OVERVIEW

DIFFERENT TYPES OF
BUSSINESS ENTITIES.

PREPARED
FOR :
TYPE OF BUSINESS ENTITIES

Unincorporated Associations
– Sole Proprietorship
– Partnership
Incorporated Associations/Companies
– Public Limited Companies
– Companies Limited by Guarantee
– Private Limited Companies
 Differences between A
Company and A Sole
Proprietorship Or Partnership
Indicators Sole Partnership Company
Proprietorship

Number of One person Min: 2 Min: 2 members

members Max : < 20 persons Max:
Max: 50 Public: No Limit
persons Private: 50 members

Ability to Business assets Partners own Company possess its

hold are his assets the assets own property.
property collectively Members do not
have interest in the
company’s property
as they do not legally
own them.
Members’ Solely Collectively Liability of
liability for responsible for responsible for members is
debts all the debts of all the debts of limited to the
the firm. the firm. amount of
Liability is Partners liability capital
unlimited. to pay the firm’s invested in the
debt is unlimited company
Mode of Any legal No legal entity. Can sue and be
taking legal proceedings sued in its own
proceedings brought in the name to enforce
name of the sole its rights or
proprietor not liabilities owned
the name of the by it
firm itself. No
Duration and legal
Whenentity.
the sole Dissolved in Can only be
dissolution proprietor dies accordance with dissolve in
the firm will be the partnership accordance with
closed agreement. the provisions of
the Companies
Act 1965
CLASSIFICATION OF
COMPANIES

2. Companies limited by shares

3. Companies limited by
guarantee
4. Unlimited companies
 Liability of the Members
• Liability in respect of its debts may
be limited or unlimited.
• The company’s own liability for its
debts is never limited; must pay off
its creditors.
• The question of members’ liability
only becomes relevant if the
company goes into liquidation and
the debts cannot be fully discharged
out of its assets.
 Companies Limited By
Shares
• Liability of the members to
contribute towards the assets of the
company on winding up its limited.
• Limited by shares, a member cannot
be asked to pay more than the
amount unpaid on his shares when
liquidate.
• If he has paid in full for his shares, he
cannot be asked for any further
contributions.
 Companies Limited By
Guarantee
• Where the liability of the members is
limited by the Memorandum of
Association to the amount the
members have guaranteed to
contribute to the assets of the
company on winding up.
• Sec 14A, CA (amendment) 1985,
prohibits the formation of a company
limited both by shares and
guarantee.
 Unlimited Companies
Company which the liability of the
members to contribute to the assets
of the company on winding up is not
limited in any way.
When a company is wound up every
present and past member is liable to
contribute to the assets of the
company to an amount sufficient for
payment of its debts and liabilities.
 Private Companies
A company with a share capital may
be incorporated as a private
company if its memorandum or
articles (M&A) of associations
contains all of the followings:
A restriction on the right to transfer
shares
A limitation on the number of members
to not more than 50 people
A prohibition against raising money
from the public
 Differences Private and Public
Company
INDICATORS PRIVATE COMPANY PUBLIC COMPANY

Name of Must end with the word Must end with the
Company ‘Sendirian Berhad’ word ‘Berhad’

Commencement Can commence business Can only commence

of the business and exercise borrowing business after the
powers as soon as they issue of the certificate
incorporated for commencement of
business by ROC
Statutory meeting Does not apply Must hold a statutory
meeting and lodge
statutory reports with
ROC
 Differences Private and Public
Company
INDICATORS PRIVATE COMPANY PUBLIC COMPANY

Issue of shares Does not issue prospectus Must issue a

prospectus or
Statement in lieu of
prospectus
Age limit of Director need not retire at Director must retire
director the age 70 at the age of 70

Removal of Rules regarding removal Section 128 of

director of directors are found in Companies Act
Articles of Association stipulates that a
director can be
removed by ordinary
resolution.
TYPE OF BUSINESS ENTITIES
• Unincorporated Associations
– Sole Proprietorship
– Partnership
• Incorporated Associations/Companies
– Public Limited Companies
– Companies Limited by Guarantee
– Private Limited Companies
 THANK YOU……..

PREPARED BY: