PB201

Business ownership is one of the first thing for an entrepreneur to decide on

before embarking on his/her venture.
Selecting the right form of business ownership is important because it will
determine :-
How the business is organized.
How the money that flows in and out of the business is handled.
How the business is taxed.
The main factors of business ownership is :-
Capital.
Personal assets.
Span of control.
Sharing of information.
 The type of business ownership :-
Sole proprietorship.
Partnership.
General partnership.
Limited partnership.
Company.
Private limited company.
Public limited company.
 Capital
The main element that determines the type of business.
If individual possesses a small amount of capital sole proprietorship /
partnership.
If individual possesses a big amount of capital company.
Also determines the probability to obtain loans from external sources.
The probability for company is higher because the is a guaranteed
agreement when the loan is approved. ( companies pledge their own asset as
collateral )
 Personal Assets.
Liable to the creditor if losses are incurred in sole proprietorship /
partnership.
In companies, there is a separate entity between the shareholders property,
member of the boards & the company.
If losses are incurred in the company, all losses will be borne by the
company & the others assets will not be effected.

Span of Control.
Sole proprietorship bigger span of control and authority.
Partnership share among all partners.
Company shareholders or members of the boards that hold the most of the
companys assets.( not necessarily be the director )
 Sharing of Information.
Sole proprietorship if an individual decides not to share information with
his/her counterparts.
Partnership / company no confidential information among the partners,
member of the company or the creditors.
 Sole Proprietorship
Attractive form of legal status for a new business.
The simplest business structure with minimal legal requirements under the
Business Registration Act 1956 (Amendment 1978) & the Procedure of
Business Registration 1957.
Owned & operated by one individual.
Also known as sole trader.
Can have large number of employees, need not be carried out by the sole
trader alone.
 Partnership.
Business owned by = 2 persons partnership 20 persons.(Called partners.)
Formed under the Business Registration Act 1956 (Amendment 1978) & the
Procedure of Business Registration 1957.
Each partner contributes money, labour or skills as well as shares profits &
losses.
Recommended to prepare agreement on the articles of partnership , which is
have a benefit to each partner individually.
If not, the partnership is assumed by the court to be an equal partnership in
any aspect of the business.
Divide by 2 types :-
General partnership.
Limited partnership.
 General partnership.
All partners have unlimited liabilities for the debts of the business.
Personally liable for all obligations of the firm.
The general partner manages the company, receives a salary & shares
the profits and losses of the firm.
Limited partnership.
Some of the partners have limited liabilities.(shares profits & losses but
do not take an active role in managing the company)
Only liable to the extent to their contribution. (of capital)

Company.
Divide by 2 types :-
Private limited company.
Public limited company.
 Private limited company.
Shares & owned by = 2 persons group of people 50 persons who
pool their capital and work together to form a company. (Does not
include employees or subsidiaries.)
The share cannot be sold to general public.
The term limited means it has its legal identity of its own that is
separated from the other who own it.
The owner called shareholders and they elect a board of directors,
appointing the president & other key officers of the company.
Use the Companies Act 1965 to :-
Protects the right & interest of shareholders & investors.
Provide regulation for the incorporation of companies.
Provide the formulation of company constitutions, management &
closures.
The name of the company ends with Sdn. Bhd. or Pte. Ltd..
 Public limited company.
Shares & owned by = 7 person unlimited.
The companies raise their capital by selling shares to the public & run
by aboard of directors elected by shareholders.
The term public means publicly held.
Can be either listed company on the Kuala Lumpur Stock Exchanges
(KLSE) Main Board or unlisted company on the KLSE 2nd Board.
To be listed company need paid-up capital of RM60 M.
To be unlisted company need paid-up capital of RM40 M.
The name of the company ends with Bhd. or Ltd.
Sole proprietorship.
Advantages.
Ease of information.
Total independence in decision
making/freedom of
choice/complete control.
Total responsibility.
Retaining all business profits.
No requirement for authorized &
disclosure of financial reports.
Taxation advantage.
Confidentiality.
Fewer legal restriction.
Disadvantages.
Unlimited liability
Relative difficulty in obtaining
long-term financing.
Lack of continuity.
Incurs all losses.
Lack of experience & ability.
Limited accees to fund.
Limited skills.
Long working hours.
Partnership.

Advantages. Disadvantages.
Increase in resources for capital. Unlimited liability.
Distribution & sharing of business Limited life span.
risks.
Direct rewards. Lack of continuity.
Taxation advantage. Shared profits.
Combined talents & business Shared control.
acumen.
Ease of formation. Conflict.
Ability to specialize.
 Company.
Private limited company.

Advantages. Disadvantages.
Limited liability. High set-up cost.
Perpetual life. High taxation.
Attracts skilled employees. Limited membership.
Ease of expansion. Regulations.
Independent of the members & Lack of freedom in the transfer of
shareholders. ownership.
Ease of raising capital.
 Public limited company.

Advantages. Disadvantages.
Limited liability. High set-up costs.
Perpetual life span. High taxation.
Transfer of ownership. Agency problem.
Ease of expansion. Regulations.
Economies of scale. Restriction of activities.
Relative ease of securing capital in Financial disclosure.
large amount.
Increase in ability & expertise.
Step Action Description charges
1 Approved name of the Can choose any name Free.
business to be suitable to business
registered. National, ASEAN & Royal
not allowed.
Complete the PNA 42 form
to ensure the name not taken.
2 Business registration. Get form A from CCM. Sole using given name
Complete it within 21 days RM 40
from the date of the names Sole using trade name
approved. RM70
Service charges RM5
Branches regs RM5
Business regs copy RM5
3 Prepare & sending the Form A must be sign in
documents. presence of Authorized
Officer.
Authorized Officer
lawyer, a Commissioner of
Oath.
Step Action Description
4 Approvals certificate. Obtained by filling form D
within 3 days.
Valid for 1 year.
5 Renew business Can be renewed at post office
registrations. by completing form A1 every
year.
Within 30 days before expiry
date.
Old certificate must be shown
for renewal.
6 Notification of Business regs renewed.
changes in business Sole using given name cant
registration. add partner.
Obtain form B.(4 types)
7 Notice of termination. Send 2 copies of form C to
business registration office
within 14 days (termination of
the business) / 30 days (the
death of the owner).
Charges
Fail fined RM200
Fail fined RM50,000 / 2
year imprisonment.
Sole using given name
RM 40
Sole using trade name
RM70
Branches regs RM5
Form B regs RM20
Add/close branch RM5
Printout for business
information RM10
Fail fined RM1,000 / 6
months imprisonments or
both.
Step Action Description Charges
1 Approved name of the Can choose any name Free.
business to be suitable to business
registered. National, ASEAN & Royal
not allowed.
Either in Malay / English.
2 Business registration. Get form A from CCM. Partnership using given
Complete it within 21 days name RM 40
from the date of the names Partnership using trade
approved. name RM70
Section A need to filled by Branches regs RM5
all partners. Business regs copy RM20
3 Prepare & sending the Send application personally
documents. to nearest commissions
office or by post.
4 Approvals certificate. Obtained by filling form Fail fined RM200
D within 3 days.
Needs to displayed at
business premises.
Step Action Description Charges
5 Renew business Can be renewed at post Fail fined RM50,000 / 2
registrations. office by completing form year imprisonment.
A1 every year. Partnership using given
Within 30 days before name RM 40
expiry date. Partnership using trade
name RM70
6 Notification of changes Business regs renewed. Form B regs RM20
in business registration. Partnership using trade Add/close branch RM5
name can change its status Printout for business
to sole proprietorship. information RM10
Form B need to certified
by Authorized Officer.
7 Notice of termination. Send 2 copies of form C to Fail fined RM1,000 / 6
business registration office months imprisonments or
within 14 days (termination both.
of the business) / 30 days
(the death of the owner).
Declared bankrupt
attached court injunction.
Step Action Description Charges
1 Proposed name of Complete form 13A.
business to be If approved the name will
registered. be kept under applicants
name for 3 months.
Totally in Malay / English
& > 50 letters.
2 Reservation of the Approval granted Reservation charge
approved name. applicant must reserve the RM25
name within 30 days.
Done by complete &
submitting form 14 to the
Registrar of Companies.
3 Prepare & sending the From the date form 14 is
documents. received by Registrar of
Companies submit
application for regs within 2
months.
Attached all the
documents.
Step Action Description Charges
4 Stamp duty & Memorandum & Article of
registration fee Association RM100
Company that does have share
capital RM1,000
For company that has share
capital, the fee based on the
authorized share capital.
Authorized Share Registration
Capital Fee
> RM100,000 RM1,000
RM100,001 RM3,000
RM500,000
RM500,001 RM5,000
RM1 M
RM1,000,001 RM8,000
RM5 M
RM5,000,001 RM10,000
RM10 M
Step Action Description Charges
5 Corporate Declaration After all process is done, the RM200 stamp for 1st copy
Certificate. Company Registrar will RM20 2nd copy
issue form 9.(Certificate of RM5 original copy
Incorporation for Private RM2 2nd copy depend on
Limited Company) authorized capital.
6 Businesss Company that have share
commencement. capital required to file for the
Certificate of
Commencement of Business.
Attached all the documents.
7 Duration & Once the company is
dissolution. incorporated, it may be
dissolved in accordance with
the provision & process set
out in the Companies Act
1965.
Step Action Description Charges
1 Proposed name of Complete form 13A.
business to be If approved the name will be kept
registered. under applicants name for 3 months.
Totally in Malay / English & > 50
letters.
2 Reservation of the Approval granted applicant must Reservation charge
approved name. reserve the name within 30 days. RM25
Done by complete & submitting
form 14 to the Registrar of
Companies.
3 Prepare & sending the From the date form 14 is received
documents. by Registrar of Companies submit
application for regs within 2 months.
Attached all the documents.
4 Prepare the prospectus Form 19/20.
to have shares. A prospectus need to be prepareed
to invite the public to participate in
buying the companys share.
Step Action Description Charges
5 Stamp duty & Memorandum & Article of
registration fee Association RM100
Company that does have share
capital RM1,000
For company that has share
capital, the fee based on the
authorized share capital.
Authorized Share Registration
Capital Fee
> RM100,000 RM1,000
RM100,001 RM3,000
RM500,000
RM500,001 RM5,000
RM1 M
RM1,000,001 RM8,000
RM5 M
RM5,000,001 RM10,000
RM10 M
Step Action Description Charges
6 Obtaining the After all process is done, the RM200 stamp for 1st copy
Incorporations Company Registrar will issue RM20 2nd copy
Certificate. form 8.(Certificate of RM5 original copy
Incorporation for Public RM2 2nd copy depend on
Company) authorized capital.
7 Businesss Company that have share capital
commencement. required to file for the Certificate
of Commencement of Business.
Attached all the documents.
8 Duration & Once the company is incorporated,
dissolution. it may be dissolved in accordance
with the provision & process set
out in the Companies Act 1965.