What is a company law and how useful is a

company as a business structure

Type of business organization
Sources of Law
Classification of companies
How to form a company
Important terminologies
(i) Sole proprietor
To earn extra income, Pak Din decided to sell
nasi lemak at a Pasar Malam three times a week.
Pak Din spend about RM40-50 for the
preparation of nasi lemak. He managed to sell
about 80-100 packs per night.

(ii) Partnership
Pak Dins cousin Pak Abu suggested that he
should open a stall at the food court nearby.
Pak Abu offered himself to be Pak Dins partner,
he contributed some money to rent the place
and ran the stall DELI NASI LEMAK together. At
the end of the month they share the profit.
(iii) Company
After two years, Pak Din & Pak Abu decided to
form a company Deli Nasi Lemak Sdn Bhd.
Both of them have 30 % shares, 15 % shares
each to their sons Amir & Aidit and 10 % to their
friend Pak Ali. Pak Din, Pak Abu and Pak Ali
were also directors of the company.
An artificial person created by the law.

To hold property and carry on business or
other activity as an entity separate from the
participants (investors, managers) in that
business or activity.


Allowing a large number of people to pool
their resources.
Limited liability if a company is unable to
pay its debt, then those participants who
have invested money in the company are not
liable to pay more than what they have
agreed to pay.
Company is a separate legal entity.
Company Act 1965 (main statute)
It is based on:
Australia Uniform Co. Legislation 1961
UK Companies Regulation 1966
Case Laws
Reception of English common law and
statutes- section 3 & 5 of the Civil Law
Act1956
Security Commission Act 1993
Capital Market and Services Act 2007
Bursa Malaysia Listing Requirements
Code of Takeover & Mergers 2010
Code of Corporate Governance 2000
(regulates corporate transaction in public
companies)
Companies Commission of Malaysia
(Provide regulatory framework for corporate &
business affairs in Malaysia)
Securities Commission
Bursa Malaysia
Public Company
Any member from
public
Can be listed (sec 4
(1))
Can change from
private to public or
public to private
(sec 26)
Private Company
Limited to certain
people
Sec 4 (1), 15 (1)
Has the word Sdn

Limited Company
Limited by shares
or limited by
guarantee
Has the word Bhd

Unlimited company
Liability of member
is unlimited
Very rare
May convert to
limited
Limited by shares
Most common
Liability of
members is limited
to the amount of
unpaid shares hold
by them.

Limited by
guarantee
Non-trading co.
No share capital
Non-profit
activities
No shareholders
Liability arise only
upon winding up
Parent/Holding Company and Subsidiary
Company
Sec 5:
Control the composition of BOD
Control more than half of voting power
Control more than half issued share capital
Refer to Secs 5A, 5B, 6.
Foreign Companies (secs 329-340)
Formed outside Malaysia
Head office not in Malaysia
Investment Companies (secs 319-328)
Declared by the minister as investment
company
Engage in making investment in
marketable securities
Sec 14 (1)-2 or more persons may form a
company.
Companys name-lodge to the ROC
Sec 22 (1)-must not be undesirable,
identical, related to state or country
Reservation of name- 3 months, sec 22 (7)
Submit the relevant documents-MOA, AOA,
other statutory declarations. Within 1 week
the process could be completed-ROC issue
certificate of incorporation
Sec 14 (1)-2 or more persons may form a
company.
Companys name-lodge to the ROC
Sec 22 (1)-must not be undesirable,
identical, related to state or country
Reservation of name- 3 months, sec 22 (7)
Submit the relevant documents-MOA, AOA,
other statutory declarations. Within 1 week
the process could be completed-ROC issue
certificate of incorporation
Company and Corporation
Share
Equity capital
Debt capital
Member of company

Company : a company incorporated pursuant
to the Act or pursuant to any corresponding
previous enactment
Corporation: Any body corporate formed and
incorporated or existing within Malaysia or
outside Malaysia and includes any foreign
company
Share : An interest of a shareholder in the
company measured by a sum of money for
the purpose of liability in the first place and
of interest in the second, but also consisting
of mutual covenants entered into by all the
shareholders (Borlands Trustee v Steel Bros &
Co Ltd)
Equity Capital: Capital contribute d by the
members of the company.
A member of a company: People who have
invested money with the company in the
expectation that they will receive a return on
their money if the company is successful.
Debt capital : Method of financing business
e.g, loan, credit facilities etc.



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