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REGISTRATION OF BUSINESS ENTITIES - Coggle Diagram
REGISTRATION OF BUSINESS ENTITIES
LEGALIZING YOUR
ENTERPRISE
THE CORPORATE TRACK
SOLE PROPRIETOR
PARTNERSHIP
Limited Liability Partnership (LLP)
THE COOPERATIVE TRACK
COOPERATIVES
Sole Proprietorship
Law: Business Registration Act 1956
Members: One owner
Liability: Unlimited
Advantages
Low registration cost
Full control over profits and decisions
No audited accounts required by SSM.
Disadvantages
Limited capital based on the owner's funds.
Personally responsible for all debts and losses.
Business continuity depends on the owner.
All decisions and responsibilities fall on one person.
Partnership
Law: Business Registration Act 1956
Members: 2–20 (up to 50 for professional firms)
Liability: Unlimited
Advantages
Capital contributed by multiple partners.
Shared responsibilities and skills.
Better decision-making through different views.
Disadvantages
Taxed like a sole proprietorship.
Unlimited liability for partners.
Equal profit sharing if no agreement exists.
Limited Liability Partnership (LLP)
Law: Limited Liability Partnerships Act 2012
Members: Minimum 2, no maximum limit
Liability: Limited
The Hybrid Vehicle
: Combines the flexibility of a traditional partnership with the legal protection of a private limited company.
SME Catalyst:
Supports start-ups, joint ventures, and venture capital growth while protecting personal assets.
Perpetual Succession:
Ensures business continuity beyond its original founders for long-term stability.
Streamlined Compliance:
Provides corporate-level liability protection without heavy secretarial and reporting burdens.
PRIVATE LIMITED COMPANY (Sdn Bhd)
Governing Framework
: Regulated by the Companies Act 1965 / 2016, allowing between 1 and 50 individual members.
Liability & Capital Structure
: Members have limited liability strictly tied to their shares, with financing and management power directly proportional to ownership percentage.
Naming & Offer Restrictions
: Must legally include 'Sendirian Berhad' or 'Sdn Bhd' in its name, and public share invitations are strictly prohibited.
Compliance & Appointments:
Requires complex establishment documents (Memorandum and Articles of Association) along with mandatory appointments of a Company Secretary and a Financial Auditor.
COOPERATIVE
Disadvantages
• Limited capital generation
• Severe management problems
• Lack of profit motivation limits effort
• High friction/ego clashes
• Extreme government dependence and direct interference/auditing
Advantages:
• Easy formation for associations
• Open membership
• Democratic control
• Elimination of middlemen's profit
• High level of State assistance (grants, tax exemptions)
• Limited (Unless fraud or loan guarantor)
• A Highly stable existence