Topic 2:

Sources of
Company Law
and Types of
Company

Atikah Rosli
LEARNING OUTCOMES

On completion of this topic students must

be able:
1. to identify the sources of company law
2. to understand different types of
company
 2.1 Introduction

▪ The Companies Act 2016 is the principal legislation governing the formation
and operation of companies in Malaysia
▪ The Act enables an association of persons to form various types of corporate
organizations known as registered companies
▪ This Act also provides facilities for the incorporation of companies, its
constitution, its relation with members and creditors, management and
winding-up
▪ Registrar Of Companies under the Companies Commission of Malaysia (CCM)
enforces and administers the CA 2016
▪ Every company must register with ROC before conducting any business activity
 2.2 Sources of Company Law

Legislation – Companies Act 2016

Case Law

Constitution of the Company

 2.3 Types of Companies
Company Limited By
Shares
▪ Section 10 (2): Liability
of members limited to
the amount of unpaid
shares respectively held
by them (if any).
▪ Must state that liability
of members is limited.
▪ a limited company
▪ PUBLIC Section 25(1)(a)-
“Berhad” or “Bhd”
▪ PRIVATE Section
25(1)(b)- ‘sendirian
berhad’ or ‘sdn bhd’
Section 10(1)
Classification of Companies
Company Limited By Unlimited company
guarantee
▪ Section 10(3):
▪ Section 10(4):
▪ Liability of members limited to the
respective amounts that they ▪ No limit placed on the
undertake to contribute to the liability of its members.
assets of the company in the event
the company is wound-up. ▪ Members are liable
upon winding-up for
▪ Does not have a share capital the debts of the
under Section 12 company without limit
if the company has
▪ S.45(1) objects: providing insufficient assets to
recreation or amusement; meet its debts.
promoting commerce and industry;
art; science; religion; charity; ▪ Section 25(1)(c) the
pension word “Sendirian” or the
abbreviation “Sdn”
▪ Example: CyberSecurity Malaysia,
Kuok Foundation Berhad.
 2.4 Private and Public Company

Private Company Public Company

Section 25(1)(b) Section 25(1)(a)
Must have “Sendirian Berhad (Sdn Bhd)” Must have “Berhad (Bhd)” after the
after the name of company name of company
Section 42(1) There is no maximum number of
Limits the number of members to 50 shareholders
Section 43(a) Can invite the public to buy shares by
Prohibits any invitation to the public to the issuance of prospectus
subscribe any shares or debenture
Section 42(2) No restrictions can be imposed as to
Restriction as to transfer of shares transfer of shares
 2.5 Holding/Subsidiary Companies
Section 5 Ultimate
Orange Ltd will be subsidiary Holding company
of Papa Ltd if any one of the - Has subsidiary
following conditions are met - Not subsidiary
based on Section 4(1): for others
(a) Papa Ltd controls the Papa Ltd
composition of the board
of directors of Orange Ltd ; Holding company Orange
Yaya Ltd
(b) Papa Ltd controls more for Grape Ltd Ltd
than half the voting power
of Orange Ltd ; Subsidiary company Section 6
of Papa Ltd Grape Ltd Wholly-owned
(c) Papa Ltd owns more than subsidiary
half the issued share - No members other
capital of Orange Ltd Section 7 Company related
than the holding
company
to each other
If it is holding, subsidiary or
subsidiary of holding
company of others.