Business Organization Forms in Malaysia
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Questions and Answers

What are the four forms of business organization mentioned?

Sole-proprietor, Partnership, Limited Liability Partnership, Companies.

How does the liability of a sole-proprietor differ from that of a partnership?

A sole-proprietor has unlimited liability, while in a partnership, liabilities are shared among partners.

What is a key characteristic of a Limited Liability Partnership (LLP)?

An LLP has characteristics of both a partnership and an incorporated company, providing limited liability to its partners.

What distinguishes a company as a separate legal entity?

<p>A company is recognized as an independent legal entity separate from its members.</p> Signup and view all the answers

What is the minimum number of members required to form a Limited Liability Partnership?

<p>A Limited Liability Partnership requires a minimum of 2 members.</p> Signup and view all the answers

According to the Companies Act 2016, what is the minimum number of shareholders for a wholly owned company?

<p>The Companies Act 2016 allows for a wholly owned company to have a single shareholder.</p> Signup and view all the answers

What is the liability status of a partnership according to the Partnership Act 1961?

<p>In a partnership, liabilities can be either firm or individual, and are typically unlimited.</p> Signup and view all the answers

How does succession work differently across the four business organizations?

<p>Succession varies, as sole-proprietorships end with the owner's death, while companies can continue to exist independently.</p> Signup and view all the answers

How does the dissolution of a sole proprietor's business differ from that of a partnership upon an owner's death?

<p>A sole proprietor's business dissolves upon the owner's death, whereas a partnership can continue if provisions are made in the partnership agreement.</p> Signup and view all the answers

What is a major advantage of a Limited Liability Partnership (LLP) compared to a traditional partnership?

<p>An LLP offers perpetual succession, meaning the partnership can continue to exist independently of changes in ownership or partners.</p> Signup and view all the answers

Explain the primary act governing the registration of businesses in Malaysia for sole proprietors.

<p>The primary act for the registration of sole proprietors in Malaysia is the Registration of Business Act 1956.</p> Signup and view all the answers

What legal framework governs the establishment of Limited Liability Partnerships (LLPs) in Malaysia?

<p>The establishment of Limited Liability Partnerships in Malaysia is governed by the LLP Act 2012.</p> Signup and view all the answers

Identify one key difference between a traditional partnership and a company in terms of succession.

<p>A traditional partnership may dissolve upon the death of a partner, while a company has perpetual succession regardless of changes in ownership.</p> Signup and view all the answers

What defines the legal status of a sole proprietorship compared to a partnership?

<p>A sole proprietorship has no separate legal entity, while a partnership is also not a separate legal entity, but it involves multiple owners.</p> Signup and view all the answers

How does property ownership differ between a sole proprietor and a company?

<p>A sole proprietor personally owns the property, while a company can hold property in its own name without needing member names.</p> Signup and view all the answers

In what way are the liabilities of partners in a partnership characterized?

<p>All partners in a partnership are jointly liable for the business's debts and obligations.</p> Signup and view all the answers

What distinguishes the liability of a Limited Liability Partnership (LLP) from that of a sole proprietor?

<p>In an LLP, there is no personal liability for business losses, unlike a sole proprietor who is personally liable.</p> Signup and view all the answers

How is the right to commence legal action different for a sole proprietor compared to a company?

<p>A sole proprietor can bring legal action in their own name, while a company can sue and be sued in its own name.</p> Signup and view all the answers

What is the implication of a company being a separate legal entity in terms of liability?

<p>The company itself is liable for its debts and wrongful acts, protecting its members from personal liability.</p> Signup and view all the answers

What are the rules governing legal actions for partnerships?

<p>Legal action for partnerships is brought in the firm's name, rather than in the individual names of the partners.</p> Signup and view all the answers

What is the capacity of a Limited Liability Partnership in legal terms?

<p>An LLP is capable of suing and being sued in its own name, maintaining a separate legal identity.</p> Signup and view all the answers

Study Notes

Business Organization Forms in Malaysia

  • Sole-proprietor:
    • Owner is the sole contributor, employer, and employee.
    • Single entity with unlimited liability for business debt.
    • Owner enjoys all profits.

Partnership

  • Defined in Section 3(1) of the Partnership Act 1961 as a relationship where individuals carry on business together for profit.
  • Each partner has unlimited liability, shared equally unless specified in a partnership agreement.

Limited Liability Partnership (LLP)

  • Defined in Section 2 of the Limited Liability Partnership Act 2012.
  • Shares some characteristics with a conventional partnership and a company.
  • Governed by the LLP Act 2012.

Companies

  • Defined in Section 2 of the Companies Act 2016 as an incorporated entity under this Act or previous law.
  • A separate legal entity from its members, meaning it is not the same as its owners.
  • Its members have interests in the company.

Key Differences between Business Forms:

  • Membership:

    • Sole-proprietor: Only one member.
    • Partnership: Minimum 2, maximum 20 (Except for professional businesses).
    • LLP: Minimum 2, no maximum.
    • Company: Generally minimum 2, except wholly owned companies (Section 6) and companies with a single shareholder (Section 9). Maximum of 50 for private companies.

  • Legal Status:

    • Sole-proprietor: No separate legal entity.
    • Partnership: Separate legal entity.
    • LLP: Separate legal entity.
    • Company: Separate legal entity.

  • Right to Hold Property:

    • Sole-proprietor: Owner personally owns the property.
    • Partnership: Property owned jointly by all partners.
    • LLP: Can hold property in its name.
    • Company: Can hold property in its own name without using member's names.

  • Liabilities:

    • Sole-proprietor: Owner is personally liable for all business losses.
    • Partnership: All partners are jointly liable.
    • LLP: No personal liability of partners, except for their own wrongful acts.
    • Company: Company itself is liable, not its members.

  • Right to Commence Legal Action:

    • Sole-proprietor: Legal action is brought on the owner's name.
    • Partnership: Legal action is brought on the firm's name (Order 77, Rules of Court 2012).
    • LLP: Can sue and be sued in its own name.
    • Company: Can sue and be sued on its own name.

  • Succession:

    • Sole-proprietor: Will dissolve upon the death of the owner.
    • Partnership: Similar to sole-proprietor, but the partnership agreement can specify otherwise.
    • LLP: Has perpetual succession, meaning changes in partners do not affect its existence.
    • Company: Has perpetual succession and can only be dissolved through a legal process.

Business Vehicles in Malaysia

  • Sole-proprietor: Registered under the Registration of Business Act 1956.
  • Partnership: Registered under the Partnership Act 1961.
  • Limited Liability Partnership (LLP): Registered under the LLP Act 2012.
  • Companies: Registered under the Companies Act 2016.

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Business Organization Forms PDF

Description

Explore the various business organization forms available in Malaysia, including sole proprietorships, partnerships, limited liability partnerships (LLPs), and companies. Understand the legal implications, liabilities, and key characteristics of each structure to make informed decisions for starting a business.

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