You are on page 1of 4

1.

MTT Associates than Joint Venture Company


Malaysian Turkistan Travel Sdn. Bhd was founded under 40% ownership to MTSB and
60% to TGS. The established company hence was considered as a Joint venture company
and a subsidiary of MTSB. However, in order to recognize MTT as a joint venture
company, both the parties should invest equally in-terms of money, time and effort to
build on the original concept (Joint Venture).
MTSB also considers MTT as its subsidiary company, although its share is less than 50
% percent and its authority to control decisions and make policy is insignificant.
Therefore, MTT cannot get the title as a subsidiary of MTSB unless it possesses half the
share and obtains influencing power in MTT. (Subsidiary)
Recommendation
MTT seems to follow associate company format rather than Joint Venture Company.
Hence, MTSB and TGS could reassess the MOU and divide shares equally to recognize
MTT as a joint venture and subsidiary company. Consequently, it would give more
power to MTSB in decision making and control irregularities.

2. MOU and MOA interchange

Memorandum of Understanding between MTSB and GTS lacks many crucial contents
that are supposed to be in proper MOU such as general rules and policies, requirements
and responsibilities of parties involved, etc. In contract, it defines the prospect of business
collaboration, objectives, liabilities to be shared, etc. Hence, the presented MOU of MTT
is more into Memorandum of Association as it governs relationship between the company
and outside. (Memorandum of Association)

Recommendation
MTSB and GTS should understand the concept of MOU and include requirements and
responsibilities of both party and it should be contractually bounded through Articles of
Association or Memorandum of Agreement. The presented MOU could be converted to
MOA as it serves more in defining business prospect than explaining obligation of parties
involved.

3. Share Capital not in Balance Sheet

The Share capital or Paid up Capital contributed by MTSB and GTS is not mentioned in
Projected Balance Sheet and this error might have occurred because of relationship based
transaction between the involved parties. The Board member of TGS, Mr. Omar Yatim
met his father Yatim Nor, an Executive Director of MTSB to form a joint venture
company MTT. Hence, the family relation between the parties who founded MTT could
be the reason for not mentioning total share value of RM. 2,358,935.00.

Recommendation
To project the proper and accurate financial transaction, MTT should include its paid up
capital in contributed capital. It should also establish accounting committee to arrange,
collect and record financial transaction for future use.

4. RM 2 Company to RM. 250,000.00

The RM2 Company is the company with RM2 as paid up capital. Any RM2 company
indicated that the company is not financially strong, the founder of the company or the
founding directors only contribute RM2 to form the company.

MTT increased its paid up capital from RM 2 to RM 250,000 after few months of
commencement. This rapid increase in capital could be the hoax amount to gain the
confidence of shareholders and government authorities as there was no audited accounts
neither issued to the shareholders nor filing made with the Companies Commission of
Malaysia.

Recommendation
The relationship based transaction between MTSB and GTS should be avoided
effectively and the parties involved in the reformation of MTT must not have family or
any kind of relationship that would influence the contract. The MTT should also maintain
proper accounting procedures and record evidences to support every financial transaction.





















B
Joint Venture. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Joint_venture
Memorandum of Association. (n.d.). Retrieved from Wikipedia:
http://en.wikipedia.org/wiki/Memorandum_of_association
Subsidiary. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Subsidiary
ibliography



http://www.youtube.com/watch?v=47yv7yMMggQ
http://teochiewkia2010.blogspot.com/2010/02/rm2-company.html
http://en.wikipedia.org/wiki/Memorandum_of_agreement
http://www.youtube.com/watch?v=drB1ZscutB0
Subsidiary. (n.d.). Retrieved from Wikipedia: http://en.wikipedia.org/wiki/Subsidiary