Business Organization Forms PDF

INTRODUCTION Introduction 1 INTRODUCTION 4 forms of business organization:- 1. Sole-proprietor 2. Partnership 3. Limited Liability Partnership 4. Companies Introduction 2 1 SOLE-PROPRIETOR  Th...

INTRODUCTION Introduction 1 INTRODUCTION 4 forms of business organization:- 1. Sole-proprietor 2. Partnership 3. Limited Liability Partnership 4. Companies Introduction 2 1 SOLE-PROPRIETOR  The owner is the contributor to the business capital, employer and at the same time an employee of the business.  The enterprmour (owner) and his business is one entity.  The owner enjoys all the business’s profits.  Unlimited liability in respect of business debt. Introduction 3 PARTNERSHIP  S3 (1) Partnership Act 1961 “The relation which subsists between persons carrying on business in common with a view of profit”  Liabilities either firm or partners are unlimited.  Liabilities will be shared equally among partners EXCEPT otherwise provided in a partnership agreement. Introduction 4 2 LIMITED LIABILITY PARTNERSHIP S. 2 - "limited liability partnership" means a limited liability partnership registered under section 11 or a foreign limited liability partnership registered under section 45; Governing statute – Limited Liability Partnership Act 2012. It shares some similarities with a conventional partnership but enjoys a few characteristics of an incorporated company. Introduction 5 COMPANY  Definition:  S2 Companies Act 2016:- “a company incorporated under this Act or under any corresponding previous written law”  A company is a separate entity from its members – separate legal entity.  Basically, a company “belonged” to its members.  “belong” = have interests. Introduction 6 3 Differences 1. Membership 2. Legal Status 3. Right to hold property. 4. Liabilities 5. Commencement of legal action. 6. Succession Introduction 7 Membership  Sole-proprietor – one.  Partnership - 2 – 20 (except for professional business).  LLP – minimum 2. No limit.  Company - Generally : min = 2 EXCEPT: i. Wholly owned company (S. 6); ii. A company with single shareholder newly introduced by CA 2016 (S. 9).  Max – 50 (for private co.) 8 Introduction 4  Legal Status Sole Partnership LLP – Company – Proprietor – no Separate separate – no separate legal legal separate entity entity entity entity Introduction 9 Right to Hold Property  Sole-proprietor – The  Partnership - jointly owned by all partners owner personally owned the property.  Company - eligible to hold  LLP – may hold by property on its own name its name without having to use member’s name. 10 Introduction 5 Liabilities Sole Proprietor Partnership Limited Liability Company Partnership – the owner will - All partners are No personal - Company itself be personally jointly liable. liability will be liable. liable for all of partner, except - Nothing to do business losses. for with its own wrongful act members or omission or without authority Introduction 11 Right to commence lrgal action Sole Partnership Limited Company Proprietor Liability Partnership – legal – legal action - Capable A company action is is brought on of suing may sue the firm’s brought on and be and be name (Order the owner’s 77 Rules of sued in its sued on its name. Court 2012) name. own name. Introduction 12 6 Succession Sole Partnership LLP Company Proprietor – will – similar - Has - Perpetual dissolve on with S/P perpetual succession succession - A company the death EXCEPT. will only be of the otherwise - Changes in dissolved owner. provided in partners throuhj the will not legal partnership affect the process.. agreement. existence, rights & liabilities. Introduction 13 BUSINESS VEHICLES IN MALAYSIA SOLE PROPRIETOR PARTNERSHIP COMPANIES LIMITED LIABILITY PARTMERSHIP (LLP) Introduction 14 7  Registration Introduction 15 Sole Proprietor Registration of Business Act 1956 Partnership Limited Liability LLP Act 2012 Partnership Companies Companies Introduction Act 2016 16 8