FORMS OF BUSINESS

ENTITIES AND BUSINESS

SUPPORT SYSTEM

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Session Objectives
At the end of the session, students should
be able to:
understand various forms of
business organisations in Malaysia
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LEGAL FORMS OF BUSINESSES IN MALAYSIA

Registration of Business Entities:
1.
Business Registration Act 1956 (Amendment
1978) 7 Procedures Of Business Registration 1957
2.

Company Act 1965

3.

Cooperative Act 1948

4.

Parliamentary Act or State (Government) Enactment

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Common forms of business structure:

Sole proprietorship or sole trader
Partnership

Limited
company
3 MAJOR
CHARACTERISTICS:
1. NUMBER OF OWNER(S)
2. LIABILITIES OF OWNER(S)
3. LIFE SPAN OF THE BUSINESS / COMPANY
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Sole Proprietorship/Sole Trader

Solely owned by one person
Management rests on that person
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Partnership
Partners / Owners :

Min 2 and Maximum 20

Partners share management responsibilities

Unlimited liabilities (also refer to partnership agreement)
Life span depends on owners / partners

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Partnerships are governed by the Partnership Act

1961. If the partners do not make their own
agreement, the provisions of the Act will become
applicable, such as:
profits & losses are to be shared equally

no interest is payable on partners' capital

every partner is entitled to participate in the management
of the business
no partner is entitled to a salary for participating in the
partnership business
expulsion of any partner must be in the form of expressed
agreement between the partners concerned
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introduction of a new partner must be by an unanimous

Limited Company
A limited company is incorporated under the
Companies Act 1965. It can be:
A company limited by shares
- Private limited company (Sdn Bhd)
- Public limited company
- Foreign
owned company
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Company Limited By Share

The liability of a member's contribution to
the company's assets is limited to the amount
specified, if any, unpaid on his share. The
personal assets of a shareholder would not
be available to the creditors of the company.
Two types of companies limited bu share:
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Private Limited company (Sdn. Bhd.)

1.Restricts the right to transfer its share
2.Limits the number of its members /
shareholders between 2 to 50
3.Prohibits any invitation to the public to
subscribe for any shares in the
company
4.Prohibits any invitation to the public to
deposit money with the company
for fixed periods
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Public Limited company (Bhd.)

A public limited company is any
company other than a private company
whose shares may be offered to the
public for subscription. Such shares are
freely transferable.

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ADVANTAGES AND
DISADVANTAGES OF EACH
BUSINESS FORM

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Sole Proprietor/Sole Trader

Advantages
1. Easy to set up - few formalities
2. Easy to manage - the owner is the boss
3. The owner keeps the profits
4. The owner is not required to disclose
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Sole Proprietor/Sole Trader

Disadvantages
1. The owner is totally responsible for
any debts incurred by the business - if
the business fails or goes bankrupt,
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Partnership
Advantages
1. Easy to set up - few formalities
2. The owners are not required to disclose
business affairs to the general public
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3. Contributions to capital
can be increased

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Partnership
Disadvantages
1. Each partner is liable for the debts of
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the business - regardless of which
partner

Limited Company
Advantages
Shareholders are not liable for the
company's debts beyond the amount of
share capital they have subscribed
Easier to transfer ownership, either wholly
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Limited Company
Disadvantages
1. The public will have access to the financial
affairs of the company
2. The company has to comply with the
requirements of the Companies Act 1965
3. ETR
The
auditors to verify
300 company has to appoint
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HOW TO REGISTER NEW

BUSINESSES/COMPANIES
All forms of sole traders and
partnerships are required under the
Registration Of Business Act 1956
to be registered with the Registrar of

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Sole Proprietorship
Before registering a business, complete a name
search form to ensure that there is no duplication

If the name is approved, proceed to the

following steps:

Step 1 : Obtain form "A" from ROB

Step 2: Complete Form "A"
Step 3: Have it verified by Commissioner for Oaths
Step 4: Submit Form "A" with a photo-copy of your i/c
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Memorandum and Articles of

Association
The affairs of a limited company are
governed by these documents. These
are usually combined into one

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Memorandum of Association
This document defines the essential components
of the structure of the company. It contains:
the name of the company
the situation of the registered office
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the objects of the company
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that the liability of members is ltd.

Articles of Association
This document constitutes the internal regulations of
a company. It contains:
the name of the company
the name of directors
the minimum and maximum number of directors
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the share qualifications

of each director

Procedures and Legal Aspects

License, Permit and Letter of Authority
License

Business License
Wholesaling License
Manufacturing License
Food Manufacturing License
Sales Tax License
Excise License

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Procedures and Legal Aspects

Permits
Foreign Workers Entry Permit
Transportation Permit
Letter Of Authority
Certificate of Fitness

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Other Procedures To Be Considered

Assembling of Machinery and Equipment
Pollution Control
Business Rights
Trade Mark Protection
Patent Protection
Copyright
Standards and Quality
Hire Purchase Act
Workers Social Needs
Infrastructure Needs
Import and Export Regulations
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BUSINESS SUPPORT SYSTEM

Training,
Seminar &
Workshop
Infrastructure

Consultancy
& Advisory
Services

ETR 300

Technical
Assistance

Marketing
Assistance
Financial
Assistance

The Entrepreneur
Business
Information
Services
Business
Research

Extension
Services

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Technical Assistance
SIRIM, MARA, MARDI, RRI, PORIM

Marketing Assistance
MITI, MATRADE, FAMA, NRC
DISTRIBUTORS, GUTHRIE, BESTA

Infrastructure
MARA, PKEN, SIRIM, UDA, KPLB, BPIMB,
MIDA
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Information Services
MATRADE, MITI, MARDI, SIRIM, MIDA,
FRIM, universities

Business Research
MARDI, SIRIM, universities

Financial Assistance
commercial banks, merchant banks,
industrial bank, financial institution,
government agencies
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Consultancy & Advisory Services

MEDEC, MARA

Training, Seminar and Workshop

MEDEC, PUNB, MARA, FDPN, SEDC

Extension Services
MEDEC, MITI, SIRIM, MARA,
MATRADE, MARDI, NPC

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