Legal Provisions on Membership in a Company

Under Section 2 of the Companies Act 2016, a “member” is defined as:

• For a company limited by shares – A person whose name appears in the register of members as the holder of shares.
• For a company limited by guarantee – A person whose name is entered in the register of members.

Since a society is not an individual, the question arises whether it qualifies as a “person” under this definition.

How the Law Defines a Society as a Legal Entity

The answer lies in how the law defines “persons” and “societies” in Malaysia:

• Interpretation Act 1948 – Defines “person” as including both corporate and unincorporated bodies, which means societies can be considered persons under Malaysian law.
• Societies Act 1966 (SA 1966) – Defines a society broadly, covering clubs, companies, partnerships, and associations of seven or more persons, regardless of their nature or objectives.

By these definitions, a society qualifies as a legal “person” and, therefore, can become a member of a company.

How a Society Holds Shares in a Company

Under Section 9(a) of the Societies Act 1966, societies are allowed to own movable property, which includes company shares. However, if these shares are not vested in trustees, they are automatically vested in the governing body of the society.

Additionally, Section 9(c) of the SA 1966 allows a society to sue or be sued in the name of:

• A registered public officer appointed for this purpose, or
• An office bearer (if no public officer is registered).

This means that while a society can own company shares, it must act through an agent, such as its public officer or an office bearer.

How Should a Society’s Name Appear in the Register of Members?

When a society becomes a member of a company by purchasing or acquiring shares, it must be represented by an individual in the company’s register of members. The proper format should be:

Example:
“Persatuan Penternak Ikan Air Tawar, Perak (represented by Ali bin Ahmad, President)”

Updating Existing Company Records

For companies that have already registered societies as members without naming a representative, SSM requires them to update their records to include the name of a registered public officer or office bearer in compliance with Section 51 of CA 2016.

Read the official Practice Note (PN8/2024) from SSM here.

Whether you are a local entrepreneur, foreign investor, or SME owner, incorporating an Sdn Bhd in Malaysia offers benefits such as better business credibility, tax advantages, and easier access to funding. However, the registration process involves several legal and regulatory steps, which must be carefully followed.

This guide outlines the step-by-step process to register an Sdn Bhd company in Malaysia, key requirements, costs involved, and how Spektra Management can assist you in incorporating your business efficiently and hassle-free.

Why Choose an Sdn Bhd in Malaysia?

– Limited Liability Protection – Shareholders are only liable for the amount they invest in the company.
– Better Business Credibility – A registered Sdn Bhd is recognized as a legitimate and stable entity, making it easier to gain trust from customers, investors, and banks.
– Tax Benefits – Enjoy corporate tax incentives and lower tax rates, especially for SMEs with profits under RM600,000.
– Easier Business Expansion – You can bring in investors, secure bank loans, and expand operations more easily than with a sole proprietorship or partnership.
– Separate Legal Entity – The company can own assets, enter contracts, and sue or be sued independently of its owners.

Step-by-Step Process to Set Up an Sdn Bhd in Malaysia

Step 1: Meet the Basic Requirements

To register an Sdn Bhd, your company must meet the following requirements:

Minimum 1 director – The director must be at least 18 years old, a Malaysian resident, and not declared bankrupt.
Minimum 1 shareholder – Can be the same person as the director or a different individual/company.
A company secretary – Must be a licensed company secretary registered with SSM (Suruhanjaya Syarikat Malaysia).
A registered business address – The company must have a local registered office address in Malaysia.
Minimum paid-up capital of RM1 – Although there is no fixed minimum capital, many companies start with RM1,000 to RM10,000.

Step 2: Name Search & Reservation

– Choose a unique company name following SSM guidelines.
– Conduct a name search using SSM’s MyCoID portal to check for name availability.
– If approved, the name will be reserved for 30 days (can be extended for an additional 30 days).

Step 3: Prepare Incorporation Documents

Once the company name is approved, you need to prepare and submit the following documents:

– Super Form (Section 14 of Companies Act 2016) – Includes company name, business activities, directors, and shareholder details.
– Declaration by Directors & Shareholders (Section 201 of Companies Act 2016) – Confirms that all parties agree to the incorporation.
– Constitution (optional) – A legal document outlining how the company is governed (not mandatory but recommended for businesses with multiple shareholders).

Step 4: Receive Certificate of Incorporation (Section 17)

Once SSM approves your registration, they will issue a Certificate of Incorporation (Section 17), which serves as proof that your company is legally established.

– Your Sdn Bhd is now officially registered and ready to operate!

Step 5: Register for Corporate Tax, Licenses & Business Bank Account

After incorporation, the company must fulfill these post-registration requirements:

– Apply for a Corporate Tax File with LHDN – All Sdn Bhd companies must register with Lembaga Hasil Dalam Negeri (LHDN) for corporate tax compliance.
– Open a Business Bank Account – Most banks require your Certificate of Incorporation (Form 9), corporate profile, and directors’ NRIC/passport.
– Apply for Business Licenses (if required) – Some industries (e.g., food, retail, construction) may require additional business permits.
– Register for EPF, SOCSO & EIS – If hiring employees, register with the Employees Provident Fund (EPF), Social Security Organisation (SOCSO), and Employment Insurance Scheme (EIS).
– Register for SST (if applicable) – Companies with taxable revenue over RM500,000 must register for Sales & Service Tax (SST) with Royal Malaysian Customs (JKDM).

Common Mistakes to Avoid When Registering an Sdn Bhd

Choosing a Name That Violates SSM Rules – Avoid using prohibited words or names too similar to existing companies.
Not Appointing a Licensed Company Secretary – A company secretary must be appointed within 30 days of incorporation.
Ignoring Tax & Business License Requirements – Failure to register for taxes, SST, or required licenses can lead to penalties and business closure.
Using a Personal Bank Account for Business Transactions – Always open a corporate bank account to separate business finances.

Why Choose Spektra Management for Your Sdn Bhd Registration?

Setting up an Sdn Bhd requires legal, tax, and compliance expertise to ensure smooth registration and avoid costly mistakes. Spektra Management provides end-to-end corporate incorporation services, handling all paperwork, licensing, and compliance requirements for you.

Our Services Include:

– Company Name Search & Reservation
– SSM Registration & Incorporation Filing
– Company Secretary Appointment
– Business Licenses & Tax Registration (LHDN, EPF, SOCSO, EIS, SST)
– Corporate Bank Account Setup Assistance