There are three forms of business structure:
- Sole Proprietorship or sole trader
- Partnership
- Limited company
1. Sole Proprietorship/ Sole Trader
This form of business structure is solely owned by one person where management rests on that person whose liability is unlimited.
2. Partnership
In this form of business, a person trades jointly with one or more persons to carry on a business with a view to making profits.
Partnerships are governed by the Partnership Act 1961. If the partners do not make their own agreement, the provisions of the Act will become applicable, such as:
- profits & loss are to be shared equally
- no interest is payable on partners' capital
- every partner is entitled to participate in the management of the business
- no partner is entitled to a salary for participating in the partnership business
- expulsion of any partner must be in the form of expressed agreement between the partners concerned introduction of a new partner must be by an unanimous consent from all existing partners.
3. Limited Company
A limited company is incorporated under the Companies Act 1965. It can be:
- a company limited by shares
- a company limited by guarantee
- an unlimited company with or without a share capital
a. Company Limited by Share
- The liability of a member's contribution to the company's assets is limited to the amount specified, if any, unpaid on his share. The personal assets of a shareholder would not be available the creditors of the company. Two types of companies limited by share:
- a private limited company (sdn bhd)
- Restricts the right to transfer its share
- Limits the number of its members to fifty (min 2)
- Prohibits any invitation to the public to subscribe for any shares in the company
- Prohibits any invitation to the public to deposit money with the company for fixed periods\
- a public limited company (berhad)
- A public limited company is any company other than a private company whose shares may be offered to the public for subscription. Such shares are freely transferable.
