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Registration of Business Entities - Coggle Diagram
Registration of Business Entities
INTRODUCTION*
The process of registering a business with an authorized agency to legalize its business activities.
SSM
= Companies Commission of Malaysia; registers business entities such as sole proprietorships, partnerships, LLPs and private limited companies.
SKM
= Malaysia Co-operative Societies Commission; registers cooperatives.
Types of Business Entities in Malaysia (cont.)
Sole Proprietorship
= A business owned, funded and managed by one person.
Benefits
Easy and inexpensive to establish
Full control over decisions
Owner receives all profits
Simple management
Limitations
Unlimited liability.
Limited capital.
Owner bears business risks.
Business continuity may depend on the owner.
Partnership
= A business owned by 2 to 20 people. Certain professional partnerships may have up to 50 members.
Benefits
More capital from partners.
Shared responsibilities.
Combined skills and knowledge.
Easy to establish.
Limitations
Generally unlimited liability for partners.
Profits are shared.
Disagreements may occur.
Partners may be responsible for business actions carried out by other partners.
Limited Liability Partnership (LLP)
= A business structure combining the characteristics of a private limited company and a conventional partnership.
Benefits
Separate legal entity
Limited personal liability
Perpetual succession
Less strict reporting requirements than a private limited company
Limitations
More compliance requirements than a conventional partnership
Partners need to coordinate decisions.
Administration can be more complex than a sole proprietorship
Separate Legal Entity
-- A business legally separate from its owners or partners.
Perpetual Succession
-- The business continues to exist despite changes in its partners or members.
Private Limited Company
= A company that is a separate legal entity from its owners or founders.
Benefits
Limited liability for shareholders.
Separate legal entity.
Can obtain capital from shareholders.
Continues to exist despite changes in ownership.
Limitations
More complicated to establish
Higher administrative responsibilities
Must comply with legal requirements
Requires company secretarial services
Limited Liability
-- Shareholders' liability is limited according to their shareholding.
Sdn. Bhd.
-- Short form of Sendirian Berhad a private limited company.
Private Share Offering
-- A private limited company cannot invite the public to buy its shares.
Cooperative
=A voluntary association of people working together to meet common economic, social and cultural needs.
Benefits
Members work together for common benefits
Democratic control
Separate legal entity
Members generally have protection from personal liability
Limitations
Limited distribution of profits to members
Requires a minimum number of members
Decision-making may take time
Must comply with cooperative regulations
Democratic Control
-- Members participate in controlling and making decisions for the cooperative.
Minimum Members
-- According to the chapter, a primary cooperative requires 100 members, while a farmers' cooperative requires 50 members.