Why is it so difficult for companies to remain SMEs (Small and Medium Enterprises)?
Paid-Up Capital Limitation
- SMEs are generally subject to certain Paid-Up Capital thresholds
- Paid-Up Capital should not exceed RM2.5 million
- However, companies seeking growth often require external funding
- As more capital is injected, the Paid-Up Capital may exceed RM2.5 million
- As a result, fundraising companies may find it difficult to maintain SME status
Challenges Arising from Subsidiary Structures
- Many fundraising companies operate their businesses through Sdn. Bhd. subsidiaries
- While the parent company raises funds through a Berhad structure
- Even if the subsidiary's Paid-Up Capital is below RM2.5 million
- It may still face limitations when applying for SME loans
- This is because banks often consider the overall group structure and ownership relationship
- A subsidiary that forms part of a Berhad group may not qualify as an SME for financing purposes
The Challenge Between Fundraising and SME Status
- Business growth requires funding
- Additional funding often increases Paid-Up Capital
- At the same time, corporate structures and fundraising arrangements
- May affect SME eligibility assessments
Summary
- SME status is generally designed for smaller businesses
- However, companies pursuing rapid expansion often require substantial funding
- As fundraising increases and corporate structures become more complex
- Maintaining SME status can become increasingly challenging