BTMW 4012:

TECHNOLOGY
ENTREPRENEURSHIP

FORMS OF BUSINESS ENTITITIES

Lecture 4
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 2 INTRODUCTION

Technopreneurs need to know the forms of

business organizations available and the
strengths and weaknesses of each business
form before they register their business.

They should also be aware of the rules and

regulations governing business
organizations and the business support
system available for them.

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 BUSINESS ORGANIZATIONS IN MALAYSIA
3Businesses in Malaysia can be registered under either one
of the following acts:
I. Business Registration Act 1956 (Amendment 1978) (
http://www.agc.gov.my/Akta/Vol.%204/Act%20197.pdf)
and Procedures Of Business Registration 1957.
There are two (2) types of business that can be
formed under this Act:
1. Sole Proprietorship (Single Owner)
Partnership (Sharing)
2.

II. Limited Liability Partnerships (LLP) Act 2012 and LLP

Regulation 2012
One type of business tan can be form under this Act is Limited Liability Partnership (LLP)

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 BUSINESS ORGANIZATIONS IN MALAYSIA
4
III. Company Act 1965 (https://www.ssm-einfo.my/page/14)
There are 3 types of companies that can be formed under this Act:

1. Limited Company by Guaranteed (Sykt. Bhd. based on

guarantee)
2. Limited Company by Share (Sykt. Bhd. based on
shares)
Private Limited Company (Sdn. Bhd.)
Public Limited Company (Bhd.)
Foreign Owned Company
3. Unlimited Company (Sykt. Tidak Terhad)

IV. Co-operative Societies ACT 1993

V. Parliamentary Act or State (Government) Enactment

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 SOLE PROPRIETORSHIP
5

Business wholly owned by a single

individual using personal name as per his /
her identity card or trade name, where
management rests on that person and the
liability is unlimited.
Normally, a sole proprietorship business requires
a small amount of capital to start with, compared
with other forms of business entities.

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 6SOLE PROPRIETORSHIP (contd)
ADVANTAGES
1. Easy to manage.
2. The owner enjoy a certain
degree of flexibility.
3. Easy to form and dissolve
(bubar).
4. All profits go to the owner.
5. Not subjected much to
government rules.
6. Pays individual income tax
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DISADVANTAGES
1. Limited source of capital.
2. The liability of the business
is unlimited.
3. The future development of
the business is limited.
4. The owner is solely
responsible for carrying out
all the tasks.
5. The life span of the business
depends upon the age of the
owner.
 7
PARTNERSHIP
Business owned by two or more
persons but not exceeding 20 persons.
Identity card name cant be used as
business name.
In a partnership, partners agree to undertake
joint business and own the business.

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 PARTNERSHIP (contd)
ADVANTAGES
1. Easy to set up. DISADVANTAGES
2. Easier to secure financial 1. Business liabilities are
assistance. unlimited.
3. Equity can be increased 2. Life span of business
through enlisting depends on life spend
additional partners. of partners.
4. Business risks can be 3. Unethical or misconduct
reduced and distributed behavior may happen.
among partners.
5. The responsibility of 4. Risk of personal clashes
managing and handling among partners.
the business can be
divided equally.
6. Synergy
7. Individual income tax.
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 CONTRACT AGREEMENT
Name of the business
The duration of the partnership to prevent the
dissolution/closure of the business. The agreement
should also state that in the event one partner passes
away or withdraws from the partnership, the business will
not be dissolved.
Individuals involved in managing the partnership
business.
The accounts of the business and share capital that
show the contribution of each partner and the right and
obligations of each partner towards the capital.
The properties are considered as assets of the business .

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 What if there is NO contract
agreement?

How is the business

managed WITHOUT a
contract agreement?
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 Section 26 and 27 of the Act
(To cover those business entities without
contract agreement)

Profits or losses are to be shared equally.

No interest is payable on partners 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.

11
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 Section 26 and 27 of the Act (Cont.)
12

Daily normal things in business can be decided by the

majority of the partners, but any changes that regularly
occur need to be made with consensus from all
partners.
A partner may withdraw after getting the consent of the
other partners.
The introduction of a new partner must have the
unanimous consent of all existing partners.
All business accounts books need to be kept at the
main business premises. Partners are allowed to
check through the books and they have the right to
keep a copy of the books.

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 How to start a Sole Proprietorship or
13
Partnership Businesses?

Please refer the following website:

https://www.ssm.com.my/en/sole/starting-a-sole-
proprietorship-partnership
 LIMITED LIABILITY PARTNERSHIP

What is it?
Limited Liability Partnership (LLP) is an alternative business vehicle regulated under the Limited
Liability Partnerships Act 2012 which combines the characteristics of a company and a
conventional partnership.
Who is it for?
The LLP business structure is designed for all lawful business purposes with a view to make
profit.
LLP may also be formed by professionals such as Lawyers, Chartered Accountants and Company
Secretaries for the purpose of carrying on their professional practice.
The LLP concept will also support start ups, small and medium enterprises (SMEs) to grow their
businesses without having to worry too much on their personal liabilities, personal assets and
strict compliance requirements.
Salient features
Amongst others, LLP is featured with the protection of limited liability to its partners similar to
the limited liability enjoyed by shareholders of a company coupled with flexibility of internal
business regulation through partnership arrangement similar to a conventional partnership.
Any debts and obligations of the LLP will be borne by the assets of the LLP and not that of its
partners. An LLP has the legal status of a body corporate which is capable of suing and being
sued in its own name,holding assets and doing such other acts and things in its name as bodies
corporate may lawfully do and suffer.
LLP also offers flexibility in terms of its formation, maintenance and termination while
simultaneously has the necessary dynamics and appeal to be able to compete domestically and
internationally. With the introduction of LLP,entrepreneurs will have more options to choose the
most preferredform of business vehicle.

Source: https://www.ssm.com.my/en/LLP-AboutLLP
 HOW TO START A LIMITED LIABILITY
PARTNERSHIP?

Please refer the following website:

https://www.ssm.com.my/sites/default/files/guideline
s/General%20Guidelines%20on%20registration.pdf
 PRIVATE LIMITED COMPANY
(Limited Company by Share)
CHARACTERISTICS:
i. Right and Responsibility
A company can acquire assets under its name and can also take
legal action and face legal action under its own name.
ii. Life Span
Not dependent upon the death or resignation of its members. Can
be dissolved when members no longer interested in the business.
iii. Liabilities
Liabilities of members limited to the total of shares contributed.
iv. Membership
There must be at least 2 members who are Malaysian. Can act as
founder or director of the company. BOD will manage and run the
company under the Companies Act 1965.

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 Contds
Mechanism:
1. Memorandum of Association
2. Articles of Association
3. The Share Capital of a Company
4. Members of Shareholders
5. Board of Directors
6. Secretary
7. Auditors
8. Registered Office
9. Company Seal
10. Authorization Letter

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 Contds

ADVANTAGES DISADVANTAGES

1. Funds easy to acquire. 1. Subject to more rules and

2. All shareholders are protected regulations.
by law.
2. Companys shares cannot
3. Shareholders are not the
managers of the company. be transacted through the
share market.
4. Liabilities are limited.
5. Life span not dependent upon 3. Pay corporate tax.
the members. 4. Qualified Auditors must audit
6. Greater expansion potential. the companys yearly
7. One entity by itself. financial statement.
5. Financial affairs must be
transparent to the public.
6. Setting up cost is high.
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 HOW TO START A Private Limited
19
Company?

Please refer the following website:

https://www.ssm.com.my/en/company/incorporation-
of-local-company
 PROCEDURES & LEGAL ASPECTS
Technopreneurs need to know and abide by
the procedures and rules governing business
entities in Malaysia.
Among the legal aspects that relate to
Malaysian businesses are:
1. License
2. Permit
3. Assembling Of Machinery & Equipment

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 LICENSE
1. Business license
2. Wholesaling License
3. Manufacturing License
4. Food Manufacturing License
5. Sales Tax License
6. Excise License

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 PERMIT
1. Foreign Workers Entry Permit
The entrepreneur needs to abide by the rules and regulations pertaining to
the hiring of foreign workers.

2. Transportation Permit
Commercial vehicles licenses are issued according to the application for the
use of different types of vehicles such as taxis, school buses, factory buses
or different categories of lorries.

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LETTER OF AUTHORITY
Government bodies issue letter of authority
Certificate of Fitness (CF) is Ex. Of letter issue by Low Authority
and supported by the Fire Department.
CF is issued after a building is certificated safe for use and
adheres to fire safety procedures.
 ASSEMBLING OF MACHINERY &
EQUIPMENT
1. Pollution Control
2. Business Rights
i. Trademark Protection
ii. Patent Protection
iii. Copyright
3. Standards and Quality
4. Hire Purchase Act
5. Workers Social Needs
6. Infrastructure Needs
7. Import and Export Regulations

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BUSINESS SUPPORT SYSTEM

Courses,
Seminars
And
Workshops
Extension Technical
Services Assistance

Advisory Marketing
Services Assistance

TECHNOPRENEUR

Financial Infrastructure
Assistance Assistance

Research
Information
and
Assistance
Development
THANK YOU
Q&A