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F.A.Q.Company laws and regulations

1.0 Business entity

1.1. Registration of business and companies are processed and regulated by the Companies Commission of Malaysia (CCM) or Suruhanjaya Syarikat Malaysia (SSM).

1.2. A business entity can be in the following forms :

1.2.1. A registered company incorporated under the Companies Act, 1965; or

1.2.2. A firm which can be either a sole proprietorship or a partnership which is governed by the Registration of Businesses Act, 1956 and the Regulation of Businesses Rules, 1957.

1.3. Choice of whichever form of business entity is dependent upon a combination of various issues such as ownership liability, cost/expense, tax planning, management and control, etc.

2.0. Sole proprietorship / Partnership

2.1. Advantages

2.1.1. Setting up is easy and fast

2.1.2. Cost of maintenance is lesser

2.1.3. Closing of business is easy

2.2. Disadvantages

2.2.1. Unlimited liability

2.2.2. Owner(s) subjects to greater business risks

2.2.3. Audit not required therefore tend to neglect keeping of accounts

2.2.4. As account not audited, may subject to more frequent audit by IRB.

2.3. Important document

Borang A -  Certificate of registration

Borang B -  Registration of changes of particulars of business

Borang C -  Notification of cessation of business

Borang D -  Confirmation of registration of business

2.4. Partnership

No partnership consisting of 20 persons shall be formed except partnership for professionals which is governed under respective legislations.

3.0. Limited companies

3.1. Advantages

3.1.1. Limited liability

3.1.2. The company is a separate legal entity and therefore provides greater flexibility in management and tax planning.

3.1.3. Account subject to audit and therefore greater reliability.

3.1.4. Shareholders?liability limited to amount paid up as share capital only and therefore well protected.

3.1.5. Management and ownership are separate.

3.1.6. Provide room for future business expansion.

3.1.7. Owner and company tax are separately assessed.

3.1.8. Transfer or sale of business is easier.

3.2. Disadvantages

3.2.1. Require higher costs to maintain a limited company.

3.2.2. A lot of company regulations and legal requirements to be complied with.

3.3. Company number

3.3.1. All limited companies will be allocated a number by ROC.

3.3.2. The number must appear in the common seal and all business stationery and documents such as letters, invoices, cheques, statement of accounts etc.

3.3.3. The number must appear immediately after the name of the company or the next line.

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