Categories of Business Entities exist in Malaysia and its differences

The most common types of business organisation in Malaysia are as follow :

Limited Company Limited Liability Partnership Conventional Partnership Sole Proprietorship
Ownership  one or more two or more (but not more than 20) individual two or more parties one
Words ended at the end of name registered “Sdn Bhd” or “Sendirian Berhad” or “Bhd” or “Berhad” “PLT” (Perkongsian Liabiliti Terhad) No specific word No specific word
Capital Contribution Shareholders contribution Partners contribution Partners contribution Self contribution
Owners of the business Shareholders or Members who own ‘shares’ and entitle to certain rights in the Company Partners who have contributed capital Partners Sole Proprietor
Legal Status Separate legal entity Separate legal entity No separate legal entity status No separate legal entity status
Party that is liable for debts of the business Company LLP Partners Sole Proprietor
Management of business Board of Directors Partners Partners Sole Proprietor
Personal liability No personal liability. Liabilities borne by directors or shareholders are to the extent of unpaid shares only. No personal liability of partner, except for own wrongful act or omission or without authority. Liabilities borne by partners are jointly and severally with the LLP to the extent of unpaid share capital only. Unlimited liability (jointly and severally liable with the partnership) which can extend to personal assets of the partners. Unlimited liability which can extend to personal assets of the sole proprietor.
Limitation of Liability Limited Limited Unlimited Unlimited
Profit sharing Follow shareholding proportion in the Company Specify in LLP Partnership Agreement Specify in Partnership Agreement Entitled to all profit
No. of Shareholders/

Partners

Minimum 1 and maximum 50 for private limited company Minimum 2 and no maximum limit Minimum 2 to 20 partners (Except for partnerships for professional practice with no maximum limit) Only one
Requirement of Company Secretary / Compliance officer Acting by qualified/licensed Company Secretary under the Law Acting by one or more Partners or qualified / licensed Company Secretary under the Law Not required Not required
Audit Requirement Accounts required to be audited Not mandatory unless stated in partnership agreement Not required Not required
Yearly Compliance to CCM Must circulate audited financial statement to shareholders.

Mandatory to lodge annual return every anniversary date of company and audited financial statements within 6 from the financial year end to SSM

Mandatory to lodge an Annual Declaration and solvency statement within 90 days from the financial year end Not required Not required
Renewal of License Not required Not required Mandatory Mandatory
Annual Filing Fee to SSM RM150.00 for Annual Return

RM50.00 for Audited Financial Statements

RM200.00 Trade Name – RM60.00 per year
Personal Name – RM30.00 per year
Trade Name – RM60.00 per year
Personal Name – RM30.00 per year
Income Tax Status Tax on Company Tax on LLP Tax on Partners Tax on Sole Proprietor
Income Tax Rate
*Year Assessment 2016 (Subject to change yearly)
19% on the first RM500K profit (applicable for Small and Medium Sized Enterprise) and 24% on the remaining balance of profit. 19% on the first RM500K profit (applicable for Small and Medium Sized Enterprise) and24% on the remaining balance of profit. From 0% to 28% From 0% to 28%
Controlling Law Companies Act 2016 & Companies Regulations 2017 Limited Liability Partnerships Act 2012 & Limited Liability Partnerships Regulations 2012 Registration of Businesses Act 1956 & Registration of Businesses Rules 1957 Registration of Businesses Act 1956 & Registration of Businesses Rules 1957
Succession Perpetual succession Perpetual succession No perpetual succession No perpetual succession
Formation Lots paperwork and more expensive Fewer paperwork and formalities Less paperwork and formalities Less paperwork and formalities
Administration A bit complex Simple Simple Simple