2. COMPANY AS A FORM OF BUSINESS
ORGANISATION
• What is ‘company’?
• Why do we need business organisation?
• Name types of business organisations.
• Are all companies listed on Bursa Malaysia?
3. SEPARATE LEGAL PERSONALITY
• What is separate legal personality?
• The law treat a company as being a separate person from its
members and those who manage its operations.
• Company can incur and receive obligation.
• Company can hold property on its own name.
• Company can be a plaintiff or defendant in court proceeding
4. SEPARATE LEGAL PERSONALITY
• What are the consequences of treating the company as a separate legal
entity?
• A company’s obligations and liabilities are its own, and not those of its
participants.
• A company can sue and be sued on its own name.
• A company has perpetual succession.
• A company’s property is not property of its participants.
• A company can contract with its controlling participants
5. PIERCING THE CORPORATE VEIL
• What is corporate veil?
• What is meant by ‘lifting the corporate veil’ or ‘piercing the corporate veil’?
• When have the courts pierced the corporate veil?
• Where the corporate form is used to avoid an existing legal duty.
• Where the company is acting as the agent or partner of the controller.
• Where the laws or statutes expressly lift the corporate veil. (eg: s36, s304, s
67(5) of Companies Act. Also in Income Tax Act 1967.
6. LIMITED LIABILITY
• What is limited liability?
• A member of a company limited by share is usually not required to contribute amounts
from their personal wealth, beyond the subscription price of their shares, to meet the
debts of a company.
• Why?
• Encourage risk taking and entrepreneurial behaviour
• Decrease the need for shareholder to monitor the managers
• Provide incentive for managers to act efficiently
7. ADVANTAGES OF CORPORATE FORM
• Limited liability
• Perpetual succession
• Free transferability of interest
• Companies as large commercial enterprises
• Corporate law as a standard form contract between participants
• Company charges
• Taxation consideration
9. PUBLIC AND PRIVATE COMPANIES
• PRIVATE COMPANY:
• Sdn Bhd
• Must have restriction to transfer its share
• Must not more than 50 shareholders
• Not allowed to be listed in share market – no public shareholders
• PUBLIC COMPANY:
• Bhd
• Purpose – to have public shareholders
• Subject to additional obligation such as to maintain register of substansial shareholder
(s 69L CA)
10. CORPORATE GROUP
• What are corporate groups? Why?
• Group relationship.
• A corporation is deemed to be related to another where the corporation:
• Is the holding company of the other corporation
• Is a subsidiary of the other corporation
• Is a subsidiary of the holding company of the other corporation
• Subsidiary if: (section 5)
• The holding company controls the composition of the subsidiary board
• Control more than one-half of the voting power
• Hold more than one-half of the issued capital
