BHD (Berhad): Definition, What It Indicates and Example Companies

What is BHD (Berhad)?

BHD is a suffix for Berhad, used in Malaysia to identify a public limited company. After a company’s name, Berhad, BHD, or Bhd indicates it is a Malaysian public limited company (PLC). At the same time, the extended suffix Sendirian Berhad (SDN BHD) denotes that it is a private limited company.

Share Issue and BHD

BHD and SDN BHD companies are classified as those that issue shares, Malaysia’s most common business entity. Such companies have a limited number of shares, and the liability of their shareholders is restricted to the amount specified on their unpaid shares.

Other businesses in Malaysia, such as nonprofits, public societies, and unlimited liability corporations (ULCs), are subject to guarantees.

BHD vs. SDN BHD

A BHD company must have a minimum of two shareholders, and the maximum is unlimited; an SDN BHD company can have two to 50 shareholders. SDN BHD companies are typically small or midsized enterprises (SMEs), while BHD companies are the largest companies in Malaysia. BHD companies have stricter financial reporting standards than SDN BHD companies because they must disclose their financial statements to the public. BHD firms also have greater access to capital than SDN BHD companies because they can access public equity and debt financing when they require funding.

Although the incorporation process for both companies is substantially similar, an SDN BHD company has some stringent stipulations in its Articles of Association. These include restrictions on transfers of the company’s assets, a maximum of 50 shareholders, a prohibition on public subscriptions to the company’s assets or debentures, and on collecting public deposits. Although most BHD companies list their shares and trade on the stock market, it is not mandatory. Therefore, they can choose to stay unlisted.