Definition
Berhad (BHD) is a term in Malaysia indicating that a company is publicly traded. It is equivalent to the terms “Corporation” or “Limited” (Ltd) as used in other countries. Companies denoted by BHD are able to sell shares to the public and are regulated by financial reporting rules.
Phonetic
The phonetic pronunciation of “Berhad (BHD)” could be “bur-haad”. Remember, the pronunciation can still vary slightly based on regional accents.
Key Takeaways
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Importance
The business/finance term “Berhad” (BHD) is significant because it indicates a public limited company in Malaysia. The term denotes that the company’s shares can be traded among the public, yet the shareholders’ liabilities are limited to their invested amount. It is a crucial distinction because it not only allows companies to raise capital through the sale of shares to the public, but also provides protection to shareholders. Understanding the term “Berhad” or “BHD” when dealing with businesses in Malaysia or investing in the stock market is crucial for comprehending the legal structure and the financial risk involved.
Explanation
Berhad (BHD) is a term originating from Malaysia, indicating a public limited company. Its primary purpose is prevalent in businesses where the company’s shares are offered to the public. The ability to sell shares publicly characteristically defines the BHD status. Such companies are typically large businesses that have been incorporated and have a share capital. As part of their structure, their shares are bought and sold to the public via the stock exchange. Hence, the purpose is to facilitate the raising of capital, expand the business, and provide liquidity to the company shares.Moreover, the term Berhad or BHD, is constitutionally a legislative measure to regulate the financial operation and transparency of a company. By being labeled as a Berhad, these companies are legally obligated to present their financial accounts to the public, thus ensuring both transparency and credibility. This provides potential investors with crucial information about the company’s performance, which assists them in making informed decisions. Furthermore, because these shares are publicly listed, it provides a platform for investors to become part-owners of such companies, thus fostering economic growth and development.
Examples
1. PETRONAS Chemicals Group Berhad (PCG): PCG, a part of the larger PETRONAS group, is a Berhad (BHD) corporation listed on the Malaysian stock exchange. It is involved in the petrochemical industry, producing a wide range of chemical products that are marketed in more than 150 countries worldwide.2. Maybank Berhad: Maybank Berhad is a major banking and financial services group in Malaysia, providing a comprehensive range of financial services, including commercial banking, investment banking, Islamic banking, insurance, and asset management. 3. Genting Berhad: Genting Berhad is a Malaysian conglomerate founded in 1965 known for its leisure and hospitality business. The group operates in Malaysia, Singapore, and several other international locations. Notably, it operates the famous Resorts World Genting, a hill resort located near Kuala Lumpur, Malaysia.
Frequently Asked Questions(FAQ)
What does the term Berhad (BHD) mean?
Berhad (BHD) is a term from Malaysia that denotes a public limited company. Companies with BHD at the end of their name are considered publicly traded and are eligible to issue and sell shares to the public.
What is the difference between Berhad (BHD) and Sendirian Berhad (SDN BHD)?
While Berhad (BHD) represents a public limited company, Sendirian Berhad (SDN BHD) signifies a private limited company in Malaysia. The significant difference is that BHD companies can issue shares to the public, unlike SDN BHD, which can only issue shares privately.
Where is the term Berhad (BHD) used?
The term Berhad (BHD) is primarily used in Malaysia to denote a public limited company.
What are the benefits of a company becoming Berhad (BHD)?
The main benefit of a company becoming Berhad is that it can issue and sell shares to the public, thereby gaining more access to capital for ongoing or new investment opportunities.
Can a private company be converted to a Berhad (BHD)?
Yes, a private company can be converted to a BHD. The conversion involves processes including shareholder agreement, re-registration and regulation adherence, all governed by Malaysia’s Companies Act.
Are Berhad (BHD) companies subject to regulatory oversight?
Yes, BHD companies are subject to regulatory oversight in Malaysia. They must abide by the regulations outlined in the Companies Act of Malaysia, including the requirement to make specific disclosures about their businesses and financial situation to shareholders and prospective investors.
Are shares of Berhad (BHD) companies exchange-traded?
Yes, shares of Berhad companies can be traded on public exchanges, however, not every BHD company is listed on the stock exchange. Whether the shares can be traded or not also depends on specific company policies and compliance with exchange regulations.
Related Finance Terms
- Public Limited Company (PLC): Berhad or BHD is a term indicating a Public Limited Company in Malaysia. Its equivalent in countries like the UK, Ireland, and others is PLC.
- Shareholders: Berhad companies are generally open to the public for buying shares. Shareholders are partial owners of the company proportional to the shares they own.
- Stock Market: As BHD companies are typically listed on the stock market, they are involved in buying and selling of stocks or shares.
- Corporate Governance: For Berhad companies, corporate governance refers to the way these companies are directed and controlled. The board, shareholders, employees, and stakeholders are all parts of this system.
- Annual General Meeting (AGM): This is a mandatory yearly gathering of a BHD’s shareholders. At the AGM, directors present an annual report containing information for shareholders about the company’s performance and strategy.
