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8/7/2019 Malaysia Business/Corporate Law Brief
http://slidepdf.com/reader/full/malaysia-businesscorporate-law-brief 1/9
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CONTENTS
Introduction 2
Types of Companies
1. Public and Private Company
2. Limited and Unlimited Companies
3. Holding and Subsidiaries Companies
4. Foreign Company
5. Sample of company certificates form
3
3
3-4
5
6
7-8
Conclusion 9
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C L AS S I F I C A T I O N / T Y P E S O F
C OM PA N I E S
INTRODUCTION
The Companies Act 1965 (the ³CA 1965) provides a great victory of forms of corporate
organisation for the manner and mode by which businesses may conduct themselves. These
range from the family-sized concerns of many businesses to the multinational conglomerate.
There are entities which are desirous of limiting their ability and those which, being entrusted
with trust funds may choose unlimited liability.
The basic aim of any company legislation should be to facilitate the use of companies. In
short, the most appropriate form of corporate organisation should be made available for
promoters to optimise their objectives in the most efficient manner.
A foreign company which has a presence in Malaysia and which has a place of business or is
carrying on business in Malaysia is also required to comply with the procedures set out in the
CA 1965.
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Section 14(1) of the Companies Act 1965:
Any two or more person associated for any lawful purpose may, by subscribing their name to
a memorandum and complying with the requirements as to registration, form an incorporated
company.
Types of companies
1. Private and Public Company
A company having a share capital may be incorporated as a private company if it¶s
Memorandum of Articles:
y R estricts the right to transfer its shares;
y Limits the number of members to not more than fifty;
y Prohibits any invitations to the public to subscribe for any shares in or
debentures of the company; and
y Prohibits any invitations to the public to deposits money with the company for
fixed periods or payable call whether bearing or not bearing interest.
A public company is a company other than a private company (Section 4(1) of the
Companies Act 1961)
2. Limited and Unlimited Company
Section 14(2) of the Companies Act 1965:
Provides the classifications of companies under the Companies Act. It reads:
a) company limited by shares;
b) a company limited by guarantee;
c) a company limited both by shares and guarantee; or
d) unlimited company
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Different of limited and unlimited
Company both by shares and guarantee
Company limited by Shares Company limited by Guarantee
Liability of the members contribution to the
company assets is limited to the amount, if
any, unpaid on his shares
Liability of member is limited by the
Memorandum of Association (MOA), to
the amount that members have guaranteed
to contribute
If company become insolvent, members are
not required to make any further
contributions
If company become insolvent, members
required to contribute up to the amount of
his guaranteed towards payment of the
debts and liabilities of the company ( Section
18(e) of the Company Act 1965
Limited Companies Unlimited Companies
The liability of the members to contribute to
the assets of the company on winding up is
limited.
The liability of the members to contribute to
the assets of the company on winding up is
not limited in any way.
Section 22(3) of the Companies Act 1965:
y a limited company may be
distinguished from other kinds of
business organization by the fact that
is contains the word µLimited¶ or
Berhad as part of its name or at the
end of the name
Section 214(1) of the Companies Act 1965:
y when a company is wound up every
present and past member is liable to
contribute to the assets of the
company to an amount sufficient for
payment of its debts and liabilities.
Example of company name:
y Zafq Pte. Ltd. Co. OR Syt. Zafq Ltd.
Co
y Zafq Sdn. Bhd. OR Syt. Zafq Bhd
Example of company name:
y Lion Co
y Not carrying Berhad (Bhd). Limited
(Ltd) in the name.
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3. Holding and Subsidiary Company
(Section 5 of the Companies Act 1965)
It states that the relationship between holding and subsidiary company may occur in any one
of four situations below:
y If the company controls the composition of the board of directors of the other
y If the company controls more than half of the voting power of the other
corporation
Holds more than half of the issued share capital of the first-mentioned corporation (excluding
any part thereof which consists of preference shares)
ExampleR
elationship flow of Subsidiaries Company
R elated to Alpha Ltd. Since they are in a
holding subsidiaries relationship
Alpha Ltd
(Gave subsidy)
Gamma LtdBeta Ltd
Delta Ltd is
subsidiaries of BetaLtd
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4. Foreign Company
Foreign company is a company incorporated outside Malaysia, which has a place of business
or is carrying on business within Malaysia.
Section 330(1) of the Companies Act 1965:
µCarrying on Business¶ includes establishing or using a share transfer or share registration
office or administering, managing or otherwise dealing with property situated in Malaysia.
y A company, corporation, society association or other body incorporated outside
Malaysia
y Example, a firm incorporated in Canada but conducting business throughout North
America is considered a foreign corporation in the United States. Also called alien
corporation.
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Sample of company certificates form
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C O N C L U S I O N
In this paper we gain knowledge what is different between private and public company,A
company limited by shares, or limited by guaranteed, or limited both by shares and guarantee
is a ³limited company´ as defined in Section4(1) of the CA 1965. The type to which a
company belongs upon its incorporation will be specified in the certificate of incorporation
issued by the R egistrar under Section 16(4). Different regulations may apply to the different
types of companies under the CA 1965.
It is important to note that a company must commence business as soon as it is entitled to
commence business. If a company does not commence business within a year from its
incorporation or suspends its business for a whole year, this may provide grounds for it to be
wound up by the High Court under Section 218(1)(c). Subsidiaries company is like a group
company because they are related to each other.
And if its for the foreign company desiring to establish business in Malaysia they must fill up
requirements needed and the registrar of companies for registration.