What’s the Difference Between SDN BHD and Company Limited by Guarantee?

If you’re setting up a business, you may have heard of SDN BHD and Company Limited by Guarantee. But what do these terms actually mean? Let’s take a look at the differences between them so that you can decide which one is best for your company.

SDN BHD stands for Sendirian Berhad, which means “private limited company” in Malaysia. An SDN BHD is registered as a private limited company with the Companies Commission of Malaysia (SSM) under Section 15 of the Companies Act 2016. It must have at least one director and two shareholders, and its share capital must not exceed RM500,000. An SDN BHD is a separate legal entity from its owners, meaning that it can sue or be sued in its own name.

A Company Limited by Guarantee (CLBG), on the other hand, is an organisation set up to provide services to members of the public or industry sector without making a profit. It has no share capital and its income or profits are reinvested into operations rather than distributed as dividends to shareholders. A CLBG does not have any shareholders but it does have members who guarantee to pay an amount if the organisation is wound-up; this amount cannot exceed RM10 per member (as per Section 32 of the Companies Act 2016).

While both types of organisations are registered with SSM, they serve different purposes: an SDN BHD typically exists to make profit while a CLBG typically exists to deliver services or promote causes. This distinction should be considered when deciding which type of organisation suits your needs best.

Conclusion: As you can see, there are several key differences between an SDN BHD and a Company Limited by Guarantee that need to be taken into consideration when deciding which type of organisation would best suit your business needs. Knowing how each type operates will help ensure that you choose the right option for your company’s goals and objectives. The decision should ultimately depend on whether you want your organisation to make profits or non-profits, so consider carefully before committing either way!

author avatar
Tan Lee Ling
Tax Consultant by training in the Big Four and trained several years with Dr Choong. Being a Chartered Accountant with a law degree. Specialised in compliance, tax planning and tax investigation in her early years. Being in tax for 12 years, to her Tax is like a tree, it is the life force for the country, tax is dynamic, continuously changing and growing. Lee Ling is the conduit in charge of not just sharing these tax changes, also to bring Dr Choong's brilliant tax planning to the tax professionals and business community.
Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Related Posts

HRDCorp: Compulsary Donation what you need to know (Program Madani)

 Special 15% Donation for Program Latihan Madani (PLM) from your HRDC Levy Are you in for it? As announced by Prime Minister in Budget 2024, there will be 15% Deduction from Your Company’s HRDC Levy Collection Year 2023 for contributing to this Special Donation for PLM. However, to avoid being qualified for this one-off 15%

Selamat Hari Raya 2024 2


The Colours and Communal Bond of Hari Raya: A Personal Reflection Hari Raya Aidilfitri, the dazzling culmination of Ramadan’s month-long of Puasa and reflection, resonates with a depth of tradition and heartwarming customs. Beyond its religious reverence, this celebration is a vibrant pageant of cultural heritage and communal bonds, weaving together a tapestry enriched with shared

Reliable ESG Committee agrees: they need these

Understanding ESG Committees At its core, an ESG committee is tasked with oversight, guidance, and strategic integration of sustainability efforts across the organisation. They’re at the helm, transforming ESG concepts into actionable initiatives. The benefits? Enhanced risk management, improved regulatory compliance, and ultimately, a solid reputation bolstered by responsible corporate citizenship. However, have you wondered

Industry 4.0: Not Just a Game Changer for Manufacturing now

The dawn of Industry 4.0 has sparked revolutionary changes across manufacturing floors worldwide. But is the story of the Fourth Industrial Revolution solely written for the manufacturing sector? In this blog post, we dispel the myths and take a panoramic view of Industry 4.0’s influence beyond its traditional stronghold.

Game Changing: E-invoicing Is Really Part Of Industry 4.0

 Transparency and Accuracy — The Need of the Hour The demand for real-time data is imperative for smart manufacturing. E-invoicing pioneers this demand, automating data exchange and drastically reducing errors that erstwhile haunted manual entries. For supply chain managers and business owners, such enhancements in transparency and accuracy mean better control over financials and an improved bottom line,

Scroll to Top