LAW 277 CHAPTER 5: BUSINESS ORGANIZATION IN MALAYSIA

Flashcards covering characteristics, types, and dissolution of business organizations including sole proprietorships, partnerships, and companies.

Sole Proprietorship

Owned by one person with minimal legal requirements.

Company

A corporate body incorporated in accordance to the Companies Act 2016; separate and distinct from its members and shareholders.

Partnership

The relation which subsists between persons carrying on a business in common with a view of profit.

Advantages of Sole Proprietorship

Owner receives all profits, simple to start, minimal capital required, and private.

Disadvantages of Sole Proprietorship

Unlimited liability, limited expertise, inadequate funds, difficulty taking time off, and ceases upon owner's death.

General Partner

Contributes capital and manages the business.

Dormant/Sleeping Partner

Contributes capital but does not manage the business.

Active Partner

Manages the business but did not contribute capital.

Quasi Partner

Not legally registered but involvement makes third party believe he is legally a partner.

Disadvantages of Partnership

Unlimited liability, potential disagreements, limited capital, and lack of succession.

Section 4(b) of the Partnership Act 1961

Sharing of gross returns does not in itself create a partnership.

Section 4(c) of the Partnership Act 1961

Sharing of profits does not create a partnership if the purpose is for some other reason than a business partnership.

Expiry of Partnership Period

Termination of partnership on the expiry of the period.

Mutually Agreed Dissolution

Partners mutually agree to terminate the partnership.