Download - POD 3123 (Chapter 3)
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 1/28
Chapter 3:Chapter 3:
Forms of Business Organization,Forms of Business Organization,Regulation & Business SupportRegulation & Business Support
SystemSystem
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 2/28
Types of BusinessTypes of Business
Organization in MalaysiaOrganization in Malaysia
All types of business by law All types of business by law
must be registered. The threemust be registered. The three
Acts that govern business are: Acts that govern business are: The Business Registration ActThe Business Registration Act
1956 (Amendment 1978).1956 (Amendment 1978).
Procedures of BusinessProcedures of Business
Registration Act 1957Registration Act 1957
Company Act 1965Company Act 1965
22POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 3/28
Types of Business OrganizationTypes of Business Organization
The following are types of business thatThe following are types of business that
operate in Malaysia:operate in Malaysia:
Sole Proprietorship OR Sole Trader.Sole Proprietorship OR Sole Trader.
PartnershipPartnership Ordinary Partnership or UnlimitedOrdinary Partnership or Unlimited
Partnership.Partnership.
Limited PartnershipLimited Partnership
CompanyCompany ± ± Private & Public CompanyPrivate & Public Company
33POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 4/28
Company Act 1965Company Act 1965
According to Company Act 1965, According to Company Act 1965,
an investor or prospector can forman investor or prospector can form
three types of companies.three types of companies.
Limited Company by GuaranteeLimited Company by Guarantee
Limited Company by ShareLimited Company by Share
Private Limited Company ( Sdn. Bhd.)Private Limited Company ( Sdn. Bhd.)
Public Limited Company (Berhad)Public Limited Company (Berhad)
Foreign Owned Company (Pvt. Ltd.)Foreign Owned Company (Pvt. Ltd.)
Unlimited CompanyUnlimited Company
Types of Business OrganizationTypes of Business Organization
44POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 5/28
Sole Proprietorship/Sole Trader Sole Proprietorship/Sole Trader
Formed under the Business ActFormed under the Business Act19561956 This type of business is owned by anThis type of business is owned by an
individual or sole person.individual or sole person.
Has a simple business structureHas a simple business structure Some sole trader can operate as bigSome sole trader can operate as big
business, e.g. Family run business.business, e.g. Family run business. E.g. Kamdar Departmental Store wasE.g. Kamdar Departmental Store was
sole trader for long time until it turn intosole trader for long time until it turn into
private limited company ( Sdn. Bhd.)private limited company ( Sdn. Bhd.) Example of Sole trader Example of Sole trader ± ± tailor, Beautytailor, Beauty
Saloon, restaurants, launderettes (dobi),Saloon, restaurants, launderettes (dobi),mini market etc.mini market etc.
55POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 6/28
Sole ProprietorshipSole Proprietorship
Advantages Advantages
Easy to manage the business.Easy to manage the business.
All decision made by the owner All decision made by the owner--manager.manager.
Low start up capital, no heavyLow start up capital, no heavy
investment.investment.
Flexibility in operation.Flexibility in operation.
The Sole trader can act quicklyThe Sole trader can act quickly
with a degree of flexibility.with a degree of flexibility.
66POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 7/28
Advantages Advantages Easy to form and dissolve (bubarkan)Easy to form and dissolve (bubarkan)
with minimum formalities.with minimum formalities.
Nobody shares the rewards of theNobody shares the rewards of thebusiness, all profit will go to the owner.business, all profit will go to the owner.
Subject to less government rules andSubject to less government rules andregulation.regulation.
The owner The owner ± ± manager has to paymanager has to pay
income tax based on total profit earnedincome tax based on total profit earnedto LHDN ( Inland Revenue Board, M¶sia)to LHDN ( Inland Revenue Board, M¶sia)
Sole ProprietorshipSole Proprietorship
77POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 8/28
DisadvantagesDisadvantages
Limited source of capitalLimited source of capital Lack of capital to expand theLack of capital to expand the
business further.business further. The liability is unlimitedThe liability is unlimited
The owner The owner-- manager will be liable tomanager will be liable tosettle all debts outstanding.settle all debts outstanding.
Failing which all assets will beFailing which all assets will beceased by court order to be sold, andceased by court order to be sold, andcash generated will used to pay allcash generated will used to pay alloutstanding creditors.outstanding creditors.
Sole ProprietorshipSole Proprietorship
88POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 9/28
DisadvantagesDisadvantages The future development of the businessThe future development of the business
is limited.is limited. Lot depends on the managerial capabilityLot depends on the managerial capability
of the owner and physical health.of the owner and physical health. The life span of the business dependsThe life span of the business depends
upon the age of the owner and howupon the age of the owner and howefficiently he manages the business.efficiently he manages the business.
He is of ill health or passes away theHe is of ill health or passes away the
business continuation is disrupted.business continuation is disrupted. If he choose an heir (successor) to theIf he choose an heir (successor) to the
business, then the business has to bebusiness, then the business has to bereregistered.reregistered.
Sole ProprietorshipSole Proprietorship
99POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 10/28
PartnershipPartnership
A partnership is a legal business A partnership is a legal businessentity with two or more partners.entity with two or more partners.
In this type of business, aIn this type of business, aperson forms a partnershipperson forms a partnership(kongsian)(kongsian)
A partnership business has to A partnership business has to
be registered under thebe registered under theBusiness Registration Act 1956Business Registration Act 1956
1010POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 11/28
PartnershipPartnership
A partnership normally should A partnership normally should
consist of minimum of 2 personconsist of minimum of 2 person
but not exceeding 20 persons.but not exceeding 20 persons.
But exception in the case of But exception in the case of
professionals ( lawyers, doctorsprofessionals ( lawyers, doctors
and engineers etc.) is theand engineers etc.) is the
members could number up to 50members could number up to 50persons.persons.
1111POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 12/28
Advantages Advantages Easy to set up and operateEasy to set up and operate ± ± less formalities.less formalities.
Easier to secure financial assistance fromEasier to secure financial assistance fromfinancial institutions.financial institutions.
Equity can be increased from existing partners.Equity can be increased from existing partners. Business risks can be less because risk is borneBusiness risks can be less because risk is borne
by all existing partners.by all existing partners.
The responsibility of managing and overseeingThe responsibility of managing and overseeingthe business can be handled by all partners.the business can be handled by all partners.
Ideas, talents and skills can be pooled together Ideas, talents and skills can be pooled together from partners for better management.from partners for better management.
Income tax is not imposed on the partnershipIncome tax is not imposed on the partnershipbusiness but instead on the individual partners.business but instead on the individual partners.
PartnershipPartnership ± ± Advantages & Advantages &
DisadvantagesDisadvantages
1212POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 13/28
DisadvantagesDisadvantages Business liabilities are unlimited.Business liabilities are unlimited.
Personal assets can be seized by court order Personal assets can be seized by court order since no distinction between personal & businesssince no distinction between personal & businessassets.assets.
The life span (jangka hayat) of the partnershipThe life span (jangka hayat) of the partnershipbusiness depends on the life spans of thebusiness depends on the life spans of thebusiness.business.
If partner declared bankrupt, dies or becomeIf partner declared bankrupt, dies or becomeinsane business has to be dissolved.insane business has to be dissolved.
If a Letter of Agreement as per Partnership ActIf a Letter of Agreement as per Partnership Act
1961 is not made members may resort to1961 is not made members may resort tomismanage or be unethical in conducting their mismanage or be unethical in conducting their business in the partnership.business in the partnership.
Difference of opinion and conflict may lead toDifference of opinion and conflict may lead tobreakup of the partnership.breakup of the partnership.
PartnershipPartnership ± ± Advantages & Advantages &
DisadvantagesDisadvantages
1313POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 14/28
Contract AgreementContract Agreement
It is necessary for the business toIt is necessary for the business to
have some kind of Contract or have some kind of Contract or
Partnership Agreement to minimizePartnership Agreement to minimize
any problems that may arise.any problems that may arise. The Business Registration Act 1956The Business Registration Act 1956
does not state that the formation of adoes not state that the formation of a
partnership business must have apartnership business must have a
written agreement.written agreement.
1414POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 15/28
Contract AgreementContract Agreement
Should an agreement arises what should be theShould an agreement arises what should be thecontents?contents? The Contents are as follows:The Contents are as follows:
Name of the businessName of the business
The duration of the partnershipThe duration of the partnership
Agreement as the partnership status once the Agreement as the partnership status once thepartner/s passes away or withdraws from thepartner/s passes away or withdraws from thepartnership.partnership.
The name of the individuals involved in managingThe name of the individuals involved in managingthe partnership.the partnership.
The accounts of the business.The accounts of the business.
The structure of ownership i.e. the contributionThe structure of ownership i.e. the contribution
made by individual partners.made by individual partners. The rights and obligation of the business partnersThe rights and obligation of the business partners
What are the properties that are considered asWhat are the properties that are considered asbusiness assets to distinguish from personalbusiness assets to distinguish from personalassets.assets.
1515POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 16/28
Partnership Act 1961Partnership Act 1961
According to Sect 26 & 27 of the According to Sect 26 & 27 of theabove act:above act: Profit & Loss are to be shared equally.Profit & Loss are to be shared equally.
No interest is payable on a partner¶sNo interest is payable on a partner¶scapitalcapital
Partners are required to participatePartners are required to participateactively in the business.actively in the business.
No partner is entitled for salary for workNo partner is entitled for salary for work
contribution done for the partnership.contribution done for the partnership. Partner¶s should be paid based on their Partner¶s should be paid based on their
contribution.contribution.
1616POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 17/28
Partnership Act 1961Partnership Act 1961
Daily routine matters can be decided byDaily routine matters can be decided bythe majority of the partners, but major the majority of the partners, but major changes require the support of allchanges require the support of allpartners.partners.
Partner may choose not to be partner Partner may choose not to be partner any longer if all partners have agreed.any longer if all partners have agreed.
If all partners agree a new partner canIf all partners agree a new partner canbe brought to replace the old partner.be brought to replace the old partner.
All business accounts books need to ket All business accounts books need to ketin the business premises.in the business premises.
Partners have the right to check thePartners have the right to check thebooks of the company as when needed.books of the company as when needed.
1717POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 18/28
Private Limited CompanyPrivate Limited Company
A private limited company (Syarikat A private limited company (SyarikatSendirian Berhad) is one of the major twoSendirian Berhad) is one of the major twobusiness entity set up under thebusiness entity set up under theCompanies Act 1965 and its subsequentCompanies Act 1965 and its subsequent
amendments.amendments. The other being the Public LimitedThe other being the Public Limited
Company (XYZ Berhad) which involves aCompany (XYZ Berhad) which involves amajor exercise which needs the approval of major exercise which needs the approval of the Suruhanjaya Syarikat Malaysiathe Suruhanjaya Syarikat Malaysia
(Companies Commission of Malaysia) and(Companies Commission of Malaysia) andSecurities Commission.Securities Commission.
1818POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 19/28
Private Limited CompanyPrivate Limited Company
The Characteristics of a PrivateThe Characteristics of a Private
Limited Company.Limited Company.
Right & ResponsibilityRight & Responsibility
A company has a specific right & A company has a specific right &responsibility. It can buy assets under it onresponsibility. It can buy assets under it on
name.name.
A company can also take legal action and A company can also take legal action and
face legal action under its own name.face legal action under its own name.
Life Span of a company is not dependentLife Span of a company is not dependentupon the death or resignation of itsupon the death or resignation of its
members.members.
1919POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 20/28
Private Limited CompanyPrivate Limited Company
LiabilitiesLiabilities The liabilities of the members in aThe liabilities of the members in a
company are limited to the total sharecompany are limited to the total sharecontributed to the company¶s capital.contributed to the company¶s capital.Personal assets of shareholders are notPersonal assets of shareholders are notaffected if the company goes bust or affected if the company goes bust or
winds up.winds up. MembershipMembership
A company must have at least twoA company must have at least twomembers who are of Malaysianmembers who are of Malaysiannationality. These two members of thenationality. These two members of thecompany will appoint the remainingcompany will appoint the remainingmembers of the Board of Directors.members of the Board of Directors.
Directors will manage the businessDirectors will manage the businessoperation in accordance with theoperation in accordance with theCompanies Act 1965.Companies Act 1965.
2020POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 21/28
The Private Limited CompanyThe Private Limited Company
Terms & ConditionsTerms & Conditions
The number of members does notThe number of members does notexceed 50 shareholdersexceed 50 shareholders
Has specific authorities to transfer Has specific authorities to transfer
ownership of member¶s shares withownership of member¶s shares withthe approval of the Board of Directorsthe approval of the Board of Directors
Not allowed to offer or sells any shareNot allowed to offer or sells any shareor debentures to general publicor debentures to general public
Not allowed to offer the general publicNot allowed to offer the general publicto deposit money within a stipulatedto deposit money within a stipulatedtime frametime frame
Must use the word ³Must use the word ³SdnSdn.. BhdBhd´ at the´ at theend of its nameend of its name
2121POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 22/28
Memorandum of AssociationMemorandum of Association
Articles of Association Articles of Association
The Share Capital of a CompanyThe Share Capital of a Company
Members of shareholdersMembers of shareholders Board of directorsBoard of directors
SecretarySecretary
Auditors Auditors
Registered officeRegistered office Company SealCompany Seal
Authorisation Authorisation Letter Letter
The Mechanism of a PrivateThe Mechanism of a Private
Limited CompanyLimited Company
2222POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 23/28
Advantages Advantages
Fund are easy to acquire through theFund are easy to acquire through theexchange of share ownershipexchange of share ownership
All shareholders are legally protected by All shareholders are legally protected bylawlaw
Shareholders are not burdened with theShareholders are not burdened with themanagement of businessmanagement of business
The liabilities of the company¶s membersThe liabilities of the company¶s membersare limited to the capital that theyare limited to the capital that theycontribute to the companycontribute to the company
The life span of the business is notThe life span of the business is notdependent upon the age or resignationdependent upon the age or resignation
It has greater potential for expansionIt has greater potential for expansion
Legally, the company is one businessLegally, the company is one businessentity by itself entity by itself
2323POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 24/28
Subject to more rules and regulationsSubject to more rules and regulationscompared with a sole proprietorship or compared with a sole proprietorship or partnershippartnership
The company¶s share cannot beThe company¶s share cannot be
transacted through the share markettransacted through the share market The company must pay corporate taxThe company must pay corporate tax
The qualified Auditors must audit theThe qualified Auditors must audit thecompany¶s yearly financial statementcompany¶s yearly financial statement
The financial affairs of the companyThe financial affairs of the companymust be made transparent to generalmust be made transparent to generalpublicpublic
The cost of setting up a company isThe cost of setting up a company ishighhigh
DisadvantagesDisadvantages
2424POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 25/28
Business LicenseBusiness License
Wholesaling LicenseWholesaling License
Manufacturing LicenseManufacturing License Food Manufacturing LicenseFood Manufacturing License
Sales Tax LicenseSales Tax License
Excise LicenseExcise License
PermitPermit
Foreign Workers Entry PermitForeign Workers Entry Permit
Transportation PermitTransportation Permit
LicenseLicense
2525POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 26/28
Trademarks ProtectionTrademarks Protection
The Trademark ActThe Trademark Act
Patent ProtectionPatent Protection The Patent Act 1983The Patent Act 1983
CopyrightCopyright
The Copyright Act 1987The Copyright Act 1987
Business RightsBusiness Rights
2626POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 27/28
Control the forms and contents of Control the forms and contents of hire purchase agreements.hire purchase agreements. VehiclesVehicles
Radios, televisions, cassetteRadios, televisions, cassetterecorders or any combination of therecorders or any combination of theitemsitems
Refrigerators, freezer Refrigerators, freezer
Sewing machines other than for Sewing machines other than for
industrial useindustrial use Vacuum cleanersVacuum cleaners
Air Air--conditioners other than for conditioners other than for industrial useindustrial use
Gas and electric cookers and ovenGas and electric cookers and oven
Hire Purchase Act 1967Hire Purchase Act 1967
2727POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship
8/3/2019 POD 3123 (Chapter 3)
http://slidepdf.com/reader/full/pod-3123-chapter-3 28/28
Business Support SystemBusiness Support System
Courses, seminars and workshopCourses, seminars and workshop
Technical assistanceTechnical assistance
Marketing assistanceMarketing assistance Infrastructure assistanceInfrastructure assistance
Information assistanceInformation assistance
Research and developmentResearch and development Financial assistanceFinancial assistance
Advisory assistance Advisory assistance
Extension servicesExtension services 2828POD 3123 EntrepreneurshipPOD 3123 Entrepreneurship