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CONTENTS
Types of Companies
Differences between Companies and Partnerships
Advantages of Companies over Partnerships
DEFINITION
A company
is an association of persons,
existing as a SEPARATE LEGAL ENTITY
from the owners (or for members)
CORPORATION
LEGAL DEFINITION:
S.4 (1) Companies Act (CA) 1965 – corporation is any body corporate
whenever formed or incorporated.
Exclude –
Public authorities, Instrumentalities or agencies of the Government of Malaysia or
of any State or body corporate not incorporated for commercial purposes and
declared as such by notice of the Minister in the…
Gazette;
Corporation sole;
Co-operative societies; and
Trade Unions
REGISTERED COMPANIES
BY LIABILITY
S.14 (2) Companies Act 1965 (CA) – a company may be:
Liability of a member of this company will depend on whether his shares are fully paid or
not.
S.22 (3) – “Berhad” or “Bhd” as part of its name to indicate Ltd. Liability.
This is to inform creditors that the liability of the members are limited
and that they can only look to whatever assets the company has to seek
payment of the company’s debt.
This liability extends to those who had left the co, but was a member
within a year before the co wound up.
Although this type of co does not have a share capital, it is still a separate
legal entity.
It is not normally used for trading, but often formed to run clubs and
other organisations that are maintained by subscriptions, social activities
and donations.
UNLIMITED COMPANY
Defined by S.4 as ‘a company formed on the principle of having no limit placed on the
liability of its members.
In winding up, the members of this company are liable for the debts of the company
without limit if the company’s assets are not sufficient.
The type of company enjoys the advantage of being a separate legal entity with two
special features;
Limit the number of members to not more than 50. If shares are jointly
held, they are considered as held by one person. Employees of the company or
its subsidiaries who are not members are not counted.
Prohibits the invitation or offer to the public to deposit money with the
company.
PRIVATE COMPANIES S.15(1)
Defined by S.4(1):
‘a private co the shares of which no beneficial interest is held
directly by any corporation, and which has not more than twenty
members none of whom is a corporation.’
A foreign company registered under the “Companies Act” 1965 has the
power to hold immovable property in Malaysia.