chapter 1 Flashcards
What is a company?
A company is a legal association of people who combine finance to a business.
Of course the nature of the business must also be legitimate.
For present definition see Section 3 of the CA 2016.
Basic type of companies
1 Statutory companies like PETRONAS (acted by parliament)
2 Registered Companies
Registered Companies
they are companies that formed under S10 C act 2016.
S10 C act 2016.
(1) A company may be incorporated as
— (a) a company limited by shares;
(b) a company limited by guarantee; or
(c) an unlimited company.
(2) A company is limited by shares if the liability of its members is limited to the amount, if any, unpaid on shares held by the members.
(3) A company is limited by guarantee if the liability of its members is limited to such amount as the members undertake to contribute in the event of its being wound up.
(4) A company is an unlimited company if there is no limit on the liability of its members.
types of Registered Companies
- companies limited by guarantee (charitable companies)
- companies limited by share
- unlimited companies
companies limited by share
- public companies (BHD)
- private companies (SDN BHD)
limited liabilities
A type of liability that does not exceed the amount invested in a partnership or limited liability company. The limited liability feature is one of the biggest advantages of investing in publicly listed companies.
While a shareholder can participate wholly in the growth of a company, his or her liability is restricted to the amount of the investment in the company, even if it subsequently goes into liquidation and racks up millions or billions in liabilities.
Private and public companies
A private company is prohibited ( connot) from:
making any invitation to public to subscribe any of the company’s shares or debentures;
making any invitation to public to deposit money with the company
For other details see Sections 41-44 CA 2016
Incorporation of a company in Malaysia
law for companies:Companies Act 2016
for register the company:Companies Commission of Malaysia (CCM) [The CCM was established by the Companies Commission of Malaysia Act 2001 (CCMA).]
or also known as Suruhanjaya Syarikat Malaysia (SSM).
Procedures for incorporation
OLD LAW (1965):
must apply to the Company Commission of Malaysia (CCM). A person must then submit the following documents with the CCM within the three months to secure the use of the proposed name:
i Memorandum of Association
ii Articles of Association
iii Declaration of Compliance (Form 6)
iv Statutory declaration by a person before appointment as a director, or by a promoter before incorporation of a company (Form 48A).
NEW LAW(2016):A more simplified process (Section 14 CA 2016)
Today there is no requirement for the filing of the Memorandum, the Articles, the declarations in Form 6 and Form 48A)
A certificate of incorporation will be bestowed by the Registrar of Companies once registration procedures are completed and approved.
See section 17 CA 2016.
Certificate of incorporation
gives:
number
seal
signature
Significance of the certificate of incorporation
onclusive evidence;
- that a company has been duly registered from the date mentioned on the certificate and has duly complied with the requirements of the Companies Act.
- This provision makes it impossible for anyone to challenge the lawfulness and validity of the existence of the company
- prevents any doubt from being cast upon the legal existence and persona of the company
Consequences of incorporation
-the company shall be a body corporate, capable of exercising the functions of an incorporated company and of suing and being sued.
-with power to hold property, but with such liability on the part of the members to contribute to its assets in the event of it being wound up, as provided for in the Companies Act
The company shall also have Separate Legal Personality
Separate legal entity (s20 CA 2016)
- A company incorporated under this Act is a body corporate and shall— (a) have legal personality separate from that of its members; and (b) continue in existence until it is removed from the register.
To whom is the company responsible to? Friedman:
Shareholders
Friedman: ‘… there is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.’
