A Comprehensive Guide to Sendirian Berhad (Sdn Bhd) and Berhad (Bhd) Companies in Malaysia

When setting up a business in Malaysia, understanding the differences between a Sendirian Berhad (Sdn Bhd) and a Berhad (Bhd) is crucial. These terms refer to private and public limited companies, each with distinct legal structures, advantages, and compliance requirements.

 

What is Sendirian Berhad (Sdn Bhd)?

A Sendirian Berhad (Sdn Bhd) is a private limited company and is the most common type of business entity in Malaysia. Here are its key characteristics:

• Limited Shareholders: Sdn Bhd can have up to 50 shareholders. Shares are not open to the public and can only be transferred with approval from other shareholders.
• Financial Privacy: Financial statements are submitted to the Companies Commission of Malaysia (SSM), but they are not disclosed publicly, ensuring greater privacy.
• Limited Liability: Shareholders’ liabilities are limited to the capital they have invested, reducing personal financial risk.
• Control: Founders often retain tight control of the company’s decisions and shares.

 

What is Berhad (Bhd)?

A Berhad (Bhd) company is a public limited company, usually larger, and more suited for businesses seeking substantial capital.

• Unlimited Shareholders: Unlike Sdn Bhd, a Bhd company has no limit on the number of shareholders. Shares are sold publicly through stock exchanges.
• Public Disclosure: Bhd companies must publish their financial reports annually, giving the public access to financial information.
• Capital Raising: Access to public markets makes it easier for Bhd companies to raise large amounts of capital through share offerings.

Key Differences Between Sdn Bhd and Bhd

 

Features	Sendirian Berhad (Sdn Bhd)	Berhad (Bhd)
Shareholders	Maximum of 50	Unlimited
Share Trading	Private, requires approval	Public, freely tradable
Financial Reporting	Private, not publicly disclosed	Public, mandatory disclosure
Capital Raising	Limited to private investments	Public offerings through stock exchanges
Listing	Cannot list on stock exchanges	Can list on stock exchanges

 

Pros and Cons of Sdn Bhd

Pros:

• Greater control over decision-making.
• Financial privacy.
• Limited liability protection for shareholders.

Cons:

• Limited capital raising opportunities.
• Harder to transfer shares due to restrictions.

 

Pros and Cons of Bhd

Pros:

• Easier to raise large amounts of capital.
• Freely tradable shares attract more investors.

Cons:

• Financial disclosure to the public.
• Subject to more regulatory requirements.
  

Which One to Choose?

The decision to incorporate as Sdn Bhd or Bhd depends on your business goals. If you value control, privacy, and limited risk, Sdn Bhd is ideal. For large-scale operations requiring public investment, Bhd offers the advantage of greater capital access.

 

Conclusion

Both Sdn Bhd and Bhd offer distinct benefits tailored to different business needs. Understanding their differences ensures that you make the right choice for your company’s future growth and sustainability.