In Malaysia, the Companies Act 1965 (CA1965) is the main legislation leading the formation and operation of businesses. This Act permits to a group of people to form several types of corporate organization called as registered companies. Furthermore, this Act also offers services for the incorporation of companies such as regulation, formation of relationship between members and creditors, management and closing down of the company. Registrar of Companies (ROC) executes and manages control of the CA1965. Before starting a business, each of the companies must register with ROC. On the other hand, the Companies Act 2006 is the act that governing the establishment and running of companies in UK. This Act is revised to help people understand the law governing companies. It also enhances the shareholders engagement as well as it enables the directors of the companies to start up a business and reduce the burden of legislation. There are three types of business entities in Malaysia which are sole trader, partnership and limited company. Sole trader is also known as sole proprietorship. It is a business that own by an individual and he or she owns unlimited liabilities. There is no separation between the owner and its personal assets which means that if the business is bankrupt, trade payables can sue the owner for all the debts owed in respect of its personal assets, personal income, and employment income. For partnership, it is a legal form of business that is carried out by two or more persons who share management, profits and losses. (Partnership, 2014) Same goes to partnership businesses, it also consists of unlimited liabilities but it is governed by Partnership Act 1961 in Malaysia. In the case of Mollowo, March & Co v Court of Wardsi , Sir Montague Smith stated that ‘to establish a partnership, it must have agreed to carry on business, or to share profits in same way.’ Under limited company, there are two form businesses which are private and public. A private limited company (SDN BHD) is the most common form of companies in Malaysia which includes of minimum two and maximum fifty members in the company. It is a separate legal entity and the members of the company own limited liability because the amount they issue as capital in the company is limited. A public limited company (BHD) is an entity which offers shares to the public and have minimum of two with unlimited shareholders. It is commonly a listed company under KLSE and oversees by Securities Commission of Malaysia. Besides that, a limited company can be created in two ways which are by shares and by guarantee. Companies limited by shares means that the liability is limited to the amount remaining on their unpaid shares. While for companies limited by guarantee is where the liability is subject to an agreed amount that would only be paid if the company cannot pay its debt when closing. Governments Linked Companies (GLCs) are referring to the companies which the Malaysian Government has a direct controlling stake and have a primary commercial objective on it. Malaysian Government has the ability to assign job to the BOD members, senior management, and make main decision for the GLCs. There are some examples for GLCs such as Khazanah Nasional, KWSP, MOF Inc., Bank Negara Malaysia, Sime Darby Bhd, and Tenaga Nasional Berhad. Incorporation is defined as which a company has legal corporate entity that is separate and distinct from its members and shareholders. There are some effects of incorporation which are limited liability, business property, and perpetual succession. Limited liability means that only companies are responsible for their own debt. This protects owners from financial liabilities if the company wound up or gets sued. Incorporation also makes business property separate from its members. In the case of Macaura v Northern Assuaranceii, it was held that Macaura cannot claim for the insurance because the timber is company’s asset. Moreover, incorporation...
References: Lifting the Veil of Corporation. (2009). Retrieved March 6, 2014, from C.F Butler & Associates: http://www.cfbutlerandassociates.com/
Piercing the Corporate Veil
A Company is a legal entity. (2014). Retrieved March 6, 2014, from Law Teacher: http://www.lawteacher.net/
Khazanah Nasional Berhad
Legal Form of Business. (2014). Retrieved March 5, 2014, from Business Cases Studies: http://businesscasestudies.co.uk/
Lifting the Corporate Veil
Partnership. (2014). Retrieved March 4, 2014, from Entrepreneur: http://www.entrepreneur.com/
Piercing the corporate veil
Type of Business. (2014). Retrieved March 5, 2014, from RISS: http://www.risscorporateservices.com/
Davies, G. &. (2012). Principles of Modern Company Law. Sweet & Maxwell.
Jeanty, J. (2014). The Effects of Incorporation of a Company. Retrieved March 5, 2014, from Chron: http://smallbusiness.chron.com/
Kin, W. H. (2014). Corporate Personality. Retrieved March 6, 2014, from Academic.edu: http://www.academia.edu/
Moore, M. (2006). A Temple Built on Faulty Foundations": Piercing the Corporate Veil and the Legacy of Salomon v Salomon. Journal of Business law, 180-203.
Please join StudyMode to read the full document