What is BHD (Berhad)?
Plain definition
– BHD (short for Berhad or Bhd) is the suffix used in Malaysia to show that a company is a public limited company (PLC). A company that uses BHD after its name is organized to issue shares to the public (or has the capacity to do so). The corresponding private form is Sendirian Berhad (SDN BHD), which denotes a private limited company.
Key points (brief)
– Both BHD and SDN BHD are share-issuing company forms; shareholders’ liability is limited to any unpaid portion of their shares.
– A BHD must have at least two shareholders; there is no statutory upper limit. An SDN BHD is limited to 50 shareholders.
– BHD companies face more extensive public disclosure and financial reporting requirements and generally have better access to public equity and debt markets.
– SDN BHD rules typically restrict share transfers, bar public subscription of shares or debentures, and prevent taking public deposits.
– Listing on a stock exchange is common for BHD companies but not mandatory.
Plain-language definitions of key terms
– Public limited company (PLC): A company whose shares can be offered to the public and whose ownership is divided into transferable shares.
– Share (equity): A unit of ownership in a company. Shareholders can be liable only up to any unpaid amount on their shares.
– Articles of Association: The internal rules that govern a company’s management, share transfers, voting, and other corporate procedures.
– Debenture: A form of debt instrument—an IOU issued by a company; public subscription means offering such securities to the general public.
– Company limited by guarantee: A different company form (often used by nonprofits) where members guarantee a fixed amount rather than hold shares.
– Unlimited liability corporation (ULC): A rare structure where owners can be fully liable for company obligations (no limit).
BHD versus SDN BHD — side-by-side differences (summary)
– Shareholder count: BHD minimum 2, no maximum; SDN BHD maximum 50.
– Public fundraising: BHD can raise capital publicly; SDN BHD cannot offer shares or debentures to the public.
– Share transfer: SDN BHD often restricts transfers via its Articles; BHD is typically more flexible.
– Reporting and disclosure: BHDs must disclose financial statements publicly and meet stricter reporting standards.
– Typical size: SDN BHDs are commonly small-to-medium enterprises; BHDs tend to be larger corporations.
Short checklist — if you are evaluating company form or a firm’s status
– Does the company include Bhd / BHD after its name? If yes → it is a public limited company.
– How many shareholders does the company have? (If >50, it cannot be SDN BHD.)
– Does the company offer shares or debentures to the public or appear on a stock exchange? If yes → consistent with BHD status.
– Are there transfer restrictions in the company’s Articles? If many restrictions exist, the company may be an SDN BHD.
– Review whether financial statements are publicly available; mandatory disclosure suggests BHD classification.
– For capital-raising needs, consider whether public equity/debt access is required—BHDs have broader access.
Share issue and shareholder liability — short explanation + worked example
– In both BHD and SDN BHD forms, shareholders’ legal responsibility is generally limited. That means a shareholder is only liable up to any unpaid portion of the shares they own. If shares are fully paid, the shareholder has no further liability for company debts.
Worked numeric example
– Suppose a shareholder subscribes to 1,000 shares with a par value of 1.00 per share.
– They have paid 0.60 per share so far, leaving 0.40 unpaid per share.
– Unpaid obligation = 1,000 shares × 0.40 unpaid = 400.
– If the company is wound up and creditors make a claim, the shareholder’s maximum additional liability would be 400 (the unpaid portion). If all shares were fully paid, additional liability would be zero.
Real-world note
– The structure is common among Malaysian firms. For example, the Forbes Global 2000 list in 2018 included multiple Malaysian companies using the BHD form; the Forbes ranking uses a composite of sales, profits, assets, and market value.
Sources for further reading
– Investopedia — Berhad (BHD): https://www.investopedia.com/terms/b/bhd-berhad.asp
– Suruhanjaya Syarikat Malaysia (Companies Commission of Malaysia, official regulator): https://www.ssm.com.my/
– Bursa Malaysia (Malaysian stock exchange — listing and disclosure rules): https://www.bursamalaysia.com/
– Forbes — Global 2000 (company rankings): https://www.forbes.com/global2000/
Educational disclaimer
This explainer is for educational purposes only. It is not individualized legal or investment advice. For decisions about company formation, investment, or regulatory obligations, consult a qualified lawyer, accountant, or licensed financial professional.