TYPES OF BUSINESS ENTITIES IN MALAYSIA
Sole Proprietorship
A sole proprietorship is the simplest and cheapest to set-up. Unlike private limited companies, a sole proprietorship is only required to pay an annual fee to the Companies Commission of Malaysia to keep its business renewed from year to year. There is no audit and annual filing requirement. However, the danger of this set-up is that it has unlimited liability. That is to say that if the sole proprietorship cannot meet its liabilities, the creditors may go after the owner’s personal assets. There is no protection to the owner’s personal assets. There is no separation between the owner and its personal assets.
Partnership
Partnership is the same as sole proprietorship except there are more than 1 owner. It is an extended version of a sole proprietorship. This form of set-up is usually for professional firms such as lawyers and auditors.
Limited Liability Partnership (LLP)
LLP is a hybrid between a private limited company and partnership. It is similar to conventional partnership but with the advantages of a private limited company. Set out below are the salient features of LLP:
Private Limited Company (Sdn Bhd)
Private Limited Company is the most common form of companies in Malaysia. Check out here for the benefits of a Sdn Bhd.
You may see the comparison between a Sdn Bhd and a LLP here.
Public Limited Company (Berhad)
Without going into too much detail, for the purpose of this website, suffice to say that a public limited company (Berhad) is rather similar to private limited companies except that it may offer its shares to the public and has more than 50 members. Although not necessarily so, public limited companies are usually listed companies.
Company Limited by Guarantee
As company limited by guarantee, the liability of its members is limited to the amount which the members have undertaken or guaranteed to contribute. A company limited by guarantee is usually the type of entity used by non-profit organizations such as charitable bodies, foundations etc.
foreign company
Foreign Company/ Foreign Branch
Find out more here
Regional Office/ Representative Office
Find out more here
Sole Proprietorship
A sole proprietorship is the simplest and cheapest to set-up. Unlike private limited companies, a sole proprietorship is only required to pay an annual fee to the Companies Commission of Malaysia to keep its business renewed from year to year. There is no audit and annual filing requirement. However, the danger of this set-up is that it has unlimited liability. That is to say that if the sole proprietorship cannot meet its liabilities, the creditors may go after the owner’s personal assets. There is no protection to the owner’s personal assets. There is no separation between the owner and its personal assets.
Partnership
Partnership is the same as sole proprietorship except there are more than 1 owner. It is an extended version of a sole proprietorship. This form of set-up is usually for professional firms such as lawyers and auditors.
Limited Liability Partnership (LLP)
LLP is a hybrid between a private limited company and partnership. It is similar to conventional partnership but with the advantages of a private limited company. Set out below are the salient features of LLP:
- It is body corporate and is a separate legal entity from its partners.
- LLP has perpetual succession.
- It is capable of suing and being sued, acquiring, owning, holding and developing or disposing of property.
- LLP has lesser compliance requirements and is therefore a more affordable business vehicle. For example, LLP is not required to audit its accounts annually.
Private Limited Company (Sdn Bhd)
Private Limited Company is the most common form of companies in Malaysia. Check out here for the benefits of a Sdn Bhd.
You may see the comparison between a Sdn Bhd and a LLP here.
Public Limited Company (Berhad)
Without going into too much detail, for the purpose of this website, suffice to say that a public limited company (Berhad) is rather similar to private limited companies except that it may offer its shares to the public and has more than 50 members. Although not necessarily so, public limited companies are usually listed companies.
Company Limited by Guarantee
As company limited by guarantee, the liability of its members is limited to the amount which the members have undertaken or guaranteed to contribute. A company limited by guarantee is usually the type of entity used by non-profit organizations such as charitable bodies, foundations etc.
foreign company
Foreign Company/ Foreign Branch
Find out more here
Regional Office/ Representative Office
Find out more here