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Lecture 4
FPTT- UTeM
2 INTRODUCTION
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BUSINESS ORGANIZATIONS IN MALAYSIA
3Businesses in Malaysia can be registered under either one
of the following acts:
I. Business Registration Act 1956 (Amendment 1978) (
http://www.agc.gov.my/Akta/Vol.%204/Act%20197.pdf)
and Procedures Of Business Registration 1957.
There are two (2) types of business that can be
formed under this Act:
1. Sole Proprietorship (Single Owner)
Partnership (Sharing)
2.
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BUSINESS ORGANIZATIONS IN MALAYSIA
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III. Company Act 1965 (https://www.ssm-einfo.my/page/14)
There are 3 types of companies that can be formed under this Act:
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6SOLE PROPRIETORSHIP (contd)
ADVANTAGES DISADVANTAGES
1. Easy to manage.
1. Limited source of capital.
2. The owner enjoy a certain 2. The liability of the business
degree of flexibility. is unlimited.
3. Easy to form and dissolve 3. The future development of
the business is limited.
(bubar).
4. The owner is solely
4. All profits go to the owner. responsible for carrying out
all the tasks.
5. Not subjected much to
5. The life span of the business
government rules. depends upon the age of the
6. Pays individual income tax owner.
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PARTNERSHIP
Business owned by two or more
persons but not exceeding 20 persons.
Identity card name cant be used as
business name.
In a partnership, partners agree to undertake
joint business and own the business.
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PARTNERSHIP (contd)
ADVANTAGES
1. Easy to set up. DISADVANTAGES
2. Easier to secure financial 1. Business liabilities are
assistance. unlimited.
3. Equity can be increased 2. Life span of business
through enlisting depends on life spend
additional partners. of partners.
4. Business risks can be 3. Unethical or misconduct
reduced and distributed behavior may happen.
among partners.
5. The responsibility of 4. Risk of personal clashes
managing and handling among partners.
the business can be
divided equally.
6. Synergy
7. Individual income tax.
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CONTRACT AGREEMENT
Name of the business
The duration of the partnership to prevent the
dissolution/closure of the business. The agreement
should also state that in the event one partner passes
away or withdraws from the partnership, the business will
not be dissolved.
Individuals involved in managing the partnership
business.
The accounts of the business and share capital that
show the contribution of each partner and the right and
obligations of each partner towards the capital.
The properties are considered as assets of the business .
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What if there is NO contract
agreement?
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Section 26 and 27 of the Act (Cont.)
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How to start a Sole Proprietorship or
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Partnership Businesses?
https://www.ssm.com.my/en/sole/starting-a-sole-
proprietorship-partnership
LIMITED LIABILITY PARTNERSHIP
What is it?
Limited Liability Partnership (LLP) is an alternative business vehicle regulated under the Limited
Liability Partnerships Act 2012 which combines the characteristics of a company and a
conventional partnership.
Who is it for?
The LLP business structure is designed for all lawful business purposes with a view to make
profit.
LLP may also be formed by professionals such as Lawyers, Chartered Accountants and Company
Secretaries for the purpose of carrying on their professional practice.
The LLP concept will also support start ups, small and medium enterprises (SMEs) to grow their
businesses without having to worry too much on their personal liabilities, personal assets and
strict compliance requirements.
Salient features
Amongst others, LLP is featured with the protection of limited liability to its partners similar to
the limited liability enjoyed by shareholders of a company coupled with flexibility of internal
business regulation through partnership arrangement similar to a conventional partnership.
Any debts and obligations of the LLP will be borne by the assets of the LLP and not that of its
partners. An LLP has the legal status of a body corporate which is capable of suing and being
sued in its own name,holding assets and doing such other acts and things in its name as bodies
corporate may lawfully do and suffer.
LLP also offers flexibility in terms of its formation, maintenance and termination while
simultaneously has the necessary dynamics and appeal to be able to compete domestically and
internationally. With the introduction of LLP,entrepreneurs will have more options to choose the
most preferredform of business vehicle.
Source: https://www.ssm.com.my/en/LLP-AboutLLP
HOW TO START A LIMITED LIABILITY
PARTNERSHIP?
https://www.ssm.com.my/sites/default/files/guideline
s/General%20Guidelines%20on%20registration.pdf
PRIVATE LIMITED COMPANY
(Limited Company by Share)
CHARACTERISTICS:
i. Right and Responsibility
A company can acquire assets under its name and can also take
legal action and face legal action under its own name.
ii. Life Span
Not dependent upon the death or resignation of its members. Can
be dissolved when members no longer interested in the business.
iii. Liabilities
Liabilities of members limited to the total of shares contributed.
iv. Membership
There must be at least 2 members who are Malaysian. Can act as
founder or director of the company. BOD will manage and run the
company under the Companies Act 1965.
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Contds
Mechanism:
1. Memorandum of Association
2. Articles of Association
3. The Share Capital of a Company
4. Members of Shareholders
5. Board of Directors
6. Secretary
7. Auditors
8. Registered Office
9. Company Seal
10. Authorization Letter
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Contds
ADVANTAGES DISADVANTAGES
https://www.ssm.com.my/en/company/incorporation-
of-local-company
PROCEDURES & LEGAL ASPECTS
Technopreneurs need to know and abide by
the procedures and rules governing business
entities in Malaysia.
Among the legal aspects that relate to
Malaysian businesses are:
1. License
2. Permit
3. Assembling Of Machinery & Equipment
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LICENSE
1. Business license
2. Wholesaling License
3. Manufacturing License
4. Food Manufacturing License
5. Sales Tax License
6. Excise License
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PERMIT
1. Foreign Workers Entry Permit
The entrepreneur needs to abide by the rules and regulations pertaining to
the hiring of foreign workers.
2. Transportation Permit
Commercial vehicles licenses are issued according to the application for the
use of different types of vehicles such as taxis, school buses, factory buses
or different categories of lorries.
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LETTER OF AUTHORITY
Government bodies issue letter of authority
Certificate of Fitness (CF) is Ex. Of letter issue by Low Authority
and supported by the Fire Department.
CF is issued after a building is certificated safe for use and
adheres to fire safety procedures.
ASSEMBLING OF MACHINERY &
EQUIPMENT
1. Pollution Control
2. Business Rights
i. Trademark Protection
ii. Patent Protection
iii. Copyright
3. Standards and Quality
4. Hire Purchase Act
5. Workers Social Needs
6. Infrastructure Needs
7. Import and Export Regulations
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BUSINESS SUPPORT SYSTEM
Courses,
Seminars
And
Workshops
Extension Technical
Services Assistance
Advisory Marketing
Services Assistance
TECHNOPRENEUR
Financial Infrastructure
Assistance Assistance
Research
Information
and
Assistance
Development
THANK YOU
Q&A