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CHAPTER 5: BUSINESS ENTITIES - Coggle Diagram
CHAPTER 5: BUSINESS ENTITIES
Business Entities
:pencil2: Company (Act 1965)
a. Private Limited (Sdn Bhd)
b. Public Limited Company (Bhd)
:pencil2: Hybrid
Limited Liability Partnership (Act 2012)
:pencil2: Business
a. Sole proprietorship (Business Registration Act 1956)
b. Partnership (Business Registration Act 1956)
Private Limited Company
Under the companies ACT 1965
Characteristics:
:check: Right and responsibility :check: Life span :check: Liabilities :check: Membership
Private Limited Requirement:
:pencil2: Board of directors
:pencil2: Company secretary
:pencil2: Members of shareholders
:pencil2: Auditors
:pencil2: The share of capital :Authorised capital, Paid-up capital
:pencil2: Registered office
:pencil2: Article of association
:pencil2: Company seal
:pencil2: Memorandum association
:pencil2: Authorization letter
Terms and conditions of private limited company:
:red_cross: Not exceed 50 people.
:red_cross: Must use Sdn. Bhd. at the end of the name.
:red_cross: Specific authority to transfer ownership of the company' Board of Director.
:red_cross:Not allowed to offer the general public to deposit money within a stipulated time frame.
:red_cross: Not allowed to offer and sell any share or debenture to the general public.
Private Limited Company Advantages:
:silhouette: All shareholders are legally protected by law.
:silhouette: Limited liabilities to the capital that they contributed.
:silhouette: Funds are easy to acquire through the exchange of share
ownership or loan from a financial institution.
:silhouette: Greater potential for expansion.
Private Limited Company Disadvantages:
:explode: The company’s shares cannot be transacted
through the share market.
:explode: The company must pay corporate tax.
:explode: Fulfil the terms set by the
Companies Commission of Malaysia.
:explode: The financial affairs of the company must be
made transparent to the general.
Sole Proprietorship
:star: Formed under the Business Act 1956
(Amendment 1978).
:star: Owned by one person whose liability is
unlimited.
:star: Simplest business structure.
:star: Requires a small amount of capital to start business.
:<3: Advantages Sole Proprietorship:
:check: Easy to manage as owner can make own
decisions.
:check: All profits or losses bear by the owner.
:check: Easy to form and dissolve (minimum
formalities).
:warning: Disadvantages Sole Proprietorship:
:forbidden: Limited source of capital.
:forbidden: The life span of the business depends upon the age of the
owner and how efficiently he manages the business.
:forbidden: Liability of the business is unlimited.
Partnership
:warning: Partnership Disadvantages:
:forbidden: Business liabilities are unlimited, which may involve personal assets of all partners of the company.
:forbidden: Risk of personal clashes among partners.
:forbidden: If no Letter of Agreement is being made, unethical or misconduct behaviour may happen.
:<3: Partnership Advantages:
:check: Easy to set up with few formalities.
:check: Easier to secure financial assistance.
:check: Equity can be increased through enlisting additional
partners.
:red_flag: Incorporated under the Business Registration Act 1956 (Amendment 1978).
:red_flag: A partnership is a legal business entity with two
or more partners.