Principle and concept of business ownership, including factors that are influence the choice of ownership, types, characteristics of each business ownership, advantages and disadvantages, the differences of business ownership and the procedure of business ownership registration.

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BUSINESS
OWNERSHIP
by Mohd Zaini Zainudin
CHAPTER 3
DPB2012 – ENTREPRENEURSHIP
POLYTECHNIC VERSION

2. LECTURER
Hi Everyone, you are in Entrepreneurship DPB2012 class!
Principle and concept of business
ownership, including factors that are
influence the choice of ownership, types,
characteristics of each business ownership,
advantages and disadvantages, the
differences of business ownership and the
procedure of business ownership
registration.
INTRODUCTION

3. TOPIC OUTLINES
Upon completing this course, students
should be able to :
1. Explain factors that influence the choice of entrepreneurial ownership.
2. Identify types & characteristics of business ownership.
3. Identify the advantages and disadvantages of each of entrepreneurial ownership.
4. Display information on the registration procedure for business ownership.

4. Upon completing this course, students
should be able to :
1. Explain clearly the concept of entrepreneurship and process in developing effective
business. (C2, LD1)
COURSE LEARNING OUTCOMES

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BUSINESS OWNERSHIP
FACTORS THAT INFLUENCE THE CHOICE OF ENTREPRENEURIAL OWNERSHIP

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FACTORS THAT INFLUENCE THE CHOICE OF ENTREPRENEURIAL OWNERSHIP

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FACTORS THAT INFLUENCE THE CHOICE OF ENTREPRENEURIAL OWNERSHIP
• The main elements.
• If the individual possess small
amount of money, which one is
more suitable SOLE PROPRIETORSHIP
or COMPANY.
• Personal assets have to be taken into
account.
• What happen if losses happen in sole
proprietorship / partnership / company.

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FACTORS THAT INFLUENCE THE CHOICE OF ENTREPRENEURIAL OWNERSHIP
• Information sharing referred to one-
to one exchanges of data between
a sender and receiver.
• Type of sharing information is one-to
one, one-to-many, many-to-many,
and many-to-one.
• Wants bigger span of control, sole
proprietorship is better.
• Only sole proprietorship will have full
power to control the business.
• Span of control is a term originating in
military organization theory, but now used
more commonly in business management,
particularly human resource management.
• Span of control refers to the number of
subordinates a supervisor has.
• If we decide not to share the information, so
choose sole proprietorship.
• In partnership & company, there is no
confidential information among partners
and member of company.

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BUSINESS OWNERSHIP
TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
SOLE
PROPRIETORSHIP
PARTNERSHIP
GENERAL
PARTNERSHIP
LIMITED
PARTNERSHIP
CORPORATIONS
PRIVATE LIMITED
COMPANY
PUBLIC LIMITED
COMPANY

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
Simplest business structure
• Minimal legal requirements – Business Act 1956
(Amendment 1978) And The Procedures Of
Business Registration 1957)
• Solely owned
• Operated by one individual
• Can have large number of employees

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
• Business owned (and usually operated) by
ONE PERSON.
• SIMPLEST FORM of business ownership.
• MOST POPULAR form of business organization –
72.2% of all.
• Minimum legal requirements under BUSINESS
REGISTRATION ACT 1956 (Amendment 1978)
and THE PROCEDURES OF BUSINESS
REGISTRATION 1957 (ROB).
EXAMPLE :
• Tailors
• Beauty salons
• Restaurants
• Mini market

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
Owned by at least two or max 20 persons
• Formed under Business Act 1956 (Amendment
1978) And The Procedures Of Business
Registration 1957). – only Malaysian citizens or
permanent residents can register partnership.
• Owners = partners
• Each partner contributes > money, labour, skills ;
share profits or loses
• Recommended to prepare an agreement on
the articles of partnership.
• Eg. Klinik Dr Zaini dan Dr Nadia
2 TYPES OF PARTNERSHIP
i. General Partnership
ii. Limited Partner

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
• Owned by at least 2 OR MAX 20 PERSONS.
• Formed under BUSINESS ACT 1956
(AMENDMENT 1978) and THE PROCEDURES
OF BUSINESS REGISTRATION 1957 (ROB).
• Only Malaysian citizens or permanent
residents can register partnership.
• Owners = partners. Each partner contributes
> MONEY, LABOUR, SKILLS ; SHARE PROFITS or
LOSES.
• Recommended to PREPARE AN AGREEMENT
on the articles of partnership.
TYPE OF PARTNERSHIP :
# General Partnership
• Unlimited Liability for debts
• General partner manages
company, receives salary
and share company’s profits
or loses.
# Limited Partner
• Share the firm’s profits or loses
but do not take an active role
in managing the company
and share company’s profits
or loses.

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
Considered a separate legal entity
• Owners called “Stockholders” or Shareholders”
• Ownership evidenced by “Stock Certificate”
• Governed by “Board of Directors”
2 TYPES OF CORPORATION
i. Private Limited Company
ii. Public Limited Company

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
• Company limited by shares
• Owned by a group of people ( 2 or more – not >50 )
• “Limited” – separate entity/has own legal identity
• Owners/shareholders will elect the BOD – responsible for establishing the
general policies, appoint president.
• Name ends with ‘Sendirian Berhad’ or ‘Private Limited’ with its
abbreviation ‘Sdn.Bhd.’ or ‘Pvt.Ltd.’

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TYPES & CHARACTERISTICS OF BUSINESS OWNERSHIP
• Company limited by shares
• Owned by a group of people ( 7 or more – no max. limit )
• Source their capital by selling shares to public
• “Public” – shares can be easily purchased/sold by investors
• Can be listed or unlisted in on the stock exchange
• Name ends with ‘Berhad’ or ‘Limited’ with its abbreviation ‘Bhd.’ or ‘Ltd.’

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BUSINESS OWNERSHIP
ADVANTAGES AND DISADVANTAGES OF EACH OF ENTREPRENEURIAL OWNERSHIP

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ADVANTAGES AND DISADVANTAGES OF EACH OF ENTREPRENEURIAL OWNERSHIP
• Ease of formation.
• Total independence in decision
making / freedom of choice complete
control.
• Full and total responsibility.
• Retaining all business profits.
• No requirement for authorization and
disclose of financial reports.
• Taxation advantage.
• Fewer legal restrictions.
• Unlimited liability.
• Lack of continuity.
• Lack of experience and ability.
• Incurs all loses.
• Limited access to funds.
• Limited skills.
• Long working hours.
• Relative difficulty in obtaining long
term financing.

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ADVANTAGES AND DISADVANTAGES OF EACH OF ENTREPRENEURIAL OWNERSHIP
• Increase in resources for capital.
• Distribution and sharing of business
risks.
• Direct rewards.
• Taxation advantage.
• Combined talents and business
acumen.
• Ease of formation.
• Ability to specialize.
• Unlimited liability.
• Limited life span.
• Lack of continuity.
• Shared profits.
• Shared control.
• Conflict.

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ADVANTAGES AND DISADVANTAGES OF EACH OF ENTREPRENEURIAL OWNERSHIP
• Limited Liability - Limited to the capital
contributed/investment.
• Ease of Ownership Transfer.
• Perpetual life- Not dependent upon the
ages or resignation of members.
• Greater Access to Capital
• Easily acquired by exchanging
shares ownership
• Loan
• Public Limited Co – increase
capital through issuance of bonds.
• Management Expertise - Have BOD.
• More difficult & costly to form
• High set up cost
• Cost included charge to authorized capital,
professional fee, filing charges, printing of
Memorandum of Articles and Articles of
Association, shares certificate, company seal.
• High taxation.
• For private limited company, have limited
members.
• For private limited company, they have lack of
freedom in transferring ownership – subject to
BOD’s approval.

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BUSINESS OWNERSHIP
REGISTRATION PROCEDURE FOR BUSINESS OWNERSHIP

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REGISTRATION PROCEDURE FOR BUSINESS OWNERSHIP
Business includes every form of trade, commerce, craftsmanship, calling,
profession or other activity carried on for the purpose of gain, but does not include
any office or employment or any charitable undertaking or any occupation
specified in the Schedule of the Registration of Businesses Act 1956 (ROBA 1956) &
ROBA Rules 1957.
Two (2) type of Business:
Sole proprietorship:
Business wholly owned by a single individual using personal name as per his / her
identity card or trade name.
Partnership:
Business owned by two or more persons but not exceeding 20 persons. Identity
card name can’t be used as business name.

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REGISTRATION PROCEDURE FOR BUSINESS OWNERSHIP
How to start a business?
1. Registration of a new business to be done within 30 days from the date of commencement
of the business.
2. Registration can be done at any SSM counter or through online via Ezbiz Online services at
ezbiz.ssm.com.my.
3. Complete the Business Registration Form (Form A). Refer to Guidelines For New Business
Registration. Business may be registered using personal name or using a trade name.
i. Personal Name - Business name using personal name as stated in the identity card is not
required to apply for business name approval.
ii. Trade Name - Complete business name approval form (Form PNA.42). Refer to
Guidelines for Business Name Application.
4. Business names approval is according to Rules 15, Rules of Business Registration 1957.
5. Business Registration can be made for a period of one (1) year and not more than five (5)
years.

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REGISTRATION PROCEDURE FOR BUSINESS OWNERSHIP
Who can submit Form A?
The owner/All partners
Fee CHARGE
1. Trade Name – RM60 per year
2. Personal Name - RM30 per year
3. Branch (s) - RM5 per year for each branch
Validity certificate of registration
Registration of Business Act 1956 Validity Certificate of Registration Issued Using A4 Paper

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REGISTRATION PROCEDURE FOR BUSINESS OWNERSHIP
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REGISTRATION PROCEDURE FOR BUSINESS OWNERSHIP
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