How Sdn Bhd Can Protect You From Partnership Fall Out

Starting a business partnership can be an exciting venture, but it also comes with inherent risks. Partnership fallout, which refers to disputes, disagreements, or the dissolution of a partnership, can have significant implications for the involved parties. In Malaysia, one effective way to protect yourself from partnership fallout is by establishing a private limited company, known as a Sendirian Berhad (Sdn Bhd).

Sdn. Bhd. company may be considered as a more professional/legitimate entity than a sole proprietorship, conventional partnership, or limited liability partnership.It is advisable to consult legal professionals or industry experts for precise and up-to-date information on legal matters and business structures in Malaysia.

Introduction to Sdn Bhd and Partnership (LLP)

Are you worried about the risk of a partnership falling apart? Well, worry no more because Sdn. Bhd. (limited liability partnership) can help protect you! When you form a business partnership with someone, it's important to have safeguards in place. A partnership agreement created by business entity Sdn. Bhd. is a legal document that outlines each partner's rights and responsibilities. This way, if things go wrong, everyone knows what to expect.

Sdn. Bhd. company in Malaysia is a type of private limited company that offers protection for its shareholders. This means that if something goes wrong with your partnership, you won't be personally liable for any debts or legal issues that arise. By forming a  Sdn. Bhd. business entities you can also ensure that your business is set up in a way that allows for clear decision-making and protects everyone's interests. You'll have a formal structure in place that outlines how decisions are made and who has control over different aspects of the business.

A Limited Liability Partnership (LLP) is a unique business structures that combines the benefits of a partnership and a limited liability company. It provides a flexible and efficient way for professionals and entrepreneurs to run their businesses while limiting personal liability and personal income.

Have you considered converting your sole proprietorship to a Sdn Bhd (limited liability partnership)? This can help prevent disputes between partners, as everyone will know what their role is and what they're responsible for. And if there are disagreements, there will be a clear process in place for resolving them without causing too much disruption to the business.

Overall, forming a Sdn. Bhd. business entities in Malaysia is a smart move if you want to protect yourself from potential fall out with your business partner. It may require some extra effort upfront, but the peace of mind that comes with knowing your interests are protected is well worth it.

Advantages of Operating as a Sdn Bhd

1. Can raise additional capital 

One of the key advantages of a Sdn. Bhd. (private limited company) company structure is its ability to raise additional capital by issuing new shares to investors.  Sdn. Bhd. has the opportunity to raise more money by selling new shares to a brand-new investor! This will help them grow and achieve even bigger goals in the future. But wait, before they can do this, they need to make sure they follow all the rules that are in place for situations like this. 

By doing so, Sdn. Bhd. can ensure that everything is fair and above board, which will give their investors confidence that their investment is in good hands. Overall, issuing new shares is a smart move, as long as they stay within the guidelines and continue to work hard towards success. Sdn. Bhd. as private limited company also can raise capital through equity financing, which involves selling ownership shares or stocks to investors. By issuing new shares, the company can generate funds to finance its expansion, research and development, acquisitions, or other business activities and lialise with the company secretary.

The ability to issue new shares makes the Sdn. Bhd. business structure an attractive option for investors. Investors are more likely to invest in a company that offers the opportunity for equity participation and potential returns on their investment. This can help the company attract new investors and expand its shareholder base.

When issuing new shares, must comply with relevant regulations and requirements set by the regulatory authorities such as SSM (Suruhanjaya Syarikat Malaysia). This ensures transparency, fairness, and proper governance in the share issuance process.

2. Can continue to operate business

Advantages of a Sdn. Bhd. business structure is its ability to continue operating even if shareholders sell their shares. This feature allows for a smoother transition within the business. In a Sdn. Bhd., the company's ownership is represented by shares held by individual shareholders. Each share represents a portion of ownership in the company.

Shares in a Sdn. Bhd. are transferable, meaning they can be bought and sold by shareholders. When a shareholder decides to sell their shares, they can transfer them to a new owner through a legally documented process. The business is not dependent on the specific individuals who hold shares at any given time. This provides for a more seamless transition when the ownership structure changes.

The day-to-day management and operations of a Sdn. Bhd. (private limited company) are typically carried out by directors and appointed officers. Even if there are changes in the business structure, the management team can remain in place, ensuring the business continues to operate smoothly.

3. Clear ownership structure 

Clear ownership structure provide a clarity and transparency regarding the shareholder's stake. In a Sdn. Bhd., the company's ownership is divided into shares, which represent ownership stakes held by individual shareholders. The number of shares owned by each shareholder determines their proportionate ownership in the company. 

The ownership structure of a business type Sdn. Bhd. (private limited company) ensures that the extent of each shareholder's stake in the company is clear and well-defined. Shareholders can easily determine their rights, entitlements, and voting power based on their shareholding percentage. 

The ownership structure of a private limited company facilitates transparent decision-making processes. Shareholders have voting rights corresponding to their shareholding, allowing them to participate in important decisions that affect the company's direction and operations. This transparency promotes accountability and ensures that major decisions are made collectively and in the best interest of the company.

By providing a clear ownership structure, a Sdn. Bhd. promotes transparency, accountability, and investor confidence. It enables shareholders to understand their rights and responsibilities and ensures that decision-making processes are fair and inclusive. This clarity in ownership fosters a conducive business environment and facilitates growth and stability for the company.

4. Shareholder liability is limited

Shareholder liability is limited to the amount that they have invested personal assets are generally protected if the company faces a financial dificulties. In a Sdn. Bhd., shareholders enjoy limited liability, which means that their personal assets are separate from the company's assets we called as separate legal entity. Shareholders are only liable to the extent of their investment in the company, typically the amount they have paid for their shares. 

This provides a significant level of protection for shareholders' personal assets. The liability of the company is limited to its assets, separate legal entity from the personal assets of the shareholders. This means that the business's obligations and debts are not tied to the individual shareholders and business owners. As a result, even if shareholders change, the company's liability remains as separate legal entity and does not affect its operations. 

The limited liability protection of shareholders also contributes to the stability and continuity of the business. If a shareholder leaves the company or sells their shares, the business can continue without disruption. The departure or change in ownership does not impact the company's ongoing operations or its ability to fulfill its obligations. 

Additionally, directors and officers of the company may have certain responsibilities and liabilities under the law. By providing separate legal entity to shareholders, a Sdn. Bhd. (private limited company) offers an attractive structure for entrepreneurs and investors. It protects personal assets of the business owner, encourages business growth, business structure and provides a level of financial security in the face of potential challenges or financial difficulties.


Operating as a private limited company, also known as Sdn Bhd, can provide crucial protection for your business against partnership fallout. By establishing an Sdn Bhd, you benefit from limited liability, clear ownership and control, ease of transition and succession, enhanced credibility, and increased confidentiality. These safeguards shield your personal assets, mitigate conflicts, ensure smoother business continuity, open up new opportunities, and protect sensitive information and all the regulatory documents by SSM (Suruhanjaya Syarikat Malaysia). Choosing Sdn Bhd as your business structure fortifies you against potential risks and positions your business for long-term success. By opting for the protection and structure of an Sdn Bhd, you can fortify your business against partnership fallout and ensure a more secure and resilient future.

Subscribe accounting, bookkeeping, taxation service from Altomate, contact

Things to prepare after you incorporate company in Malaysia

Things to prepare after you incorporate company in Malaysia

The incorporation process of a Company (“Sdn Bhd”) in Malaysia is straight forward and simple. But there are few important things that you need to do before you growing your business
Things to Think About When Setting Up a Company

Things to Think About When Setting Up a Company

Setting up a Company is simple. But there are some things you need to understand and think about before you set it up, especially when you partner with others.
Company Corporate Compliance MY

Company Corporate Compliance MY

To learn more about the corporate compliance requirements and responsibilities of a Company in Malaysia under Companies Act 2016


If you're looking to form an Sdn. Bhd. in Malaysia, or have any other questions on starting your business, contact the team at Altomate.

We're here to answer any questions, provide resources, and give you the exact answers you need to get your business to the next level. We thank you for reading this article and hope it gave you some new thoughts and business ideas to move forward with. Click here for common questions in Company Incorporation FAQ.