chargeable income, those rates come to less tax than the personal scale. That comparison is before personal reliefs, and the profit still has to reach the owner as salary or dividends. The company also pays a company secretary and usually an auditor, and the rates have conditions. The section on how a Sdn Bhd is taxed, below, sets out the rates and their conditions.
- Larger clients and tenders: Some larger clients will only deal with a company. Some contracts and tenders are also open only to a company. Many banks and suppliers prefer to deal with a registered company. Anyone dealing with a Sdn Bhd can check it first, as one way to judge its credibility. SSM sells a company’s profile with its share capital, directors, shareholders and financial information, while SSM’s profile of a registered business (an enterprise) holds no financial information.
- Room to grow: New shareholders can join without the business changing hands. A company that needs to raise money from the public can convert into a public company, as the section on changing the company below explains.
The disadvantages:
- Compliance work: A Sdn Bhd must keep a company secretary and lodge filings with SSM every year. Its accounts must also be audited, unless the company qualifies for the audit exemption and elects it.
- Higher costs: A company costs more to set up and keep than an enterprise. The figures for Sdn Bhd setup and each year after are in the section on what a Sdn Bhd costs, below.
- The money is the company’s: The company’s money is its own. It can leave the company only as salary, fees or dividends, as the section on taking money out below explains.
- Public finances: The company’s financial affairs are open to the public, unless it is an exempt private company that lodges a certificate in place of its financial statements.
- A longer exit: A Sdn Bhd closes by striking off or by winding up. It does not close with one form, as an enterprise does.
- Limits to limited liability: Directors are personally liable, with the company, for unpaid Employees Provident Fund (EPF) contributions. Banks often ask the directors of a small company to guarantee its borrowing personally. The detail is under directors’ duties below.
How a Sdn Bhd Compares With an Enterprise, an LLP and a Berhad
A Sdn Bhd differs from a Berhad (Bhd) mainly in being private. A Berhad is a public company and may offer its shares to the public, while a Sdn Bhd may not. Unlike an enterprise, a Sdn Bhd is a separate legal entity that provides limited liability. Unlike an LLP, a Sdn Bhd is owned through shares rather than by partners.
| Sdn Bhd | Enterprise (sole proprietorship or partnership) | LLP | Berhad | |
|---|---|---|---|---|
| Legal entity and liability | Separate legal entity; liability limited to any amount unpaid on shares | Not a separate legal entity; unlimited liability that can reach the owner’s personal assets | Separate legal entity; limited liability | Separate legal entity; limited liability |
| Number of owners | One to 50 shareholders | One owner, or two to 20 partners | At least two partners, no maximum | At least one member, no maximum |
| Who may own it | Individuals or bodies corporate, foreigners included | Malaysian citizens or permanent residents aged 18 or over | Individuals or bodies corporate | Individuals or bodies corporate |
| Name ending | Sdn Bhd (Sendirian Berhad) | No legal ending; “Enterprise” in a trade name is not one | PLT. PLT stands for Perkongsian Liabiliti Terhad, which means limited liability partnership (LLP) in Malay | Berhad (Bhd) |
A public company is not necessarily listed on a stock exchange such as Bursa Malaysia.
Listing is a separate step that only some public companies take.
To weigh each of the business entities against your own business, our guide to choosing between a Sdn Bhd, an enterprise, a partnership and an LLP works through the full comparison.
Sdn Bhd or Enterprise: What Changes With a Private Limited Company Structure
In everyday speech, people use “business”, “enterprise” and “company” to mean any business. In law, a company is one registered under the Companies Act 2016. “Enterprise” is the common name for registered sole proprietorships or partnerships, and many entrepreneurs in Malaysia put it in their trade name. Unlike Sdn Bhd and PLT, “Enterprise” is not a legal ending. A business registered as a sole proprietorship or partnership is not a separate legal entity, and its owner’s liability is unlimited.
When a business becomes a Sdn Bhd, these things change for the owner:
- Debts: The debts the company runs up are its own, not the owner’s.
- Tax: The profit is taxed in the company, not as the owner’s own income.
- Money: The money belongs to the company, and it leaves only as salary, fees or dividends.
- Compliance: A company secretary, yearly filings with SSM and usually an audit take the place of renewing the business registration.
Only a Malaysian citizen or permanent resident aged 18 or over may register a sole proprietorship or partnership. SSM’s form for business registration in Malaysia accepts only a MyKad or MyPR number.
A foreigner who is not a permanent resident therefore has two routes to starting a business in Malaysia: a company, or an LLP. An LLP needs at least two partners, and a compliance officer who is a citizen or permanent resident of Malaysia and ordinarily resides here.
Who a Sdn Bhd Suits, and When to Incorporate a Sdn Bhd and Move to It
The Sdn Bhd structure suits a business that needs something an enterprise cannot give it:
- A business carrying risk or borrowing: Limited liability keeps the company’s debts its own. Directors are still personally liable for unpaid EPF contributions and for any guarantee they sign.
- A business bringing in partners or investors: An investor usually expects shares in return for their money, and a Sdn Bhd can issue them.
- A business bidding for larger clients and tenders: Some larger clients will only deal with a company. If your business is aiming for larger clients, it is better off as a Sdn Bhd. Some contracts and tenders are also open only to a company.
- A digital business seeking Malaysia Digital status: The Malaysia Digital Economy Corporation (MDEC) takes applications only from a company registered under the Companies Act 2016.
- A foreign entrepreneur: A company is the route for a founder starting alone, because only a Malaysian citizen or permanent resident may register a sole proprietorship or partnership, and an LLP needs at least two partners.
Running a small business as a Sdn Bhd may not be worth it if the business has modest profit and no staff.
For that business, the yearly cost of a company secretary, SSM’s filings and usually an audit can outweigh what the company adds.
The signs that it is time to move from an enterprise to a Sdn Bhd:
- Profit past RM157,500 of chargeable income: Above that point, the small company rates come to less tax than the personal scale.
- Clients or contracts that need a company: Some contracts and tenders are open only to a company, so winning bigger work can mean changing structure.
- Staff and borrowing: Taking on employees and debt raises what the owner stands to lose personally, because an enterprise’s unlimited liability can reach the owner’s personal assets.
You move an enterprise into a Sdn Bhd by registering a new company and moving the business across, because the law has no conversion from one form to the other. You then close the enterprise.
Contracts with customers and suppliers have to be transferred to the company or signed again in its name. Assets have to be sold or transferred to the company. The company also opens a bank account of its own.
These steps are needed because the business’s contracts, assets and bank account do not pass across by themselves. Staff move across by taking new employment contracts with the company, which registers as an employer in its own name.
Requirements for Sdn Bhd Registration: What an Entrepreneur Needs Before Applying
Before you register your Sdn Bhd, you need the people, the address, the name and the shares that the Companies Act 2016, in its text as at 1 August 2022, requires of a private company:
- A director: At least one, aged 18 or over, who ordinarily resides in Malaysia.
- A shareholder: At least one. The same person may be both director and shareholder.
- A registered office address: An address in Malaysia, open to the public during ordinary business hours.
- A company name: A name ending in Sdn Bhd.
- The shares: The class and number of shares each member takes.
- A company secretary: Not needed on the day you apply, but appointed within 30 days of registration.
The Companies Act 2016, in its text as at 1 August 2022, states no minimum paid-up capital.
Under section 14(3), your application names the class and number of shares each member takes, and no amount.
The company name must end in Sdn Bhd, or Sdn. Bhd. as the Act writes it. Before you apply, run an online company name search on the name you want, to check its availability.
SSM will not register a name identical to one already on its register, so every Sdn Bhd needs a unique company name.
SSM also refuses names it considers undesirable or misleading. It refuses names using restricted words too, unless the relevant authority approves. SSM confirms the name when it reviews the application.
The CRS application also asks for the information SSM passes to other agencies: whether the company will have employees, and its statement to the EPF.
For a body corporate shareholder, the application also asks for its consent letter.
The full document list is in our step-by-step guide to registering a Sdn Bhd.
A constitution is not a requirement.
Some guides still list a memorandum and articles of association among the registration documents, which is out of date.
Can a Foreigner Own a Sdn Bhd in Malaysia, and Does It Need a Local Director?
Foreigners may own up to all of a Sdn Bhd in most sectors. Some sectors, among them retail and distribution, financial services, education and healthcare, carry local equity, capital or licence conditions set by other authorities.
A foreign entrepreneur still needs one resident director, meaning a director who ordinarily resides in Malaysia. Under the Companies Act 2016, the residency requirement applies only to the minimum number of directors, which is one for a private company.
An alternate or substitute director does not count towards that minimum. A foreigner may be the company’s sole shareholder, and may sit on the board beside a director who ordinarily resides in Malaysia.
Under section 196(4) of the Act, a foreigner may be the sole director only if they ordinarily reside in Malaysia, with a principal place of residence here. The resident director therefore need not be Malaysian, only resident.
The company secretary must be a Malaysian citizen or permanent resident who ordinarily resides in Malaysia. A foreign founder therefore appoints a local company secretary within 30 days of registration.
Foreign ownership of 20% or less does not change a Sdn Bhd’s tax rate.
If foreign companies or non-citizens own more than 20% of a company, it loses the small company rates and pays 24%.
For more on registering as a foreigner, read our guide to registering a Sdn Bhd.
How to Register Sdn Bhd Companies: The Registration Process, SSM’s Fee and the Time It Takes
You can register a Sdn Bhd online, through SSM’s Corporate Registry System (CRS) on the SSM4U portal. A new user has to verify their identity once before reaching CRS. Have the details from the list of requirements above ready, then:
- Open an SSM4U account, or use the one you already have.
- If you are a new user registered with a MyKad, MyPR, MyKAS or MyTentera card, verify your identity in person, once, at an SSM counter or a Tap.it kiosk. If you are a new user registered as a foreign national, activate your account online instead.
- Apply in CRS with the company’s details.
- Pay SSM’s fee.
- Wait while SSM reviews the application.
- Receive the Notice of Registration once SSM registers the company.
- Buy the Certificate of Incorporation, which SSM does not issue automatically.
Some guides still send founders to MyCoID, SSM’s old system, which closed on 14 July 2026.
For the full company registration process, see our step-by-step guide to registering a Sdn Bhd.
Whoever prepares the registration documents, SSM charges RM1,000.00 for registering a Sendirian Berhad, plus RM10.00 for Supply of Corporation Information to Agencies.
SSM uses the RM10.00 to register the new company with other agencies, among them the Inland Revenue Board of Malaysia (LHDN) and the EPF.
SSM’s own review of a registration application typically takes one business day. On the route through a company secretary, it takes about three days to go from submitting your information to holding a Certificate of Incorporation.
If you register your company yourself, add the time it takes to open an SSM4U account and, as a new user, to verify your identity. These are typical times, not guaranteed ones.
You do not need professional help to register a Sdn Bhd, because registering it yourself and using a company secretary lead to the same registration.
On the company secretary route, a licensed company secretary can also prepare and lodge the registration documents for you. For that, you pay a one-time agent fee on top of SSM’s fee.
Every Sdn Bhd must appoint a company secretary within 30 days of registration anyway. You can bring the appointment of a company secretary forward to before you apply and have the secretary handle the registration.
For a first-time founder, Altomate’s Company Secretary & Incorporation package is one example of the company secretary route. The package pairs registration with the Essential Company Secretary Plan, the company secretary plan Altomate recommends. That plan is open to locals and foreigners alike.
Through the Altomate app, registration under the package costs RM1,399 one-time. That is SSM’s fee of RM1,000.00 plus RM10.00 and an agent fee of RM389, which also covers SSM’s RM20.00 fee for the Certificate of Incorporation.
The Essential plan costs RM100 a month, billed annually at RM1,296 including tax. It runs on a two-year contract with a RM1,000 early termination charge.
On this route, you do not need an SSM4U account or a counter visit, because Altomate prepares the registration documents and lodges them for you. SSM registers the company.
Altomate’s company secretaries are members of the Malaysian Association of Company Secretaries (MACS) and hold practising certificates from SSM. The package is set out on registering a Sdn Bhd with Altomate.
The Costs for Sdn Bhd Companies to Set Up and Keep Each Year
Setting up a Sdn Bhd costs SSM’s registration fee once, then the company pays SSM’s filing fees and professional fees every year. SSM charges a private company RM150.00 for its Annual Return each year, and RM50.00 to lodge audited financial statements, or RM20.00 for non-audited ones.
Professional fees, such as those of a company secretary and auditor, come on top of what SSM charges. A company secretary typically costs about RM600 to RM2,000 a year.
A registered office address typically costs about RM300 to RM1,200 a year. Audit and accounting typically cost about RM2,000 to RM5,000 a year, rising with the company’s size and the number of its transactions.
Most companies also pay a tax agent or an accountant to prepare their tax return.
A tax agent’s fee depends on how complex the company’s affairs are.
| Cost | First year | Each year after |
|---|---|---|
| SSM registration fee | RM1,000.00 plus RM10.00 | None |
| SSM Annual Return | Not yet due | RM150.00 |
| SSM fee to lodge financial statements | Usually not yet due | RM50.00 audited, or RM20.00 non-audited |
| Company secretary | About RM600 to RM2,000 | About RM600 to RM2,000 |
| Registered office address | About RM300 to RM1,200 | About RM300 to RM1,200 |
| Audit and accounting | About RM2,000 to RM5,000 | About RM2,000 to RM5,000 |
| Total | About RM3,900 to RM9,200 | About RM3,070 to RM8,400 |
A sole proprietorship or partnership that pays a professional at all usually pays only for help with the owner’s own tax return.
As an example for budgeting, Altomate’s three company secretary plans cost RM40, RM100 or RM180 a month, billed annually, on a two-year contract. Altomate’s company secretarial service includes a registered office address at no extra charge.
On top of each plan’s price, you pay any SSM fees, audit and accounting that the plan does not cover.
For more on what registering costs, read our step-by-step guide to registering a Sdn Bhd.
Opening a Corporate Bank Account After You Incorporate Your Sdn Bhd
A Sdn Bhd needs a bank account in its own name, because a company is a separate legal entity. The company’s money is the company’s own, so its receipts and payments cannot run through a personal account.
The requirements a bank sets differ from bank to bank.
Public Bank, as one example, asks for an introducer, and for certified copies of documents that include the Certificate of Incorporation.
Banks and government institutions require the Certificate of Incorporation as proof that a company exists. They do not accept the Notice of Registration in its place.
SSM issues the Certificate of Incorporation only when the company applies for it and pays the fee.
Banks often ask a foreign-owned company for more documents, such as those on its foreign shareholders and the people who ultimately own it.
For more on opening a business bank account, read our guide to starting a small business in Malaysia.
What a New Sdn Bhd Sets Up After Incorporation, Before It Starts Trading
A new Sdn Bhd gets its tax identification number (TIN) without applying for it. A company that is dormant or has not started business must still register with LHDN and submit Form E.
You cannot always begin operating as soon as the Sdn Bhd is registered.
Registering with SSM does not replace a licence, permit or approval. If the business needs one, it must come from the authority for the activity before the business starts trading.
A qualifying new company does not have to file a tax estimate with LHDN for the year of assessment in which it starts operating, or the year after.
To qualify, the company must meet all of these conditions:
- Residence and incorporation: The company is resident and incorporated in Malaysia.
- Capital: Its paid-up ordinary capital is RM2,500,000 or less.
- Ownership: The ownership cases in which a company loses the small company rates do not apply to it. The section on how a Sdn Bhd is taxed, below, lists them.
Any other new company whose first basis period is at least six months files its first estimate, e-CP204, within three months of starting operations. Its monthly instalments begin in the sixth month of the basis period.
Sdn Bhd incorporation already covers some of what a new company owes other agencies, through the RM10.00 charge above.
Once the company hires, registering as an employer is still its own step, which the next section covers.
For more on the tax number and on licences and permits, read our guide to starting a small business.
Registering as an Employer When the Company Hires
A Sdn Bhd with one or more employees registers as an employer with the Social Security Organisation (SOCSO, also known as PERKESO). The company contributes to SOCSO for social security and employment insurance.
The company also registers with the Employees Provident Fund (EPF). The deadline is the end of the first week of the first month in which the company pays wages that attract contributions. Failing to register is an offence.
A director who draws a salary from their own Sdn Bhd is generally treated as the company’s employee for EPF. The company therefore registers and contributes for them.
When SST and E-Invoicing Apply
A Sdn Bhd registers for sales tax or service tax (SST) with the Royal Malaysian Customs Department once the value of its taxable sales over 12 months passes the threshold for what it sells.
E-invoicing is phased in according to annual turnover. A taxpayer with annual turnover or revenue of less than RM3,000,000 is exempt.
LHDN’s e-invoicing page, last updated on 30 August 2026, sets out the phases. The last phase began on 1 January 2026, for turnover up to RM5 million.
What Must a Sdn Bhd Do Every Year to Meet Its Compliance Requirements?
Every year, a Sdn Bhd lodges its Annual Return and its financial statements with SSM, keeps its records and registered office in order, and handles its tax with LHDN. Each duty has its own deadline:
- Annual Return: The company lodges it within 30 days of each anniversary of its registration, through the Malaysian Business Reporting System (MBRS), not CRS. A company that fails to lodge an Annual Return for three or more consecutive years may be struck off.
- Financial statements: The company prepares them to approved accounting standards and circulates them to members within six months of the financial year end (FYE). It then lodges them with SSM within 30 days of circulating them.
- Accounting records: The company makes entries within 60 days of each transaction, and keeps the records for seven years after the transactions are completed.
- Registered office and company secretary: The registered office stays open to the public during ordinary business hours, and the company notifies SSM of a change of address within 14 days. The company also keeps a qualified company secretary.
- Tax: Every company submits Form E to LHDN, including a dormant one. The company also files its own income tax return, Form C, with LHDN within seven months of its FYE. It submits its tax estimate for each year of assessment, CP204, at least 30 days before the basis period begins. It then pays the estimate in monthly instalments.
A Sdn Bhd also keeps statutory registers, among them its register of members, its register of directors, managers and secretaries, and a register of the charges over its assets.
For more on what each business structure keeps doing once registered, read our guide to starting a small business.
Audit, and When a Sdn Bhd Can Be Exempt From It
A Sdn Bhd’s accounts are audited by default, but a small company within the limits below can choose to be exempt. Under the Companies Act 2016, a private company appoints an auditor for each financial year. The board appoints the first auditor at least 30 days before the deadline for the company’s first financial statements.
SSM’s FAQ on audit exemption, updated 19 May 2026, treats the exemption as a choice that needs no application. The company assesses its own eligibility under Practice Directive 10/2024.
To qualify, a private company stays within at least two of three limits, on revenue, total assets and full-time employees. The test covers the current financial year and the two before it, and the current phase’s limits apply to all three years. A new company that is not dormant cannot elect audit exemption until it has two past financial years to test against the limits.
The limits rise in three phases, set by the date the financial period starts. Full-time employees are counted at the end of each financial year. The 2027 limits stay unchanged unless the Registrar reviews them.
| Financial period starting | Revenue | Total assets | Full-time employees |
|---|---|---|---|
| 1 January 2025 to 31 December 2025 | RM1,000,000 | RM1,000,000 | 10 |
| 1 January 2026 to 31 December 2026 | RM2,000,000 | RM2,000,000 | 20 |
| On or after 1 January 2027 | RM3,000,000 | RM3,000,000 | 30 |
A company that elects audit exemption still prepares and circulates its financial statements.
Within 30 days of circulation, it lodges its unaudited financial statements with SSM, along with a directors’ report and a certificate signed by a director. That certificate is a different document from the EPC certificate, which an exempt private company may lodge in place of its financial statements.
Three kinds of company cannot elect audit exemption:
- a private company that is a subsidiary of a public company, or is jointly controlled by one
- an exempt private company that lodges the EPC certificate
- a foreign company
A company that qualifies for exemption can still need an audit.
The exemption does not apply where another law, requirement or third-party obligation requires audited financial statements.
How a Sdn Bhd Is Taxed
A Sdn Bhd pays income tax on its own chargeable income, and a qualifying smaller company pays lower corporate tax rates on its first RM600,000. Under the Income Tax Act 1967, in its text as at 1 November 2023, a company qualifies for the lower rates if it is resident and incorporated in Malaysia. It also needs paid-up ordinary capital of RM2,500,000 or less, and gross business income of no more than RM50,000,000. Such a company pays 15% on its first RM150,000 of chargeable income, 17% on the next RM450,000 and 24% above RM600,000. Other companies pay 24%.
A company loses the small company rates in any of these cases:
- A large company owns it: A related company with more than RM2,500,000 of paid-up capital owns more than 50% of it.
- It owns a large company: It owns more than 50% of a related company with more than RM2,500,000 of paid-up capital.
- A third company owns both: A third company owns more than 50% of both it and a related company with more than RM2,500,000 of paid-up capital.
- Foreign ownership: Foreign companies or non-citizens own more than 20% of it.
Under LHDN’s Public Ruling No. 8/2025, an investment holding company (IHC) that is not listed on Bursa Malaysia does not qualify for the small company rates, and pays 24%.
For more on what each business structure pays in tax, read our guide to starting a small business.
Taking Money Out of a Sdn Bhd: Salary, Director’s Fee or Dividend
Money leaves a Sdn Bhd as a salary, a director’s fee or a dividend. The owner cannot simply draw on the company’s account, because the company’s money is the company’s own.
A salary or a director’s fee is taxed as the owner’s own income, on the personal scale.
A director who draws a salary, the owner included, is generally treated as the company’s employee for EPF. The company therefore registers and contributes for them, as the section on registering as an employer above sets out.
When paid to an individual, dividends of RM100,000 or less in a year are exempt.
Above RM100,000, from the year of assessment 2025, the individual pays tax at 2% on the chargeable income in respect of the dividend.
A Sdn Bhd may not lend money to its own director or to a director of a related company. It also may not guarantee or secure a loan that someone else makes to such a director.
An exempt private company is not bound by this rule. Some loans, such as one to meet expenses incurred for the company, are allowed only with the company’s prior approval by resolution.
For more on paying yourself, read our guide to starting a small business in Malaysia.
Directors’ Duties, and Where Limited Liability Stops
A director of a Sdn Bhd must exercise their powers for a proper purpose and in good faith in the best interest of the company, with reasonable care, skill and diligence. Under the Companies Act 2016, in its text as at 1 August 2022, a director who breaches either duty commits an offence. The offence carries up to five years’ imprisonment, a fine of up to RM3,000,000, or both.
Limited liability protects a shareholder, but a director can still be personally liable in these cases:
- Unpaid EPF contributions: Where a company leaves EPF contributions unpaid, its directors are jointly and severally liable with the company for them. Those directors include anyone who was a director while the contributions fell due.
- Personal guarantees: Banks often ask the directors of a small company to guarantee its borrowing personally. A director who signs a personal guarantee is liable under it whatever the company’s structure.
- A loan made without approval: Directors who authorise a loan to a director without the approval the Act requires are jointly and severally liable to indemnify the company against any loss.
Offences and late filings carry their own consequences:
- No company secretary within 30 days: Failing to appoint one is an offence, and the Act’s general penalty applies. For an individual, that penalty is a fine of up to RM50,000, imprisonment of up to three years, or both. For anyone else, it is a fine of up to RM50,000.
- Late lodgement: SSM can also impose late lodgement penalties or compounds on an Annual Return or financial statements lodged after the deadline.
Mixing personal and company money cuts across the separation the company rests on.
In practice, mixed accounts make company records harder to keep.
Grants, Financing and Incentives for Business Growth in Malaysia That a Sdn Bhd Can Apply For
Support for a Sdn Bhd comes through several agencies and lenders rather than a single list. SME Corporation Malaysia coordinates development programmes from many ministries and agencies. It also keeps four financing lists: loan schemes, grant schemes, venture capital and guarantee schemes.
Malaysia’s main tax incentives come in two kinds: an income tax exemption (Pioneer Status or Income Tax Exemption), and the Investment Tax Allowance on capital spending. A company takes one or the other.
The Malaysian Investment Development Authority (MIDA) says the company applies before it starts operating.
For more on funding and government help, read our guide to starting a small business in Malaysia.
Bringing In Shareholders, Selling Shares and Changing the Company
A Sdn Bhd brings in an investor by issuing new shares, or an existing shareholder can transfer their shares to the investor. The investor’s stake is set by the shares they hold. A private company must restrict the transfer of its shares, so a sale follows the company’s own rules. Issuing new shares generally needs the shareholders’ approval by resolution. The company then lodges a return of the allotment with SSM. After a transfer, the company notifies SSM of the change.
A private company may convert into a public company by special resolution and a notice to the Registrar, lodging a statement in lieu of prospectus and a statutory declaration. A Sdn Bhd cannot be listed as it is, because listing on Bursa Malaysia is a separate step that only some public companies take.
A private company may also convert into a limited liability partnership (LLP), if its shareholders become all of the LLP’s partners and its assets carry no security interest.
No route turns a Sdn Bhd into a sole proprietorship directly: the owner registers a business and closes the company separately.
Closing a Sdn Bhd, or Keeping It Dormant
A Sdn Bhd closes by being struck off the register or by being wound up. SSM accepts an application to strike a company off only if:
- the members have resolved to apply
- the company has no assets and no liabilities
- it has no outstanding charges, penalties, compounds or tax, with a tax clearance obtained if it has operated
- its records at SSM are up to date
- it is in no legal proceedings
- it has made no return of capital to its shareholders
- it is not a holding company
- it is not a guarantor corporation
A company cannot apply to be struck off if its last audited financial statements show a dividend declared or paid.
The company applies through CRS, for a fee of RM100.00.
The Registrar gives the company 30 days’ notice, publishes a notification, and may strike it off 30 days after that. Anyone may object within 30 days from the date the Registrar’s notice gives, including an unpaid creditor.
After striking off, the liability of every director, officer and member continues.
Keeping a Sdn Bhd dormant is the alternative to closing it, but dormancy does not stop the compliance work.
A dormant company still registers with LHDN, submits Form E and lodges its Annual Return. A dormant Sdn Bhd therefore still pays SSM’s yearly fees and still keeps its company secretary.
Closing the company also means closing its other registrations and its bank account:
- SST: A company registered for service tax or sales tax notifies the Director General of Customs in writing within 30 days of the date it stops providing taxable services or manufacturing taxable goods. It also submits a final return and pays the tax due within 30 days of stopping. Failing to notify is an offence.
- SOCSO: An employer notifies SOCSO that it has stopped being an employer.
- The bank account: The company also needs to close its bank account.
Frequently Asked Questions About Sdn Bhds
Is RM1 Paid-Up Capital Enough for a Sdn Bhd?
RM1 is enough under the Companies Act 2016, which sets no minimum paid-up capital. Some approvals set their own minimum.
Does a Sdn Bhd Renew Its Company Registration With Suruhanjaya Syarikat Malaysia (SSM) Every Year?
A Sdn Bhd does not renew its registration. An enterprise renews its business registration, while a Sdn Bhd lodges an Annual Return with SSM each year instead.
Can a Sdn Bhd Change Its Company Name?
A Sdn Bhd can change its name by special resolution. It then notifies the Registrar within 30 days.
Is a Sdn Bhd an SME?
A Sdn Bhd is a small and medium enterprise (SME) if it falls within SME Corporation Malaysia’s limits for its sector and is not excluded. Under the definition in effect since 1 January 2014, a manufacturer qualifies with sales turnover of no more than RM50 million or no more than 200 full-time employees. A business in services or another sector qualifies with sales turnover of no more than RM20 million or no more than 75 full-time employees.
Deciding Whether to Register a Sdn Bhd for Your Business in Malaysia
A Sdn Bhd gives a business its own legal identity and limited liability. In return, the business pays for a company secretary, yearly filings with SSM and usually an audit, with professional fees on top of what SSM charges. The decision turns on whether the things a company lets your business do are worth that yearly cost. Our guide to choosing between a Sdn Bhd, an enterprise, a partnership and an LLP sets the options side by side.
