Lec 9

• The Companies Commission of Malaysia (SSM)

  A statutory body under the Ministry of Domestic Trade, Cooperatives and Consumer Affairs that manages and governs the establishment and registration of a business in Malaysia
• Business


  All forms of activities such as trade, craft, occupation, profession or other activity which seeks to gain profit
• Types of business entities in Malaysia

  • Sole proprietorship
  • Partnership
  • Private limited company
• Sole proprietorship


  • Established, owned, funded and managed by only one person
  • Normally run by one person who may hire a few workers
  • Registered under the Business Registration Act 1956
  • Registration fee is RM60
• Examples of sole proprietorship

  • Mini markets
  • Restaurants
  • Convenient stores
  • Burger kiosks
• Partnership


  • Registered under the Business Registration Act 1956
  • Has at least two persons and not more than 20 persons as partners
  • Legal responsibility to external parties is similar to sole proprietorship
  • Internal relationship between partners depends on the partnership agreement
• Partnership Agreement


  A contract agreement between partners/parties that shows they have an intention to create a contract
• The Business Registration Act 1956 does not specify that the formation of a partnership business requires a written agreement between partners
• In the absence of a partnership agreement, the provisions of the Partnership Act 1961 will be applicable
• Provisions of the Partnership Act 1961 in the absence of a partnership agreement


  • Profit or losses are to be shared equally
  • No interest is payable on a partner's capital
  • Each partner is entitled to actively participate in the management of the business
  • No partner is entitled to a salary for participating in the partnership business
  • Partners have the right to be paid based on their contribution to the business
• Private limited company


  • Incorporated under the Companies Act 1965
  • Liabilities of its members are limited to the amount of shares held in the company
  • Recognized as a legal entity separate from founding members
  • Can acquire and own property, sue and be sued in court
  • Life span not dependent on death or resignation of members
  • Total number of members must be at least two and not more than fifty
  • Financial liability of members limited to amount of shares held
• Private limited companies must carry the words 'Sendirian Berhad (Sdn Bhd)' behind their names according to the Companies Act
• Establishment of a private limited company is quite difficult compared to sole proprietorship or partnership due to many legal requirements and procedures that must be complied with
• Business legal and regulatory requirements

  Based on the laws of the country, including the Constitution, federal laws, state enactments, and by-laws approved by local authorities
• Examples of federal laws and related ministries/agencies

  • Ministry of International Trade and Industry (MITI) - Manufacturing Licence
  • Ministry of Housing and Local Government Malaysia - Developer's license
  • Ministry of Home Affairs - Immigration Department of Malaysia
  • Ministry of Finance - Royal Malaysian Customs - Sales Tax Licence
  • Ministry of Domestic Trade and Consumer Affairs - Business registration
• Examples of state enactments and related departments

  • Land Office - Land administration matters
  • Forestry department - Forestry and timber concession
• Examples of by-laws and related local authorities

  • Kuala Lumpur City Hall - License for business, Development permit and issuance of certificate of fitness
• Examples of other relevant laws

  • Registration of Businesses Act 1956
  • Company's Act 1965
  • Employment Act 1955
  • Children and Young Persons' Act 1966
  • Occupational Safety and Health Act 1994
  • Factory and Machinery's Act 1974
  • Industrial Relations Act 1967
  • EPF Act 1991, SOCSO Act 1969
  • Trade Union Act 1959
  • Contract Laws
  • Sale of Goods Act
  • Agency Laws
  • Intellectual Properties Act
• The Companies Commission of Malaysia (SSM)


  A statutory body under the Ministry of Domestic Trade, Cooperatives and Consumer Affairs that manages and governs the establishment and registration of a business in Malaysia
• Business


  All forms of activities such as trade, craft, occupation, profession or other activity which seeks to gain profit
• Types of business entities in Malaysia


  • Sole proprietorship
  • Partnership
  • Private limited company
• Sole proprietorship


  • Established, owned, funded and managed by only one person
  • Normally run by one person who may hire a few workers
  • Registered under the Business Registration Act 1956
  • Registration fee is RM60
• Examples of sole proprietorship


  • Mini markets
  • Restaurants
  • Convenient stores
  • Burger kiosks
• Partnership


  • Registered under the Business Registration Act 1956
  • Has at least two persons and not more than 20 persons as partners
  • Legal responsibility to external parties is similar to sole proprietorship
  • Internal relationship between partners depends on the partnership agreement
• Partnership Agreement


  A contract agreement between partners/parties that shows they have an intention to create a contract
• The Business Registration Act 1956 does not specify that the formation of a partnership business requires a written agreement between partners
• In the absence of a partnership agreement, the provisions of the Partnership Act 1961 will be applicable
• Provisions of the Partnership Act 1961 in the absence of a partnership agreement


  • Profit or losses are to be shared equally
  • No interest is payable on a partner's capital
  • Each partner is entitled to actively participate in the management of the business
  • No partner is entitled to a salary for participating in the partnership business
  • Partners have the right to be paid based on their contribution to the business
• Private limited company


  • Incorporated under the Companies Act 1965
  • Liabilities of its members are limited to the amount of shares held in the company
  • Recognized as a legal entity separate from founding members
  • Can acquire and own property, sue and be sued in court
  • Life span not dependent on death or resignation of members
  • Total number of members must be at least two and not more than fifty
  • Financial liability of members limited to amount of shares held or subscribed
  • Personal assets of members not part of company's assets
• Companies limited by shares must carry the words 'Sendirian Berhad (Sdn Bhd)' behind their names according to Section 22(4) of the Companies Act
• The establishment of a private limited company is quite difficult compared to sole proprietorship or partnership due to many legal requirements and procedures that must be complied with as outlined in the Companies Act 1965
• Hierarchy and legal scope of laws affecting business activities in Malaysia


  • The Constitution of the country
  • Federal laws passed by act of Parliament
  • State enactments passed by the state legislative council
  • By-laws approved by the local authority
• Examples of federal ministries and agencies governing business laws


  • Ministry of International Trade and Industry (MITI)
  • Ministry of Housing and Local Government Malaysia
  • Ministry of Home Affairs
  • Ministry of Finance
  • Ministry of Domestic Trade and Consumer Affairs
• Examples of state departments responsible for business laws


  • Land Office
  • Forestry department
• Examples of local authority departments responsible for business laws

  • Kuala Lumpur City Hall
• Examples of business laws with immediate impact


  • Registration of Businesses Act 1956
  • Company's Act 1965
  • Employment Act 1955
  • Children and Young Persons' Act 1966
  • Occupational Safety and Health Act 1994
  • Factory and Machinery's Act 1974
  • Industrial Relations Act 1967
  • EPF Act 1991
  • SOCSO Act 1969
  • Trade Union Act 1959
• Examples of external business laws


  • Contract Laws
  • Sale of Goods Act
  • Agency Laws
  • Intellectual Properties Act