Are clients bypassing you because of your size? Are you ineligible to bid for many contracts because your business is not incorporated with Suruhanjaya Syarikat Malaysia (SSM/formerly ROC)? If so, you may want to consider incorporating a company with Sendirian Berhad status.

Even if you are newly starting a business, you should carefully evaluate your products and clientele to decide if it may not be better to go straight to Sendirian Berhad status than starting with a sole proprietor or partnership.

No doubt a sole proprietor or partnership is easier to handle in terms of administration and may work out lower in terms of taxation and costs, but it may end up hampering your business development when you want to expand and take on bigger clients.

MAIN BENEFITS OF SENDIRIAN BERHAD STATUS

Liability Protection - a Sendirian Berhad company is a legal entity separate from its individual members. That means that your personal assets (existing and unrealised) are protected from business losses in the event your business is unable to repay its debts and/or is sued for a sum beyond its capacity for repayment. In a Sendirian Berhad company, you are only liable to the amount of the par value of your shares, or by guarantee where your partners and your liability is restricted to the amount each agrees to contribute to the assets of the company in the event of dissolution or liquidation.

Perpetual Existence and Better Recognition – as the setting-up, maintenance and dissolution of a Sendirian Berhad company requires much time and money to be spent on legal and secretarial fees, Sendirian Berhads tend to last longer and be more permanent than sole proprietorships. Also, a Sendirian Berhad need not be dissolved on the death of a shareholder as the shares will then pass on to the shareholder’s beneficiary.

Financial institutions, government agencies and larger business entities prefer dealing with Sendirian Berhads, especially on larger projects as the permanence of a Sendirian Berhad structure offers relatively more stability, continuity and protection.

Name Protection – once a Sendirian Berhad registers its name with and has it approved by Suruhanjaya Syarikat Malaysia (SSM), no other company may take on that name for the period of your company’s existence and for some time after its dissolution.

More Financing Options - in addition to taking out loans, cash may be raised through the sale of stock to private buyers. At a later stage, these shares may be offered to the public if the company changes its status to limited or public limited company.

It is also the case that Sendirian Berhads can usually obtain trade lines more easily than sole proprietorships.

Transparency and Streamlined Administration – company accounts have to adhere to strict standards set by SSM. The company’s annual audited profit and loss accounts as well as its balance sheet have to be furnished to SSM who mount it into a database accessible to the public.

All Sendirian Berhads are legally bound to employ the services of an accredited Company Secretary to assist in the registration of their companies, file minutes of meetings and company resolutions, and audited company accounts. These Company Secretaries in turn, adhere to standards set by SSM, thus ensuring streamlined administration among all Sendirian Berhads in Malaysia.

Pioneer and Multimedia Super Corridor (MSC) Status – although Sendirian Berhads are charged 28% corporate tax in Malaysia, they may apply for pioneer or MSC status. Pioneer status offers 100% exemption from taxable statutory income. This incentive is granted in the first instance for a period of 5 years. MSC companies may apply for Pioneer Status. They are also eligible for a 100% Investment Tax Allowance (ITA), R&D grants (for majority Malaysian ownership MSC-Status companies) and have the freedom to source capital and borrow funds globally. Other unique benefits include duty-free importation of multimedia equipment (DFI) and access to a one-stop agency, Multimedia Development Corporation (MDC), for licensing and other regulation purposes.
 
OWNERSHIP AND CAPITAL REQUIREMENTS OF A SENDIRIAN BERHAD

A Sendirian Berhad must have a minimum of two and a maximum of 50 shareholders. It must have two directors at all times. A director must be a natural person who has their principal or only place of residence within Malaysia.

In terms of capital, you only need a minimum paid up capital of RM2 to start a Sendirian Berhad. This amount can be raised as and when you deem necessary.

TAKING THE FIRST STEP

To find out more about regulations governing Sendirian Berhad companies, log onto www.ssm.gov.my or consult a chartered company secretary.

If you do not know which chartered company secretaries to approach, ask friends with companies to give you some referrals.

Once you have your shortlist, start calling and ask for more information. By their responses, you will quickly know which ones are helpful, professional, informative and to your liking. Arrange for an appointment with 2 – 3 of these secretaries. Pick the one most suited to your requirements and appoint them as your official Company Secretary.

Company Formation fee usually range between RM2300 to RM3500 [if all inclusive] but our fee stand at RM1990 only.

Company Secretary fees for a year range between RM1,500 to over RM5,000. This amount sometimes includes annual audit fees as many Company Secretaries tie-up with accountants to offer their service as a package. In Malaysia, it is compulsory to use the services of a Company Secretary who is licensed by SSM.
 
Through the Company Secretary, you must first make an application to SSM to ascertain whether the intended name for your company is available. If so, three months reservation of the name is given from the date of approval. Within the three months reservation period, you must submit documents such as the Memorandum & Articles of Association, Form 6 and Form 48A together with the registration fee to SSM.

The Statutory Declaration Form 48A is required of each proposed director and subscriber of the company. A company must have at least two directors named in the Articles of Association of the company and two subscribers to the Memorandum and Articles of Association of the proposed company. In the Articles of the proposed company Form 6, at least one secretary of a company shall be named.

SSM will issue a certificate of incorporation upon registration.

Last but not least, you may find it helpful to speak to friends who already own Sendirian Berhad companies. As they would have gone through the entire process, they would know what issues you should generally be aware off and be able to offer relevant advice.

An article by Spire Media & Research