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Sdn Bhd stands for Sendirian Berhad, the ending the Companies Act 2016 gives every private company limited by shares. The Act keeps “Sendirian” for companies that meet the private company rules and “Berhad” for companies incorporated with limited liability, so a Sdn Bhd is the Malaysian private limited company, while a name ending in Berhad alone belongs to a public company. It is the form the rest of this guide is about, and the one we form and sell ready-made.
Foreign owners set up a Sdn Bhd for three broad purposes: to manufacture, in a sector open to 100% foreign ownership of new projects since June 2003; to sell goods and services to customers in Malaysia; and to run regional service operations. Doing business in Malaysia through a Sdn Bhd means dealing with the Companies Commission of Malaysia (SSM) for the company and the Inland Revenue Board (LHDN) for income tax. Labuan, a federal territory of Malaysia, runs a separate offshore regime with its own laws and its own regulator, set out in our Labuan company guide; this guide covers the onshore company.
| Form | Registered with | Typical use |
|---|---|---|
| Sdn Bhd, private company limited by shares | SSM | Trading, services and manufacturing; one to fifty shareholders |
| Berhad, public company limited by shares | SSM | Companies that offer shares to the public; at least two directors |
| Company limited by guarantee | SSM | Non-profit bodies; always a public company |
| Limited liability partnership (PLT) | SSM | Professional and smaller partnerships; two or more partners and a compliance officer who is a citizen or permanent resident |
| Registered foreign company | SSM | A foreign company trading in its own name, with an agent in Malaysia |
| Sole proprietorship or partnership | SSM, through EzBiz | Malaysian citizens and permanent residents only |
| Labuan company | Labuan FSA | The separate offshore regime under the Labuan Companies Act 1990 |
The officers, documents and SSM procedure for a new company are on company formation in Malaysia.
| Tax | Position in 2026 |
|---|---|
| Corporate income tax | 24% for resident and non-resident companies, on income accruing in or derived from Malaysia |
| SME rates | 15% on the first RM150,000 and 17% up to RM600,000, for companies with paid-up capital of up to RM2.5 million, gross business income of up to RM50 million and no more than 20% foreign ownership |
| Sales tax | 5% or 10% on taxable goods made by registered manufacturers or imported |
| Service tax | 8%, with 6% for food and beverage, telecommunications, parking, logistics, construction work, private healthcare and private education |
| Dividends | Single-tier system: exempt for the shareholder, with no withholding tax |
| Payments to non-residents | 15% on interest, 10% on royalties and on services performed in Malaysia, unless a treaty lowers them |
| Capital gains | 10% of the net gain when a company sells unlisted Malaysian shares |
| Large multinational groups | 15% domestic minimum top-up tax for financial years starting on or after 1 January 2025 |
SST is not one tax but two, both administered by the Royal Malaysian Customs Department: sales tax on goods and service tax on listed services, each with its own registration once taxable sales or services pass RM500,000 in twelve months, and higher thresholds for some services. The SME condition is the line foreign owners notice most: with more than 20% foreign ownership, a company pays the full 24% on all its chargeable income.
Ownership is open. Shareholders may be individuals or companies of any nationality, and MIDA, the investment authority, states that the Companies Act imposes no equity conditions. Limits come from sector approvals instead, for example the domestic trade ministry’s guidelines on foreign participation in distributive trade, which require its approval and a Bumiputera director.
Management needs two people based in Malaysia. At least one director must have a principal place of residence there, whatever their nationality, and the company secretary must be a Malaysian citizen or permanent resident living in Malaysia, qualified through a professional body or an SSM licence. Singapore, too, requires a director resident locally, as our Singapore company guide describes. Where you have neither person, we can arrange both, and a nominee shareholder if wanted, through an SSM-registered company secretary, which is a reporting institution under the anti-money laundering law for these roles; a nominee director keeps the full statutory duties of a director, including the duty not to subordinate the company to the nominator, and the real owners appear as beneficial owners in the company’s own register and in SSM’s records.
Since 1 April 2024 every company has kept a register of beneficial owners, the natural persons who ultimately own or control it, lodges the information with SSM and reports changes within 14 days. Under the Act a nominee is never a beneficial owner, and SSM does not accept a company in that role.
For exchange control a Sdn Bhd is a Malaysian resident whoever its shareholders are. Bank Negara Malaysia lets non-residents invest, open ringgit or foreign currency accounts with licensed onshore banks and repatriate profits and dividends in foreign currency, subject to the bank’s normal due diligence. What each bank asks of a foreign-owned company, and whether directors must attend, is the bank’s own policy; which banks open accounts for Malaysian companies is covered on bank accounts for Malaysian companies.
Form a new company when you want to choose the name, the constitution and the shareholding from the start. SSM’s client charter states that an incorporation is processed within one working day. The steps are on company formation in Malaysia.
Buy a ready-made company when an earlier date of incorporation, a record of lodged annual returns or a company that exists today matters more than choosing those details. The purchase works through a stamped share transfer and new notices to SSM, set out on shelf companies in Malaysia, and our guide to off-the-shelf companies explains the concept.
We form new Sdn Bhds and supply ready-made ones, prepare the incorporation or share transfer papers and the lodgements with SSM, and help assemble the bank application. Where we have a working contact at a suitable bank we can introduce you; the bank takes its own decision.
Sdn Bhd is short for Sendirian Berhad. Under the Companies Act 2016 a private company’s name must end with “Sendirian Berhad” or “Sdn. Bhd.”, “Sendirian” being reserved for companies that meet the private company rules and “Berhad” for companies with limited liability. In English it is a private limited company: at most fifty shareholders, restricted share transfers and no offers of shares to the public.
SST is Malaysia’s sales and service tax. Sales tax is charged at 5% or 10% on taxable goods made by registered manufacturers or imported. Service tax applies to listed services provided in Malaysia by registered businesses, at 8% generally and 6% for services such as food and beverage, telecommunications, logistics and construction work. Businesses register once taxable sales or services pass RM500,000 in twelve months, with higher thresholds for some services.
It is 24% for resident and non-resident companies. Small and medium companies with paid-up capital of RM2.5 million or less and gross business income up to RM50 million pay 15% on the first RM150,000 and 17% up to RM600,000, but only if no more than 20% of their paid-up capital is foreign-owned. Large multinational groups also face a 15% domestic minimum top-up tax.
A Sdn Bhd is a private company: one to fifty shareholders, restricted share transfers, no public offers of shares, and a single director allowed. A Berhad is a public company: it may offer shares to the public, is not held to fifty shareholders and needs at least two directors, both counted for the residence rule. A company limited by guarantee is always a Berhad.
No. A Labuan company is formed under the Labuan Companies Act 1990 and falls under Labuan FSA, the authority overseeing the Labuan IBFC, while a Sdn Bhd is formed under the Companies Act 2016 and registered with SSM. Different laws and a different regulator apply, so the choice depends on where and with whom the business is done. Our Labuan company guide explains the offshore side; this guide covers the onshore company.
Weighing Malaysia against Singapore, Labuan or another base in the region? Tell us what the company will do and where its customers are, and we will say whether a Sdn Bhd suits it and whether a ready-made one is available now. Telegram and WhatsApp work too, on +48 663 247 166.