Law 309: Chapter 9 - Public Incorporations

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Questions and Answers

What distinguishes the legal personality of a corporation from its shareholders?

  • The corporation operates under government regulations.
  • The shareholders are personally liable for the corporation's debts.
  • The corporation has a separate and distinct legal personality. (correct)
  • The shareholders retain control over the corporation's assets.

Which characteristic indicates that a corporation's property is not considered government property?

  • Corporations receive special privileges under the law.
  • Corporations are bound by ordinary laws like any other person. (correct)
  • Corporations cannot hold real estate assets.
  • Corporations are always governed by public interests.

What is implied about the government’s control over public corporations?

  • The government cannot influence the decision-making processes.
  • The corporation operates entirely independently of the government.
  • The government has full ownership of the corporation's assets.
  • The government may subscribe to the capital of the corporation without influencing its operations. (correct)

In the context of legal characteristics, what does the Tamlin v Hannaford case illustrate?

<p>Property owned by statutory corporations is treated like any other private property. (A)</p> Signup and view all the answers

What does the legal concept of distinct personalities imply regarding the rights of a corporation?

<p>Corporations are treated as individuals under the law. (A)</p> Signup and view all the answers

What distinguishes a public corporation from the Government of Malaysia?

<p>It is established as a legal entity under an Act of the State Legislature. (A)</p> Signup and view all the answers

Which of the following best describes the primary function of Bank Negara Malaysia (BNM)?

<p>To manage national reserves and assist in monetary policy. (C)</p> Signup and view all the answers

Which classification of public incorporation focuses on providing financial support for developmental activities?

<p>Promotional and Developmental Undertakings (C)</p> Signup and view all the answers

Which of the following organizations would be classified as a Financial Institution?

<p>Bank Negara Malaysia (C)</p> Signup and view all the answers

Which of the following is NOT a characteristic of promotional and developmental undertakings?

<p>They focus on production and commercial transactions. (C)</p> Signup and view all the answers

Which type of public enterprise is responsible for producing goods and services for profit?

<p>Commercial and Industrial Undertakings (A)</p> Signup and view all the answers

Which of the following statements about public enterprises is true?

<p>They can take the form of government companies registered under the Companies Act. (B)</p> Signup and view all the answers

What is the primary purpose of companies classified as 'Commercial and Industrial Undertakings'?

<p>To engage in production, trading, and profit-making activities. (A)</p> Signup and view all the answers

Which of the following bodies is a recognized example of a promotional and developmental undertaking?

<p>MARA (A)</p> Signup and view all the answers

Which of the following is NOT a function of Bank Negara Malaysia?

<p>Servicing the educational sector (C)</p> Signup and view all the answers

Flashcards

Public Incorporation

A company established by government, often with a specific focus on developing a particular sector of the economy, such as infrastructure, agriculture or industry.

Separate Legal Personality

A key feature of corporations, meaning they are legally recognized as distinct entities separate from their owners or shareholders and hold their own property and debts.

Legal Personality of Corporations

The capacity of incorporated bodies, whether created by statute or common law, to act as legal persons with ownership rights, the ability to enter contracts and be involved in legal proceedings.

No Special Privileges for Government Corporations

The principle that government corporations are not immune from laws and regulations that apply to other legal entities, despite their government backing.

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Tamlin v Hannaford 2 All ER 327

Court decision highlighting that a statutory corporation's assets are subject to regular laws, just like any private entity.

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What is a Public Incorporation?

A legal entity established by statute, separate from the government, with specific functions, often in key economic sectors.

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How are Public Incorporations Classified?

Public incorporations are categorized based on their primary functions, focusing on areas like finance, promotion, development, or commercial activities.

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What type of Public Incorporation is Bank Negara Malaysia?

Public incorporations that manage financial matters. They focus on activities like currency issuance, national reserves, and serving as the government's banker and financial advisor.

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What are Promotional and Developmental Undertakings?

Public incorporations that aim to promote specific developmental activities. They provide financial assistance to projects in their initial stages.

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What are the Subcategories of Promotional and Developmental Undertakings?

Public incorporations focused on promoting and developing activities related to agriculture and non-agricultural sectors. They support key industries like farming and other industries.

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What are Commercial and Industrial Undertakings?

Public incorporations that engage in production, trading, or commercial activities. They earn profits by offering services or trading goods.

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What are Statutory Corporations?

Specific types of Public Corporations established by law, designed to operate independently with their own legal identity and structure.

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How are Public Enterprises Organized?

Public enterprises can be organized as government departments, statutory corporations, or companies registered under general company laws.

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What are Departmental Undertakings?

Public enterprises that operate as part of a government department, often with a close connection to the government's administrative structure.

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What are Government Companies?

Public companies established under the Companies Act. They have a similar structure to private companies but are owned and controlled by the government.

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Study Notes

Law 309: Chapter 9 - Public Incorporations

  • Public corporations are entities distinct from the government, engaging in trade, business, and commerce.
  • Modern governments participate in these activities through public corporations.
  • Reasons for public incorporations include socio-economic development, promoting public control of essential resources, and reducing wealth concentration.
  • Public corporations are instrumental for economic development, particularly in rural areas.
  • Lack of financial/managerial capacity in private individuals is another motivation for the public sector to participate.
  • Public corporations are often used to plan and develop specific regions of the country.

Reasons for Growth

  • Economic Regeneration: Public corporations aim to revitalize the economy, improve people's well-being, and control essential resources.
  • Economic Development: They serve as instruments for economic growth, particularly for rural communities.
  • Control of Resources: These entities facilitate governmental control over economic resources.
  • Bumiputra Equity: Government policy aims for 30% indigenous ownership/employment in industrial and commercial sectors.
  • Financial/Managerial Capacity: Limited private sector capacity in large-scale projects necessitates public sector involvement.
  • Regional Development: Specific regions are targeted for comprehensive and integrated development through established bodies.
  • A corporation has legal personality independent of its shareholders.
  • Government control over a corporation's operations does not negate its separate legal identity.
  • Corporate property is not government property and does not enjoy government immunities.
  • Corporate personnel are not considered government employees. Legal requirements for corporations are similar to those for ordinary individuals/entities.
  • Legal cases, such as Tamlin v Hannaford (1949), and N.T.S. Arumugam Pillai v Government of Malaysia (1977), clarified the legal separation of corporations from the government. In these cases, courts established that corporate property is subject to normal laws, and government property exemptions don't apply to corporations.

Classification of Public Incorporations

  • i. Financial Institutions:
    • Bank Negara Malaysia (BNM) is the main financial institution (established 1959). It manages currency, national reserves, and acts as the government's banker. BNM's purpose is to develop a sound financial system for the country's economy.
  • ii. Promotional and Developmental Undertakings:
    • Their purpose is to sponsor and promote development, particularly in formative stages, often needing governmental financial aid. Examples include MARA, FELDA, and UDA.
  • iii. Commercial and Industrial Undertakings:
    • These agencies focus on production, trade, or commercial activities. They either offer public services or produce, sell, and purchase goods. Examples include FAMA, MAS, and PERNAS.

Organisation of Public Enterprises

  • i. Departmental Undertakings: The Malayan Railway Administration is an example. Government property rights associated with this body are vested in the Federal Land Commissioners.
  • ii. Government Companies: These companies are registered under the Companies Act. Government is the primary shareholder; they maintain control over the company's affairs with the right to make appointments and dismissals.
  • iii. Statutory Corporations: Established by specific legislation. For instance, the Federal Agricultural Marketing Authority (FAMA) operates under the Federal Agricultural Marketing Authority Act 1965, aimed at improving the agricultural product market. Statutory bodies and government companies are distinct.

Control Over Public Enterprises

  • i. Audit Control: Yearly accounts for public corporations must be audited by the Auditor General according to the 1980 Act. This Act is specifically designed for statutory bodies.
    • Statutory corporations' accounts are subject to auditing requirements.
  • ii. Parliamentary Control: Parliament receives annual reports from statutory corporations but often lacks detailed discussions or probing of the companies' operations.
    • Limited parliamentary control over public enterprises.
    • Procedures involving public corporations' annual accounts differ between statutory and non-statutory forms.
  • iii. Ministerial Control: Ministers are responsible for supervising related sectors of public corporation's operations. They have the power to appoint members of the corporations.
  • iv. Judicial Control: Courts intervene in public corporations' activities through the doctrine of "ultra vires," ensuring adherence to their defined objectives, powers, and acts outlined by statutes.

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