Key characteristics of Sdn Bhd Company in Malaysia
Posted by We Corporate on April 22nd, 2021
This article discusses all aspects of Sendirian Berhad (“Sdn. Bhd.”)
- Key characteristics
- People involved in Sdn. Bhd. and their responsibility
- Advantages of Sdn Bhd
- Disadvantages of Sdn Bhd
Key characteristics of Sdn Bhd Company
Limited Liability
- The idea of limited liability company which protects the shareholder/ owners’ personal wealth.
- The company’s shareholders are only liable for debts accrued by the company in accordance with their levels of investment and not more.
Status as a Separate Legal Entity and perpetual continuity
- A Sdn Bhd company is a separate legal entity from its shareholders/owners
- Its status as a separate legal entity allows it to be in operation regardless of the identities of its founders, directors, and shareholders
- Any deaths or retirements of its founders, directors, and shareholders will have no effect as the company will continue to exist and operate unless it is dissolved
- A Sdn Bhd company has the rights to acquire assets, enter into contracts, and sue or be sued
Transferability of Ownership
- A shareholder of a Sdn Bhd in Malaysia is allowed to sell or transfer shares to any person of the shareholder’s choice as long as the potential buyer can afford the shares.
Ease of Fund Raising
- It is relatively simple for Sdn Bhd to raise money either by equity or loan.
- The share concept of Sdn Bhd make it easy for investor to invest into the company so long they can agree on the valuation
- Sdn Bhd is a well recognised corporate structure hence it is easier to borrow money from banks at lower rates when compared to rates paid by other business structures. Banks may view loans for Sdn Bhd companies as less risky compared to loans for other business structures.
Flexibility of Profit Distribution
- The shareholder/owner of a Sdn Bhd company benefits from the advantage of being able to distribute the company’s profit as is deemed to be suitable.
- Company owners determine the salaries, directors’ fees, bonuses, dividends, and other benefits. They also dictate how much money is to be reinvested into the business.
Check out the full version of this article about the key characteristics of Sdn Bhd Company on this WeCorporate blog.
