Types of companies that can be set up in Brunei

Brunei, a small but wealthy country located in Southeast Asia, is increasingly attracting the attention of investors and entrepreneurs worldwide. With a stable economy, preferential tax policies, and a favorable business environment, Brunei offers many attractive opportunities for business establishment and development. Viet An Law would like to guide you with some information about the types of companies that can be established in Brunei through the article below.

Types of companies that can be set up in Brunei

Sole proprietorship

A Private Enterprise is the simplest form of business, owned and operated by a single individual. It is a popular choice for small businesses, startups, or self-employed.

Advantage

• Full Control: The owner has full control over business operations, from strategy, products, services to finance.
• Keep all profits: Owners are entitled to all after-tax profits of the business.
• Less administrative procedures: Private Enterprises usually have less to comply with complicated regulations and administrative procedures than corporations.

Shortcoming

• Unlimited liability: The owner is liable for unlimited liabilities for the debts and obligations of the business. This means that the owner’s personal assets can be used to repay debts to the business if the business is in financial difficulties. This is the biggest risk of this type.
• Difficulties in raising capital: Private Enterprises often have difficulty getting bank loans or calling for investment due to their small size and limitless responsibilities of the owners.
• Owner-dependent viability: The survival of a business depends entirely on the owner. If the owner dies, becomes incapacitated, or does not want to continue in business, the business may have to cease operations.

Eligibility

• Be at least 18 years old.
• For Brunei Citizens and Permanent Residents only.
• Bankrupts who have not yet had their sentences cleared may not manage the enterprise without the approval of the court or the official asset management officer.

Partnerships

A Partnership is a type of business in which two or more individuals (or legal entities in some cases) jointly contribute capital and participate in business activities, share profits and are jointly responsible for the company’s debts.

Main characteristics of a Partnership:

• At least two members: A minimum of two members are required to form a partnership.
• Infinite Responsibility: This is the most important characteristic. The general partners are liable infinitely with their entire assets for the company’s debts and obligations. This means that if the company is in financial trouble and is unable to repay its debts, creditors can ask the partners to use their personal assets to make payments.
• Capital-contributing members (if any): Some types of partnerships allow capital-contributing members. These members are only responsible for the company’s debts within the amount of capital contributed. They are usually not involved in the management and operation of the company.
• Partnership: The relationship between the members is governed by a partnership agreement. This agreement stipulates issues such as the capital contribution ratio, profit sharing, rights and obligations of the members, the dispute resolution process, etc.
• No separate legal entity status (in some countries): Unlike a joint stock company, a partnership in some countries is not considered a separate legal entity separate from the members.

Advantages of a Partnership

• Professional Combination: Allows the combination of knowledge, skills, and experience of multiple people.
• Risk sharing: Risk is shared among members.
• Flexibility in management: Members are free to agree on how to manage and run the company.

Disadvantages of a Partnership

• Unlimited Liability: This is the biggest risk, which can affect the personal assets of the general partners.
• Difficulties in raising capital: Compared to joint stock companies, partnerships often have more difficulty in raising capital from outside.
• Likelihood of conflict: Due to the large number of members involved, the likelihood of conflicts of opinion and interests is quite high.
• Continuity of dependence on members: A change in membership (e.g., a member withdraws or dies) can affect the survival of the company.

Eligibility

• Be at least 18 years old.
• For Brunei Citizens and Permanent Residents only.
• Bankrupts who have not yet had their sentences cleared may not manage the enterprise without the approval of the court or the official asset management officer.

Company

A “Company” is a legal entity established to carry on business, commercial, or other activities for profit or non-profit purposes. It is a more complex form of business organization than a Sole Proprietorship or Partnership, with more stringent legal regulations.

Main characteristics of the Company:

• Legal status: The company has a separate legal status, separate from the members (shareholders or capital contributors). This means that the company can sign contracts in its name, own assets, litigate, and be sued before the law.
• Limited liability (in most cases): Members (shareholders or capital contributors) are only responsible for the company’s debts and obligations within the amount of capital contributed. This is one of the biggest advantages of the company form, which helps limit risks for investors.
• Charter capital: Charter capital is the total value of assets contributed by members upon establishment of the company or the registered capital. Charter capital represents the level of financial responsibility of the company to its partners and creditors.
• More complex organizational structure: Companies typically have more complex organizational structures than other types of businesses, including the Board of Directors, Board of Directors, specialized departments, etc.
• Large capital raising capacity: The company can raise capital from a variety of sources, such as issuing stocks, bonds, bank loans, etc.

Popular Company Types

• Limited Liability Company (LLC):
  • There can be one member (Single-member Limited Liability Company) or multiple members (Two-member Limited Company or more).
  • The member is liable for limited liability within the scope of the contributed capital.
  • Shares are not allowed to be issued.
• Joint Stock Company (JSC):
  • Charter capital is divided into shares.
  • Shareholders own shares and have limited liability within the value of their shares.
  • It is allowed to issue shares to raise capital.
• Public Company: A form of Joint Stock Company, with shares listed on the stock market and publicly traded.

Advantages of the Company:

• Limited Liability: Limit risk for investors.
• Ability to raise large capital: Favorable for business expansion.
• High professionalism: Clear organizational structure, specific task assignment.
• High prestige: Considered a more reputable form of business than other types.

Company Cons:

• High cost of establishment and maintenance: More expensive than other types of businesses.
• Subject to strict supervision by law: Must comply with many regulations on accounting, taxation, reporting, etc.