Chapter 1

THE LEGAL FRAMEWORK OF

CORPORATE
SECRETARYSHIP

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Learning Outcome
 Laws and regulations affecting corporations
 Guardian of the laws affecting corporations

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Guardians of the Laws
Affecting Corporations

 Companies Commission of Malaysia

 Securities Commission of Malaysia
 Bursa Malaysia Securities Berhad
 Bank Negara Malaysia

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Companies Commission of
Malaysia
 Administers and enforces the Companies Act
2016, and all its subsidiary legislations
 Submission of relevant documents to get
approval for incorporation of companies
 Reports to the Ministry of Domestic Trade and
Consumer Affairs
 Powers to inspect, investigate and compound
offences under the relevant Acts it administers.

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https://www.ssm.com.my/Pages/Home.aspx
Companies Commission of
Malaysia
 The Companies Commission of
Malaysia (Suruhanjaya Syarikat Malaysia,
abbreviated SSM), is a statutory body formed
under an Act of Parliament that regulates
corporate and business affairs in Malaysia.

 The SSM was formed in 2002 under

the Companies Commission of Malaysia Act
2001, assuming the functions of the Registrar
of Companies and Registry of Business
Companies Commission of
Malaysia
 The main purpose of SSM is to serve as an agency to
incorporate companies and register businesses as well
as to provide company and business information to the
public.

 SSM launched e-Info Services to allow information on

companies and businesses obtainable via its website.

 SSM handles monitoring and enforcement activities to

ensure compliance with business registration and
corporate legislation.
Companies Commission of
Malaysia
 In 2003, the SSM began a review of the Companies
Act 1965, with the aim of simplifying the process of
incorporation in Malaysia and reducing businesses'
costs of compliance with Malaysian corporate law.

 Companies Act 1965 was eventually replaced

by Companies Act 2016 Major changes such as:
 Only one director is needed to register the company as a
Company Limited by Shares instead of two,
 Heavier penalties on directors who do not comply with the
Act,
 Annual General Meeting (AGM) is no longer mandatory to
be held by private companies.
Companies Commission of
Malaysia
Business owners may choose to incorporate
their business in the form corporation with SSM
under:
Sole proprietorship or

Partnership or

Limited Liability Partnership (LLP) or

Companies incorporated under the

Companies Act 2016
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Securities Commission of
Malaysia
 Central authority responsible for the regulation and
development of the securities and futures industries in
Malaysia
 Established under the Securities Commission Act 1993
(Incorporating latest amendment – Act A1539/2017)
 Reports to the Minister of Finance and tables its account to
Parliament annually
 Broad powers to make rules, interpret rules, investigate and
enforce rules relating to the securities law
 Regulates conduct of brokers, dealers, investment advisors,
the exchanges, public companies
 Supervises and monitors the capital and futures markets

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Bursa Malaysia Securities
Berhad
 Exchange holding company approved under section 15
of the Capital Markets and Services Act 2007
 Operates a trading, clearing, settlement and depository
services
 Governed by Securities Commission
 Objective: to maintain an efficient, secure and active
trading for investors
 Empowered to govern the stock exchange, brokers and
companies through the Listing Requirements and
Practice Notes

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Bank Negara Malaysia
 Statutory body wholly owned by the Government
of Malaysia
 Reports to the Minister of Finance
 Objective: to safeguard monetary stability and
maintaining a sound financial system
 Acts as a banker and adviser to the Government
 Broad powers to develop, enhance and enforce
rules relating to financial institutions…

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 Chapter 2
FORMS OF BUSINESS
OWNERSHIP

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Learning Outcome
 Form of Business Ownership
 Form of ownership of businesses
 Corporations incorporated pursuant to other
written laws
 Comparing sole proprietor, partnership,
limited liability partnership and incorporated
company

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Form of ownership of
businesses
From the perspective of ownership, business
organisations can be classified into:
Sole proprietorship
Partnership

Limited Liability Partnership (LLP)

Companies incorporated under the Companies Act 2016

Corporations/bodies incorporated in pursuance to other
written law
Joint venture (This form of arrangement normally will
incorporate a company Sdn Bhd)
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Form of ownership of
businesses
CCM
CCM

REGISTRAR
REGISTRAR OF
OF REGISTRAR
REGISTRAR OF
OF
COMPANIES
COMPANIES BUSINESSES
BUSINESSES
(ROC)
(ROC) (ROB)
(ROB)

Incorporation
Incorporation of
of Registration
Registration of
of aa sole
sole
companies
companies proprietorship
proprietorship and
and
partnership
partnership firm
firm

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Form of ownership of
businesses
Factors to consider in selecting the most appropriate form of
business ownership:
ease of formation of business
nature of the business

impact of income taxes

capital required

business plan of the business

personal interest of those involved

inherent risks associated with the products of the firm

specific type of business ownership preferred or required by the

customers/suppliers/regulatory bodies
debt financing requirement

licensing requirement

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Form of ownership of
businesses – Sole Proprietorship
 Simplest and cheapest to register (approx.
RM70)
 Only Malaysian or permanent resident can
register
 Owned by a single person
 Due to legal restrictions, all auditing and
advocate and solicitors firms are either
formed as sole proprietorship or partnership

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Form of ownership of
businesses
Sole Proprietor
Advantages Disadvantages
Easy to form No “separate legal entity” status
Owner is the ‘boss’ Owner personally liable for all debts
Compliance cost of running is low Upon his death, his estate is liable for
his debts
All assets of the firm belong to the Funds are limited to the resources of
owner and registered under the the owner and his capacity to borrow
personal name of the owner from external sources
All profits belong to the owner and
there is no restriction on how much he
wants to draw out from the firm
@Prof Dr Zubaidah Zainal Abidin
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Form of ownership of
businesses
Sole Proprietor
Advantages Disadvantages
No requirement to file accounts with Must still prepare financial statements
the CCM and this protects the sole for filing with Inland Revenue
proprietorship from public/competitors
scrutiny

No requirement to have accounts Liability to pay taxes are imposed on

audited the owner and not the firm
Not required to appoint a company
secretary
Ease of dissolving Firm is automatically dissolved upon
death, insanity or bankruptcy of the
owner
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Form of ownership of
businesses – Partnership
 Two, but not more than 20 persons jointly carry on a
business with a view to share profits (does not apply to a
partnership firm of lawyers, doctors, dentists and accountants
whose professions are governed by specific statutes)
 Only Malaysian and permanent residents
 Partnership Agreement
- partners’ responsibility, powers, duties
- capital contribution
- profit sharing
- rights and liabilities

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Form of ownership of
businesses
Partnership
Advantages Disadvantages
Wider base of capital and human No “separate legal entity”
resource
Easy to form (RM60) Every partner is an agent of the firm
Compliance cost of running is low – The act of every partner in the normal
governed by Partnership Act 1961 course of business bind the firm and
his partners
All assets of the firm belong to the Every partner is liable for all debts
partnership and registered under the incurred while he is a partner, after his
personal or joint names of the partners death his estate is also severally liable
for such debt

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Form of ownership of
businesses
Partnership
Advantages Disadvantages
No requirement to file accounts with Any wrongful act of any partner where
the CCM and this protects the loss or injury is caused to any third
partnership from public/competitors party or any penalty incurred, the firm
scrutiny is liable to the same extent as the
partner so acting
No requirement to have accounts Where a partner receiving money or
audited property of a third person and
misapplies it, the firm is liable to make
good the loss
Not required to appoint a company A partner who retires from a firm does
secretary not cease to be liable for partnership
September 2014
debts incurred before his retirement
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Form of ownership of
businesses – Joint Venture (JV)

 A collaboration of 2 or more separate entities

with a view to share profits
 Some JV are formalised through the
incorporation of separate company jointly
undertaken by the joint venturers
 Some JV are collaboration between joint
venturers without any separate company.
 Unincorporated JV is not a separate legal entity

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Form of ownership of
businesses – Company

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Form of ownership of
businesses – Company

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Form of ownership of
businesses

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Form of ownership of
businesses

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Form of ownership of
businesses

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Form of ownership of
businesses

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Form of ownership of
businesses

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Form of ownership of
businesses

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Form of ownership of
businesses

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Form of ownership of businesses
– Limited Liability Partnership (LLP)

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Form of ownership of businesses
– Limited Liability Partnership (LLP)

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Form of ownership of businesses
– Limited Liability Partnership (LLP)

Conversion into a Limited Liability Partnership

1)From conventional partnership to LLP

2)From private company to LLP

3)From conventional professional firm to LLP for

professional practice

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