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 as business vehicles to Commonwealth Countries, which includes Malaysia. 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. 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 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 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 Articles: s. 15(1) 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 shares or 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) for definition)
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INCORPORATION OF A COMPANY IN MALAYSIA

The law relating to incorporation of a company in Malaysia is governed by the Malaysian Companies Act, 1965. As per the Act any company doing business or wishing to do business in Malaysia must register with the Companies Commission of Malaysia (CCM) or also known as Suruhanjaya Syarikat Malaysia (SSM). The CCM was established by the Companies Commission of Malaysia Act 2001 (CCMA), which came into force on 16 April 2002, which resulted in the merger of the Registrar of Companies (ROC) and the Registrar of Business (ROB).

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INCORPORATION OF A COMPANY IN MALAYSIA - continued

Apart from administering and enforcing the Companies Act 1965, it is also responsible in 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 INCORPORATION

To incorporate a company, a person must apply to the Company Commission of Malaysia (CCM) using Form 13A together with a payment of RM30 in order to determine if the proposed name of the intended company is available. If it is, the application will be approved and the proposed name reserved for the applicant for three months.

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PROCEDURES FOR INCORPORATION continued

A person must then lodge the following documents with the CCM within the three months to secure the use of the proposed name: i Memorandum of Association - The Memorandum of Association shall describe the company's name, the objects, the amount of its authorized capital (if any) proposed for registration and its division into shares of a fixed amount. ii Articles of Association - The Articles of Association describes the regulations governing the 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 promoter before incorporation of a company (Form 48A).

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PROCEDURES FOR INCORPORATION continued

A certificate of incorporation will be bestowed by the Registrar of Companies once registration procedures are completed and approved.

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CERTIFICATE OF INCORPORATION - SAMPLE

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SIGNIFICANCE OF THE CERTIFICATE OF INCORPORATION

The certificate of incorporation serves as conclusive evidence that a company has been duly registered from the date mentioned on the certificate and has duly complied with the requirements of Section 361 Companies Act 1965.

Salleh Abbas FJ had said about Section 361 Companies Act 1965 in Tan Lai v Mohammed Bin Mahmud (1982) 1 MLJ 338, This provision makes it impossible for anyone to challenge the lawfulness and validity of the existence of the company. A certificate of incorporation prevents any doubt from being cast upon the legal existence and persona of the company
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CONSEQUENCES OF INCORPORATION
Once the Certificate of Incorporation is issued, the subscribers to the Memorandum together with such other persons as may from time to time become members of the 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, 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. This is referred to as a corporate personality.(see s16(5) CA 1965)

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