BUSINESS ENTITIES IN
MALAYSIA
COMPANY LAW
WEEK 1
TYPES OF BUSINESS ENTITIES IN
MALAYSIA
FACTORS TO BE CONSIDERED WHICH
BUSINESS ENTITY IS THE BEST?
PROCEDURE Some business requires more steps and expenses for the
REQUIRED purpose of formation.
LIABILITY Owners of some business entities are liable for the debts
of the business.
CONTINUITY Some business entities may have perpetual existence.
Some business entities is closely connected with the
identity of the owner.
TRANSFERABILITY Some business entities allow the owner to transfer his
rights to a third party without affecting the status of
business entity.
TAXATION Some business entities, their profits are taxed at the entity
level. The taxes payable at a different scale compared to
taxes paid by individuals.
PARTNERSHIP
Definition Sec. 3(1) of Partnership Act 1961
Number of Sec. 47(2) of Partnership Act 1961
persons Sec. 13 of Companies Act 2016 – more than 20 (professional)
Registration Sec. 5 of Registration of Businesses Act 1956 & details of partners
and agreement. Any changes-notify ROB within 30 days.
Sec. 6 – The register kept by ROB is prima facie evidence – partners.
Agency Sec. 7 of Partnership Act 1961 – agent to firm unless no authority.
Liability Sec. 11 of Partnership Act 1961-liable for firm’s debt while he in.
Sec. 12- Jointly & severally liable for wrongful act/misappropriation $.
Torts - Jointly & severally liable.
Retirement Sec. 19- Retires partner continues liable for debt before retirement.
Agreement Capital contribution, profit distribution, management business,
introduction of new partners, partnership property, change biz nature.
LIMITED LIABILITY PARTNERSHIP
(LLP)
The Limited Liability Partnerships Act
2012
Section 6 At least 2 persons but no maximum number.
Section 3 A body corporate, a legal personality separate from its
partners & has perpetual succession.
Section 21 Liability of partners - Contract: limited. Partners NOT
personally liable. Tortious act: he with the LLP will be
liable.
Section 69 Required proper accounting records at least 7 years.
Must prepare true and fair financial statements but NOT
audited or lodged with Registrar of LLP.
Required to file an annual statement in its solvency with
Registrar.
COMPANY UNDER
THE COMPANIES ACT 2016
MAIN FOUNDATION OF
COMPANY UNDER THE COMPANY
LAW
• Upon incorporation, company is a body
corporate which is recognised by law to have a
separate legal entity from its members and
officers.
• Case: Salomon v Salomon & Co Ltd
Sec. 20 of the CA 2016
Company
INCORPORATING COMPANY
• The incorporation process is simplified by the use of one
incorporation form where an application must be made to
the Registrar containing details:-
• the company’s name, whether it is a private or public
company;
• nature of business;
• address of registered office;
• details of the member;
• details of directors;
• details of company secretary;
INCORPORATING COMPANY (con’t)
• details of class and number of shares to be taken by the
members or the liability that the member agrees to
undertake upon winding up if the company is a company
limited by guarantee and other details as may be required
by the Registrar.
• The application must be accompanied by a statement of
each promoter or director regarding his consent, and that
he is not disqualified.
• The certificate of incorporation is no longer required under
the Companies Act 2016. SSM will no longer issue the
certificate of incorporation. Instead, a notice of registration
is conclusive evidence of a company being incorporated.
• A company is incorporated from the date of incorporation
stated in the notice of registration and is a legal person
separate from its members, continues in existence until
removed from the register, and has all the powers of a
body corporate.
REFERENCE BOOKS
1) Chan Wai Meng (2017) Essential Company Law in
Malaysia Navigating the Companies Act 2016, Sweet
& Maxwell
2) Aiman Nariman Mond Sulaiman. Aishah Bidin,
Pamela Hanrahan, Ian Ramsey and Geof Stapledon
(2008), Commercial Application of Company Law in
Malaysia, 3rd Edition, CCH Asia Pte Ltd
3) The Companies Act 2016
