What is the difference between Sdn Bhd and Bhd in Malaysia?
Sdn Bhd (Sendirian Berhad) is a private company limited by shares; Bhd (Berhad) is a public company. A private company needs one director, has at most 50 shareholders and cannot offer shares to the public. A public company needs at least two directors and may offer shares to the public.
Under Companies Act 2016, s.11, a company limited by shares is either private or public.
| Sdn Bhd (private) | Bhd (public) | |
|---|---|---|
| Minimum directors | 1 | 2 |
| Shareholders | 1 to 50 | No fixed maximum |
| Share transfers | Must be restricted | Free to transfer |
| Public offer of shares | Not allowed | Allowed (subject to securities laws) |
Key rules
- A private company must restrict share transfers and cannot offer shares or debentures to the public (ss.42-43).
- A public company must hold an annual general meeting each calendar year, within six months of its financial year end (s.340).
- Company names must end with the right suffix for the company type (s.25).
- Directors forming the minimum number must ordinarily reside in Malaysia (s.196).
Almost all SMEs incorporate as a Sdn Bhd. A Bhd is mainly used for listing or public fund-raising. A company limited by guarantee is by law a public company (s.11(2)). Converting from private to public later is possible but involves extra requirements.
Legal basis
- Companies Act 2016, s.11
- Companies Act 2016, s.42
- Companies Act 2016, s.43
- Companies Act 2016, s.196
- Companies Act 2016, s.340
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What business structure should I choose in Malaysia: sole proprietorship, partnership, LLP or Sdn Bhd?Pick based on liability, who owns it and how credible you need to look. A sole proprietorship or partnership is cheapest but the owners are personally liable; an LLP or a Sdn Bhd gives a separate legal entity. A Sdn Bhd is the usual choice once you hire staff, sign larger contracts or bring in investors.
- What is the difference between a sole proprietorship and a Sdn Bhd in Malaysia?A sole proprietorship is not a separate legal person, so you are personally liable for all business debts. A Sdn Bhd is its own legal person and shareholders are generally liable only for unpaid share capital. A Sdn Bhd costs more to set up and carries more yearly filing duties.
- What is an LLP in Malaysia and how is it different from a Sdn Bhd?A limited liability partnership (LLP) is a body corporate registered under the LLP Act 2012. It needs at least two partners (a shortfall is allowed for six months) and a compliance officer who is a Malaysian citizen or permanent resident living in Malaysia. It runs on a partnership agreement, not a board. A Sdn Bhd has directors, shares and heavier governance under the Companies Act 2016.
- Can one person be the only director and shareholder of a Sdn Bhd?Yes. A company needs at least one member and one director, and one person can be both. A private company must have at least one director who ordinarily lives in Malaysia. You still need a licensed company secretary, and you cannot act as both director and secretary where the law needs both.
- Does a Malaysian Sdn Bhd need a resident director?Yes. A private company needs at least one director who ordinarily resides in Malaysia, meaning their principal place of residence is in Malaysia. Citizenship is not required for directors, but residence is. Alternate or substitute directors do not count towards that minimum.