Norazlina AA, PARTNERSHIP & COMPANY.

PARTNERSHIP
A.

DEFINITIO
N
SEC 3(1) P.ACT
RELATION

-2 to 20 Exception Professional
-sec 47(2)
-Agreement
- HORGAN v. MURRAY AND
MILTON

BUSINESS

IN COMMON

- Sec2. as: including every trade,

occupation or profession
- Sec. 3(2)
- MOLLWO, MARCH & CO. v
THE COURT OF WARDS
- MANN v D ARCY
- SOH HOD BENG v KHOO
CHYE NEO
- BADELEY v CONSOLIDATED
BANK
- BP (SABAH) SDN BHD V.
SYARIKAT JUBRIN
ENTERPRISE &
- HITCHINS v. HITCHINS

WITH A VIEW OF PROFIT

- GULAZAM v.
NOORZAMAN AND
SOBATH
- JOYCE v. MORRISSEY

Norazlina AA, PARTNERSHIP & COMPANY.

B.

SEC. 4 :SITUATION WHICH

ARE NOT PARTNERSHIP
i)Sec 4(a): Joint tenancy, tenancy in common, joint
property
DAVIS v DAVIS
SINNATHAMBY A/L KLONDAKOUNDAN &
ORS. v. BRIJKISHORE A/L SHUPARSHAD
CHOI SIEW CHEONG v. LUCKY HEIGHT
DEVELOPMENT
AW YONG WAI CHOO & ORS v. ARIEF
TRADING SDN BHD
ii)Sec 4(b):Sharing of gross return
COX v COULSON

iii)Sec. 4 (c): as a general rule, a person who

receives a share of the profits is deemed to be a
partner. However there are special cases whereby
the receipt of the share of the profits does not
qualify the person to be a partner. The situations
are:

Norazlina AA, PARTNERSHIP & COMPANY.

(a)Payments by installments
COX v HICKMAN
(b)Payment of servant or agent
WALKER v HIRCSCH
(c)Annuity to the widow or children of a deceased
partner
I.R.C v LEBUS TRUSTEES
(d)Loan given with a rate of interest varying with profits
RE YOUNG Ex PARTE JONES
(e)Sale of goodwill
PRATT v STRICK

Norazlina AA, PARTNERSHIP & COMPANY.

RELATIONS BETWEEN PARTNERS AND

OUTSIDERS
(1)

INDIVIDUAL PARTNERS TO BIND THE

FIRM: SEC 7-10
Principle of Agency( 1st limb sec 7)
Ostensible Authority( 2nd limb sec 7)
Conditions( sec. 8, 9, 10 & in usual
way)

(2)

LIABILITIES OF PARTNERS, SEC 11-15

In Contract( sec 11)
Torts and crime(sec 12)
Misapplication of money and
property(sec 13(a) &13(b))
Improper employment of trust
property( sec 15)

(3)

DURATION OF LIABILITY
Holding Out( sec 16)
Incoming & Outgoing partner(sec 19,
38 & 16)
Death of partner.

Norazlina AA, PARTNERSHIP & COMPANY.

RELATIONS OF PARTNERS TO ONE ANOTHER

(1) RIGHTS & DUTIES( SEC 21, 26 & 27)
Partnership agreement sec 21
Capital and profit sec 26(a)
Indemnity sec 26(b)
Advances to firm sec 26(c)
Interest on capital sec 26(d)
Management of partnership business 26(e)
Remuneration sec 26(f)
Intro.of new Partner sec 26(g)
Differences as to ordinary matters sec 26(h)
Patnership books 26(i)
Expulsion of partner sec 27
(2) DUTY OF GOOD FAITH
To render account and full info sec 30
Accountability for private profits sec 31
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Norazlina AA, PARTNERSHIP & COMPANY.

Not to compete with the firm sec 32

(3) PARTNERSHIP PROPERTY (SEC 22, 23,
24, 25)
Section 21: What are considered as partnership
property
MILES v CLARKE
Section 22(2): Co-owners of the estate in land
DAVIS v DAVIS
Section 23Property bought with partnership
money
WRAY v WRAY
PONUKKON v JEBARATNAM
Devolution of partnership property
Sec 24: where land or any interest therein has
become partnership property, it shallbe
treatedas personal and not real estate.

Norazlina AA, PARTNERSHIP & COMPANY.

WU SHU CHEN & ANOR v RAJA ZAINAL

ABIDIN BIN RAJA HUSSIN
(4) RETIREMENT FROM P/SHIP AT WILL( SEC 28)
(5) CONTINUANCE OF P/SHIP AFTER
EXPIRATION OF AGREED TERM (SEC 29)
(6) RIGHTS OF ASSIGNEES(SEC 33)
Sec 33 mentioned that an assignee of a partners
share in the business is not entitled as against the
other partners during the life-time of the firm to
i)

Interfere in the management , administration

or affairs of the business
ii) require accounts of the partnership business,
and
iii) inspect the firms books.
He is entitled to
i)
ii)

receive the share of the profits to which the

assigning partner would otherwise be entitled.
Accept the account of profits agreed to by the
partners.

Norazlina AA, PARTNERSHIP & COMPANY.

If the partnership is to be dissolved, the

assignee is entitled to:
i) the assignors share in the assets and
an account to ascertain that share as from the date of
the dissolution.

DISSOLUTION OF PARTNERSHIP
1. By Agreement SECTION 34(1)
2. By operation of Law SECTION 34(1)(a), (b)
and(c)
SUBRAMANIAN
CHETTIAR
KADER MASTAN
MC LEOD v. DOWLING
3.

v.

By Death or Bankruptcy
LEE CHOO YAM v. KHOO YOKE WAH
WILLIAMS v. WILLIAMS,
FRY v. ODDY

4.

By charging on shares SECTION 35(2)

5.

By supervening illegality SECTION 36

R v KNUPFER
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Norazlina AA, PARTNERSHIP & COMPANY.

HUDGELL YEATES v WATSON

6.

By Court Order

HANDYSIDE v CAMPBELL
J.M.M LEWIS
CARMICHEAL v. EVANS
CLIFFORD v. TIMMS

END OF PARTNERSHIP

Norazlina AA, PARTNERSHIP & COMPANY.

COMPANY
Intro: Law relating to co. in Malaysia is constituted
under the Company Act 1965 ( revised 1973) and
Judicial precedent
2. Definition: company is a corporate body @
corporation. It is an artificial legal person that exists
independently of the individuals( members of
Co.).Doctrine of Separate Legal Entity[ section 16]
3.

Effects of incorporation

i)

Separate Legal Personality

SALOMON v. SALOMON
LEE v LEE AIRS FARMING LTD
A L UNDERWOOD LTD v BANK OF
LIVERPOOL AND MARTINS LTD
ABDUL AZIZ B ATAN v. LDG RENGO
MALAY ESTATE
MULTINATIONAL GAS &
PETROCHEMICAL CO. v MULTINATIONAL

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Norazlina AA, PARTNERSHIP & COMPANY.

GAS & PETROCHEMICAL SERVICES

LTD(1983)
ii)Ability To Sue and Be Sued
FOSS v HARBOTTLE
iii) Perpetual Succession
RE NOEL TEDMAN HOLDINGS PTY LTD
ABDUL AZIZ B ATAN v. LDG RENGO
MALAY ESTATE
iv)Ability To Own Property/ Land.
MACAURA v NORTHERN ASSURANCE CO.
LTD.
GRAMAPHONE AND TYPEWRITER LTD v
STANLEY(1908)
v) Members Liability Are Limited.
RE APPLICATION by YEE YUT EE

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Norazlina AA, PARTNERSHIP & COMPANY.

vi) Rights under Torts and contract

LIMPUS v LONDON GENERAL OMNIBUS
CO

LIFTING UP CORPORATE VEIL

VEIL OF A CORPORATION:
It is the concept of a body corporate being separate from
its members.

GEN RULE:
The veil is supposed to hang between the members and the
co. and cannot be lifted.

EXCEPTIONS: where the veil can be lift up if the

following circumstances happen.

1. (Section 36):Number of members of a co. falls

below 2 persons.

2. Section 304(1):In process of winding up,

court found out that there is intention of
defrauding the creditors.
-sec

304(2) & 304(3):

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Norazlina AA, PARTNERSHIP & COMPANY.

an officer who knowingly contracts a debt with

no reasonable ground of expectation of the co.
being able to pay the debt is guilty of an offence
and a conviction may be the basis for a court to
declare that the officer concerned shall be
personally liable to pay that debt.

i)

3. Sec. 169: Affairs of holding co. and its

subsidiaries.

A holding and its subsidiary are 2 separate legal

entities.
PEOPLES INSURANCE CO. (M) SDN. BHD.
v PEOPLES INSURANCE CO. LTD

4. Where the co. is a close co. in that its board of

directors controls it or by 5 or fewer participators
the veil will be lifted to prevent avoidance of
taxation by sufficient distribution of profits.
[Income Tax Act 1967- sec 140(1)]
5. Where the co. has been formed for a
fraudulent purpose or to avoid existing legal
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Norazlina AA, PARTNERSHIP & COMPANY.

liabilities the court may take action which lifts

the veil.
ASPATRA SDN BHD. V. BBMB
GILFORD MOTOR CO. LTD v HOME
JONES v LIPMAN

6. Where the country is at war and the courts

suspects that the co. is controlled by enemies.
The veil may be lifted to discover the nationality
of the owners.
DAIMLER CO. LTD v CONTINENTAL
TYRE & RUBBER CO. LTD.
7. Where a displaced director is seeking a
winding up order on the
just & equitable in
circumstances where the co. is in essence a
quasi-partnership.
8. Sec. 121: an officer of a co. signs or
authorizes to be signed on the co.s behalf any
bill of exchage, cheque or promissory note where

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Norazlina AA, PARTNERSHIP & COMPANY.

the cos name is not properly written thereon,

that officer will be personally liable.

TYPES OF COMPANY
Section 16(4)
Co. classified according to liability of members

Co. ltd by SHARES

(public /private)

Co. ltd by guarantee

unltd co.
(public only) (public/private)

co. ltd by shares & guarantee

(public / private)

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Norazlina AA, PARTNERSHIP & COMPANY.

MEMORANDUM AND ARTICLES OF

ASSOCIATION(MOA/AOA)
MEMORANDUM OF ASSOCIATION
The memorandum sets out provisions, which are
mainly concerned with the relationship between the
company and outsiders. It sets out the extent of the
liability of its members and also defines objects and
powers of the co. MOA is important for the creditors
or prospective creditors and shareholders or potential
shareholders so that they are aware of the purposes
to which the assets of the co. may be applied and
extent of their liability.
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Norazlina AA, PARTNERSHIP & COMPANY.

STATUTORY REQUIREMENT
-HINDON v. ADELMAN
-CAMERON REAL ESTATE PTY LTD v
CAMERON
COMPANIES NAME
WHAT ARE THE NAMES THAT I CAN USE FOR MY
BUSINESS
You can either use your own name as stated in your
National Registration Identification Certificate (e.g.
Ali Bin Sulaiman or Lee Kim Lim) or a trade name
(e.g. ABC Enterprise or ABC Import-Export
Agency) for your business.
There are certain names that cannot be registered as
business names.
-You cannot register the name of a person who is
not the owner of the business. ---Names that has
been registered or very similar to business names
already registered by other people are not allowed.
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Norazlina AA, PARTNERSHIP & COMPANY.

-The Registrar of Business has the rights to reject

application for name which in their opinion is
misleading as to the nature, scope or importance of
the business carried on or to be carried on under
such name.
A "Certificate of Registration" will be issued for all
successful applications. You must then display the
"Certificate of Registration" at the trading or
business premises. A "Trading License" or "Form
B" will be issued for all successful applications.
Your "Trading License" should be display at the
business premises.
HOW LONG DOES A CERTIFICATE OF
REGISTRATION OR TRADING LICENCE VALID
FOR USE ?
In West Malaysia, the "Certificate of Registration" is
valid for one year from the registered date and shall be
renewed annually at annual Renewal fee of RM 60.00.

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Norazlina AA, PARTNERSHIP & COMPANY.

WHERE CAN I RENEW MY LICENSE OR

CERTIFICATE
The "Certificate of Registration" can be renewed at any
of the Registrar of Business, branches, post office or by
mail by presenting Business Registration Number with
renewal payment. You can renew your license or
certificate at the earliest three (3) months before the date
of expiry. Late renewal of business registration is an
offence and can be compounded.
CHANGES IN THE BUSINESS OWNERSHIP OR
PARTICULARS OF MY BUSINESS.
Failure to submit changes in business particulars is an
offence and can be compounded.
CLOSING THE ENTERPRISE / BUSINESS
For businesses registered with Registrar of Business or
ROB, you'll have to fill in the Notification of Disclosure
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Norazlina AA, PARTNERSHIP & COMPANY.

of Business "Form C" within 14 days from the date of

termination. Registration of "Form C" is free.
It is an offence for failure to notify the Registrar of
Business for business that has ceased operation.If the
business terminates due to the death of the owner,
personal representative or the heir may notify the
organization concerned or file in "Form C" within 30
days from the date of death.

OBJECTS CLAUSE & DOCTRINE OF

ULTRA VIRES
Memorandum of every co. must state its objects.
This is because the registered co. may only do
that which it is formed to do or authorized to do
by statute. The purpose of the objects clause is to
define and limit the activities which the co. is
permitted to undertake.. Transactions beyond its
specified objects are said to be ultra vires.
( beyond the powers of the co. )[sec. 20]

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Norazlina AA, PARTNERSHIP & COMPANY.

ASHBURY RAILWAY CARRIAGE & IRON

Co. v RICHE
RE LEE BEHRENS AND CO LTD
DEUCHAR V. GAS,LIGHT AND COKE CO

ALTERATION OF OBJECT CLAUSE

Section 28(1) allows a co. to alter its objects clause
by special resolution. The following is the
procedures to alter object clause:
1. s 28(3): Notice of a gen. Meeting must be
given to all members, trustees for debenture
holders
2. sec. 28(6): if there is any special resolution for
the cancellation of an alteration to the objects,
the application must be made within 21 days
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Norazlina AA, PARTNERSHIP & COMPANY.

from the day of the special resolution. Where

such application is made, the alteration does
not have any effect unless it is confirmed by
the court.
3. sec. 28(7): ct in using its discretion have to
take into consideration on the rights and
interest of the members and creditors.
4. sec. 28(8): A copy of the resolution must be
lodged with the Registrar within 14 days after
the expiry of 21 days of the date of resolution.
ALTERATION OF THE MEMORANDUM
The MOA of a co. may be altered only to
the extent and in manner provide by sec.
21(1).
Sec. 21(1A) provides that subject to Sec 33
and 181, if a provision of the MOA of a co.
could lawfully have been contained in the
Articles of the co., the co. may , by special
resolution, alter the MOA
By altering or
By deleting
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Norazlina AA, PARTNERSHIP & COMPANY.

The provisions, unless the MOA itself

prohibits the alteration or deletion of that
provision.
Sec 21(1B): However, the alteration of
MOA that relates to rights to which only
members included in a particular class of
members are entitled is not permitted.

ARTICLES OF ASSOCIATION
The articles primarily regulate the internal
working of the member. They govern the rights and
relations of members to the co and the relations of the
members between themselves. The articles deal with
such matters as the allotment and transfer of shares,
the rights attaching to particular shares, the rules
relating to the holding of meetings and the powers of
directors.
CONTRACTUAL NATURE( contract company v.
member)
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Norazlina AA, PARTNERSHIP & COMPANY.

LIM BENG HUI v LIM BENG SUNG

HICKMAN v KENT OR ROMNEY MARSH
SHEEP BREEDERS

ELEY V. POSITIVE GOVERNMENT

SECURITY LIFE ASSURANCE.
RAYFIELD V. HANDS

CHUNG KHIAW BANK v FOUR SEAS

COMMUNICATIONS BANK
RAFFLES HOTEL
BANKING BHD

LTD

v.

MALAYAN

Contract as distinguished from sec 33(1)

ALTERATION OF ARTICLES
Sec. 31 :Articles can be altered by the passing
of a special resolution.
Sec 31(1): provisions in the MOA may
restricts the ability of the co. to alter the
articles by imposing further requirements in
addition to a special resolution. Any such
alteration has to be made bona fidei in the
interest of the company as a whole.
GREENHALGH v ARDERNE CINEMAS
LTD

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Norazlina AA, PARTNERSHIP & COMPANY.

BROWN v BRITISH ABRASIVE WHEEL

CO.
SIDEBOTTOM v KERSHAW LEESE

PROMOTERS AND PREINCORPORATION OF

A COMPANY
i)

Definition sec 4(1)

TRACEY v MANDALAY
TWYCROSS v GRANT
ii) Duties of a promoter/ Fiduciary duties
Must not make secret profit
WHALEY BRIDGE CALICO PRINTING v
GREEN AND SMITH

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Norazlina AA, PARTNERSHIP & COMPANY.

Promoter must disclose his interest

A promoter is entitled to make a profit out of
the promotion as long as he discloses the profit
to and obtains the consent of the co.
-ERLANGER v NEW SOMBRERO PHOSPHATE
-GLUCKSTEIN v BARNES
-SALOMON v SALOMON AND CO. LTD

iii) Remedies for breach of fiduciary duties

Recission.
Damages
RE LEEDS AND HANDLEY
THEATRES OF VARIETIES
Remuneration and expenses
Suspension

iv) Pre-incorporation of a company

a) Situation under Common Law

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Norazlina AA, PARTNERSHIP & COMPANY.

-NATAL LAND CO. LTD

COLLIERY SYNDICATE LTD.

v.

PAULINE

A person who enters a contract on behalf of a co.

which has not been formed yet will be personally
liable on that contract even if he describes
himself as agent.
-KELNER v BAXTER
-NEWBORNE v SENSOLID( GREAT BRITIAN)
LTD.

b) Situation under sec 35 of Company Law

This section puts an innocent outsider in afar
more satisfactory position than under the
common law. The effect of sec. 35 is to enable
the outsider to enforce the contract either against
the company after it is incorporated when it
ratifies the contract or against the persons who
purported to execute the contract on behalf of the
non existent co. if it does not.
Elements of sec 35:
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Norazlina AA, PARTNERSHIP & COMPANY.

Contract made B4 company is formed

i) Once it is formed.co. ratifies
becomes co.s contract. All terms
agreed must be accepted by co.
ii) Once it is formedco. dont ratify
@ until the company ratify.the
promoter personally liable upon the
contract. UNLESS otherwise expressly
provided under contract.
COSMIC INSURANCE CO. LTD v KHOO
CHIANG POH
ABDUL RASHID V. DATIN HAJJAH
MAIMON
PHONOGRAM LTD V. LANE.

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