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COMPANY LAW

CHAPTER 1: INTRODUCTION TO COMPANY LAW

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TOPICS

Types of Business Entities

Introduction

Formation procedures of incorporation

Promoters

Pre-incorporation contracts

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TYPES OF BUSINESS ENTITIES

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WHAT IS A COMPANY?

England is responsible for introducing the concept of registered companies a

vehicles to Commonwealth Countries, which includes Malaysia.

A company is a legal association of people who combine finance to a busin

Of course the nature of the business must also be legitimate.

In Australia, Canada, and the US, the term 'corporation' is preferred instead.

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BASIC TYPES OF COMPANY

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BASIC TYPES OF COMPANY

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LIMITED LIABILITY

A type of liability that does not exceed the amount invested in a partnership

liability company. The limited liability feature is one of the biggest advantage

investing in publicly listed companies.

While a shareholder can participate wholly in the growth of a company, his o

is restricted to the amount of the investment in the company, even if it subsegoes bankrupt and racks up millions or billions in liabilities.

http://www.ssm.com.my/en/LLP-AboutLLP

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PRIVATE AND PUBLIC COMPANIES

A company with share capital is a private company if its Memorandum and Artic

i restricts the right to transfer shares;

ii limits the number of members to not more than 50;

iii prohibits any invitation to public to subscribe any of the companys sha

debentures;

iv prohibits any invitation to public to deposit money with the company

a public company is a company other than a private company (refer to s.4(1) fo

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INCORPORATION OF A COMPANY IMALAYSIA

The law relating to incorporation of a company in Malaysia is governed by th

Companies Act, 1965. As per the Act any company doing business or wishin

business in Malaysia must register with the Companies Commission of Mala

or also known as Suruhanjaya Syarikat Malaysia (SSM).

The CCM was established by the Companies Commission of Malaysia Act 2(CCMA), which came into force on 16 April 2002, which resulted in the merg

Registrar of Companies (ROC) and the Registrar of Business (ROB).

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INCORPORATION OF A COMPANY IMALAYSIA - continued

Apart from administering and enforcing the Companies Act 1965, it is also re

administering and enforcing;

Trust Companies Act 1949

Kootu Funds (Prohibition) Act 1971

Registration of Business Act 1956; and

Any subsidiary legislation made under those Acts.

The 8 key functions of CCM are set out in Section 17 of the CCMA.

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PROCEDURES FOR INCORPORATIO

To incorporate a company, a person must apply to the Company Commissio

Malaysia (CCM) using Form 13A together with a payment of RM30 in order t

if the proposed name of the intended company is available. If it is, the applic

approved and the proposed name reserved for the applicant for three month

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PROCEDURES FOR INCORPORATIOcontinued

A person must then lodge the following documents with the CCM within the three months

use of the proposed name:

i Memorandum of Association - The Memorandum of Association shall describe th

name, the objects, the amount of its authorized capital (if any) proposed for registr

division into shares of a fixed amount.

ii Articles of Association - The Articles of Association describes the regulations gov

internal management of the affairs of the company and the conduct of its business

iii Declaration of Compliance (Form 6)

iv Statutory declaration by a person before appointment as a director, or by a prom

incorporation of a company (Form 48A).

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PROCEDURES FOR INCORPORATIOcontinued

A certificate of incorporation will be bestowed by the Registrar of Companies

registration procedures are completed and approved.

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CERTIFICATE OF INCORPORATION - SA

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SIGNIFICANCE OF THE CERTIFICATEINCORPORATION

The certificate of incorporation serves as conclusive evidence that a compan

duly registered from the date mentioned on the certificate and has duly com

the requirements of Section 361 Companies Act 1965.

Salleh Abbas FJ had said about Section 361 Companies Act 1965 in Tan La

Mohammed Bin Mahmud (1982) 1 MLJ 338, This provision makes it imp

anyone to challenge the lawfulness and validity of the existence of the comp

certificate of incorporation prevents any doubt from being cast upon the lega

and persona of the company

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CONSEQUENCES OF INCORPORATI

Once the Certificate of Incorporation is issued, the subscribers to the Memo

together with such other persons as may from time to time become member

company shall be a body corporate, capable of exercising the functions of an

incorporated company and of suing and being sued.

It has a perpetual succession under common seal with power to hold land, b

liability on the part of the members to contribute to its assets in the event of

wound up, as provided for in the Companies Act. This is referred to as a corp

personality.(see s16(5) CA 1965)

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