Classification of Companies Flashcards

Questions and Answers

Which of the following terms describes a company where liability is limited by shares?

Limited by Guarantee

Limited by Shares (correct)

Liability of Members

Unlimited Company

Which definition applies to 'Limited by Guarantee'?

Neither A nor C

Limited liability to the amount unpaid on shares

Limited liability to an amount members contribute if wound up (correct)

No limit on liability

What is a key characteristic of an unlimited company?

No limit on liability (correct)

Less than 50 members

Limited by shares

No share capital

Which of the following describes a company that has a public status?

Both A and B Signup and view all the answers

What defines a private company according to Section 2 of the CA 2016?

A private company may either be exempt or non-exempt with less than 20 members who are not companies. Signup and view all the answers

What types of businesses are private companies typically suited for?

Small to medium size businesses, usually family run. Signup and view all the answers

What is the requirement for a public company in terms of membership?

A public company has more than 50 members. Signup and view all the answers

What does Section 41 of the CA cover?

Conversion from public company to private company and vice versa. Signup and view all the answers

Which terms relate to the classification of companies in terms of ownership?

All of the above Signup and view all the answers

What does the term 'place of incorporation' define?

It defines where a company is legally registered and recognized as a business entity. Signup and view all the answers

Study Notes

Liability of Members

Types of companies based on liability include limited by shares, limited by guarantee, and unlimited companies.

Limited by Shares

Defined under Section 10(2) with reference to Section 192(2)(a).
Members’ liability is limited to the unpaid amount on shares held.
Can be structured as either a private or public company.
Creditors cannot claim members' personal assets for company debts.

Limited by Guarantee

Governed by Section 10(3) and Section 192(2)(b).
Members' liability is limited to the amount they agree to contribute if the company is wound up.
Public company status under Section 11(2).
Does not have share capital and does not issue shares (Section 12).
Must have a Constitution (Section 38).
May only be formed for community-oriented purposes or recreation (Section 45(1)).

Unlimited Company

No liability limit for members (Section 10(4)).
Can be either a private or public company (Section 11(1)).
Name must end with "Sendirian" or "Sdn." (Section 25).
Rarely used for trading organizations due to unlimited liability issues.

Public Status

Companies categorized as private or public.

Private Company

Types include exempt and non-exempt private companies.
Exempt status applies to companies with fewer than 20 members, with no member being another company (Section 2 of the CA 2016).
Exempt private companies maintain confidentiality of financial information.
Relevant sections include 42 (characteristics), 43 (prohibition), 31 (constitution), and 196 (one director requirement).
Not required to hold an annual general meeting annually.

Private Company Suitability

Typically suited for small to medium-sized family-run businesses.
Fundraising from internal sources or recognized lending institutions.
Generally lower maintenance costs compared to public companies.

Public Company

Defined as any company other than a private company (Section 2(1)).
Further divided into listed and non-listed categories.
Name must end with "Berhad" or "Bhd.".
Requires more than 50 members, with no cap on membership.
Must meet multiple provisions including two directors (Section 196) and an annual meeting (Section 340).
Can raise funds from the public through share or debenture issuance, subject to minimum subscription rules before allotting shares.

Section 41 of the CA

Addresses the conversion process between public and private company status.

Relation with Other Companies

Key types include subsidiary and holding companies (Section 4).
Ultimate holding company defined in Section 5.
Wholly owned subsidiaries are outlined in Section 6 and Section 22.
Related corporations discussed in Section 7.

Place of Incorporation

Foreign company definitions provided under Section 2(1).
"Carrying on business" includes establishing share transfer or registration offices in Malaysia, or handling property in a representative capacity (Section 561).

Description

Test your knowledge on the classification of companies with these flashcards. Each card covers essential concepts such as liability, limited by shares, and guarantees. Perfect for students and professionals alike looking to strengthen their understanding of business structures.