Company Incorporation Malaysia: Structures & Fit
Topic
What “incorporation” means
Creating a separate legal person that can own assets, sign contracts, open bank accounts, and outlive founders—so governance and treasury can be run cleanly.
Why incorporate
Limited liability, counterparty comfort, continuity/share transferability, and a predictable admin cadence.
Operational overview only—no legal, tax, or investment advice.
Structures in Malaysia (SSM)
Sole Proprietorship
What: You trade in your own name (not a separate legal person).
Liability: Unlimited (personal).
Who it fits: Micro-operators testing demand with minimal admin.
Watch-outs: Personal risk; limited bank/investor comfort.
Partnership
What: Two or more persons carry on business jointly.
Liability: Generally joint and several among partners.
Who it fits: Small, relationship-based businesses.
Watch-outs: Shared liability; governance can be loose.
Limited Liability Partnership (LLP)
What: Partnership flexibility with limited liability.
Who it fits: Professional practices or small teams preferring partnership economics.
Watch-outs: Some counterparties still prefer Sdn Bhd.
Private Company Limited by Shares (Sdn Bhd)
What: Separate legal person; liability limited to paid-up capital.
Who it fits: Default for SMEs/growth companies needing banks, vendors, or investors.
Why it’s default: Strong counterparty comfort, clear shareholding, scalable governance.
Company Limited by Guarantee (CLG)
Who it fits: Non-profits, associations, societies.
Watch-outs: Purpose-linked; not for profit distribution.
Foreign Company (Branch) / Representative Office
Branch: Extension of a foreign company (not separate).
Rep Office: Non-revenue, research/liaison (typically MIDA-guided).
Who it fits: Foreign HQs exploring Malaysia pre-setup.
Simple decision rules (operator lens)
Default to Sdn Bhd for most operating businesses that need banking, hiring, and growth.
Use LLP for partner-led professional practices wanting flexible splits with limited liability.
Use Sole Prop/Partnership only for low-risk testing where personal/shared liability is acceptable.
Use CLG for non-profit missions.
Use Branch/RO for foreign HQs testing the market or centralising control abroad.
Minimums & basics you’ll need
Proposed name(s), activities, and a short business narrative.
Directors/shareholders’ details, simple cap table, and UBO map.
Registered office address and contact.
Constitution (company) or partnership/LLP agreement (as applicable).
Banking readiness pack: certified IDs, proof of address, org chart, and KYC questionnaire.
