Company Law
Table of Contents Question | Page | Question 1 | 1 | Question 2 | 2 | Question 3 | 3 - 4 | Question 4 | 5 - 6 | Question 5 | 7 | Question 6 | 8 – 9 | Question 7 | 10 | Question 8 | 11 | Question 9 | 12 – 13 | References | 14 |
Question 1: Problem Set 2, Question 1
There are several choices of form of business organization that Mal and Lisa can opt to do their graphics business. If they are to conduct the Smallco Graphics business through a company, a very significant of the advantages will be the separate legal entity, which means that from the view of the law, a company is treated as a separate person. Hence, the debts of the company will be limited to the amount remaining unpaid on the members’ shares. This is also called “limited liability” of the members.
Apart from the limited liability, a company has a perpetual succession, meaning that it is a continuing entity in law with its own identity regardless of changes in its membership. Membership of a company can be transferred from one individual to another upon death, resignation or other circumstances. Its existence can be assured until it is decided to be winded up or deregistered.
Another advantage of a company is that it is easier to borrow from financial institutions such as banks, so a company can grow and expand very fast compared to sole proprietor and partnership.
Professional managers and staffs can be employed to manage the business as well, whereby this will lead to higher efficiency of a company’s operations.
The disadvantages will be that companies are difficult to maintain secrecy of the business, since their accounting details are open to the public, especially for the public listed companies.
Besides that, the companies are required to keep proper records of accounting and they need to submit all financial records to the authorities, meaning that companies are tightly controlled and regulated by the government.
Companies especially those public listed have the
Question 1: Problem Set 2, Question 1
There are several choices of form of business organization that Mal and Lisa can opt to do their graphics business. If they are to conduct the Smallco Graphics business through a company, a very significant of the advantages will be the separate legal entity, which means that from the view of the law, a company is treated as a separate person. Hence, the debts of the company will be limited to the amount remaining unpaid on the members’ shares. This is also called “limited liability” of the members.
Apart from the limited liability, a company has a perpetual succession, meaning that it is a continuing entity in law with its own identity regardless of changes in its membership. Membership of a company can be transferred from one individual to another upon death, resignation or other circumstances. Its existence can be assured until it is decided to be winded up or deregistered.
Another advantage of a company is that it is easier to borrow from financial institutions such as banks, so a company can grow and expand very fast compared to sole proprietor and partnership.
Professional managers and staffs can be employed to manage the business as well, whereby this will lead to higher efficiency of a company’s operations.
The disadvantages will be that companies are difficult to maintain secrecy of the business, since their accounting details are open to the public, especially for the public listed companies.
Besides that, the companies are required to keep proper records of accounting and they need to submit all financial records to the authorities, meaning that companies are tightly controlled and regulated by the government.
Companies especially those public listed have the
References: 1) Hanrahan, P., Ramsay, I., Stapledon, G., Mohd. Sulaiman, A.N., Bidin, A. (2002). Commercial Applications of Company Law in Malaysia, CCH Asia Pte Limited.