What Is The Difference Between Sdn Bhd And Bhd: Unveiling The Distinctions

A Private Limited Company, often referred to as an Sdn Bhd (Sendirian Berhad), is a distinct legal entity within the business world. This type of business structure possesses the ability to engage in various legal activities independently of its owners. In essence, an Sdn Bhd can participate in property transactions, establish and enforce legal contracts, and initiate legal proceedings or defend itself in court. This legal separation between the company and its owners is a fundamental aspect of the Sdn Bhd structure, providing owners with limited liability and enabling the business to operate with autonomy in the realm of commerce.

In Malaysia, businesses can take various legal forms, each offering unique advantages and responsibilities. There are five primary types of business entities recognized in the country:

1. Sole Proprietorship: This is the simplest form of business ownership, where a single individual is solely responsible for the business’s operations and liabilities.

2. Partnership: A partnership involves two or more individuals or entities coming together to jointly run a business. Partners share responsibilities and profits, and the business’s structure can vary depending on the type of partnership chosen.

3. Limited Liability Partnership (LLP): LLPs offer a blend of the flexibility of partnerships and the limited liability protection of corporations. In an LLP, partners are not personally responsible for the debts or actions of the business.

4. Private Limited Company (Sdn. Bhd.): This structure provides limited liability protection to its shareholders, allowing them to separate their personal assets from those of the business. Private Limited Companies have restricted ownership and are not publicly traded.

5. Public Limited Company (Berhad): Public Limited Companies are larger entities with shares that can be traded publicly on the stock exchange. They have more complex regulatory requirements and are suitable for businesses seeking to raise capital from the public.

Choosing the right business entity in Malaysia depends on factors such as the scale of operations, ownership structure, and long-term goals, with each type offering distinct advantages and legal implications.

Why Choose SDN BHD in Malaysia for Business Incorporation?

One compelling reason for opting to establish an SDN BHD (Sendirian Berhad) company in Malaysia is the robust financial security it offers to the owners, safeguarding their personal wealth. In the event of the company facing bankruptcy, the founders’ personal assets remain shielded from the company’s liabilities. This limited liability structure serves as a vital protective measure, which significantly appeals to both local entrepreneurs and foreign investors considering Malaysia as their business destination. This feature ensures that entrepreneurs can embark on their business ventures with confidence, knowing that their personal finances are separate from the potential financial risks associated with their company’s operations. This added level of security can make SDN BHD an attractive choice for those looking to start or expand their businesses in Malaysia.

Published on December 15, 2020.

• Sole proprietorship.
• Partnership.
• Limited Liability Partnership (LLP)
• Private Limited Company (Sdn. Bhd.)
• Public Limited Company (Berhad)