Chapter 3 business law : Legal Aspects of Business Entities

 Contents outline:

3.1 Types of business entities in Malaysia
✅3.1.1 Define sole partnership
✅3.1.2 Define partnership
✅3.1.3 Define company

3.2 The characteristic of sole proprietorship, partnership and company

✅3.2.1 Characteristics of sole proprietorship, partnership and company in respect of

        a)formation

        b)management

        c)registration

        d)number of members

        e)constitution 

        f)liability

        g)dissolution

3.3 Right and duties of partners and dissolution of partnership based on Partnership Act 1961

✅3.3.1 The duties of partners
✅3.3.2 Dissolution of partnership

3.1 Types of business entities in Malaysia

1. Sole proprietorship

🟣type of business entity that is owned and run by one natural person 

🟣no legal distinction between the owner and the business

个人做生意

2.Partnership

🟣the relation which subsist between person carrying on business in common with a view of profit

合伙做生意

3.Company

🟣are legal entities incorporated under the Company Act 2016

公司

3.2 The characteristic of sole proprietorship, partnership and company

1. Sole proprietorship

📝Formation: individual in business on his own

📝Management: owns and manages the firm himself and can employ employees to manage the firm          for him

📝Registration: register business under the Registration of Business Act 1956

📝Number of members: only one person

📝Constitution: no agreement is necessary

📝Liability: may withdraw capital. Liability for the firm's debt to its creditors is unlimited

📝Dissolution: may be dissolved informally by the sole-proprietorship

# Sole-Proprietorship 是个个人公司，需要注册。它是由个人管理的，因此不需要别人同意也可以创办。liability是无限制的，亏损与盈利都个人承担。Sole-Proprietorship 可以通过非正式解散。

2.Partnership

📝Formation: two or more persons carrying on business with a view of profit

📝Management: partners are agent of the firm carrying on the business in the ordinary course of                 business and are generally entitled to manage the firm

📝Registration: Register with Companies Commission of Malaysia under the Registration of Business       Act 1956

📝Number of members: max is twenty (except for professional firm)

📝Constitution: may be formed orally or in writing

📝Liability: may be withdraw capital but their liability for the firm's debt to its creditor is unlimited

📝Dissolution: Partnership my be dissolved by agreement, operation of law by death or                 bankruptcy, charging on share, supervening illegality, court order

# Partnership 是由2-20人经营的合伙生意。它是由合伙人共同经营的，需要注册。合伙生意可以由口头上或者书写的方式决定成立。liability也是无限制的，如果其中一个合伙人要退出合伙生意，退出前必须要承担公司的损失/可以获得公司盈利。如果公司的损失大于合伙人的初始投资，合伙人可以不承担大于初始投资数目的欠款。合伙生意如果要dissolve，需要有条件，这个接下来再深入说说。对了，如果有新的合伙人要加入公司，也需要全部partner赞同

3. Company

📝Formation: A company is a person separate from its members

📝Management: members of company as much are neither its manager nor its agent

📝Registration: need to be registered with the Companies Commission of  Malaysia as a company                                   under the Company Act 2016

📝Number of members: no max numbers of members (except private company, the max is fifty)

📝Constitution: must be constituted in writing- by a Memorandum and Articles of Association

📝Liability: not liable for its debt

📝Dissolution: winding up with formal procedure

# Company是由manager或者agent来管理，需要注册。company分成public company和private company。 public company不限人数，private company是最多只能50人。Liability 是limited的。如果公司倒闭，股权拥有者只会亏损手上的股份的价值，不需要额外承担损失。如果是个人或者partnership公司亏损，投资人需自己补贴损失部分。如果要dissolve company，需要正式的流程，不能随随便便dissolve company

3.3 Right and duties of partners and dissolution of partnership based on Partnership Act 1961

Duties of partners (Section 26 Partnership Act 1961)

a) entitled to share equally in the capital and profits有权平均分享资本和利益

b) the firm must indemnify every partner in respect of payments made and personal liabilities incurred by him 公司必须赔偿每位合伙人的付款/对初始资金负责

c) a partner is entitled to interest at the rate of 8% per annum from the date of the payment or advance 每年8%利率获得利息

d) a partner is not entitled before the ascertainment of profits to interest on the capital subscribed by him合伙人在确定利润之前无权就其认购的资本获得利息

e) every partner may take part in the management of the partnership business每个合伙人均可参与企业管理

f) no partner shall be entitled to remuneration for acting in the partnership business任何合伙人均无权因从事合伙企业而获得报酬

Dissolution of partnership

1. by agreement Section 34(1) of Partnership Act 

✅the duration of the partnership has been specified in the particular agreement, the partnership is terminated on the expiry of that period 

✅partner mutually agree to dissolve the partnership

2.by operation of law Section 34(1) of Partnership Act

✅If the partnership was entered into for a fixed term and the term expires - Section 34(1)(a) Partnership Act 1961

✅If the partnership was entered into for a single adventure or undertaking and that adventure or undertaking terminates - Section 34(1)(b) Partnership Act 1961

✅If the partnership was entered into for an undefined time by any partner giving notice to the partner giving notice to the other partners of his intention to determine or end the partnership- Section 34(1)(c) Partnership Act 1961

3.by death of bankruptcy Section 35(1) Partnership Act 1961

✅every partnership is dissolved as regards all the partners by death or bankruptcy of any partner

4.by charging on share Section 35(2) Partnership Act 1961

✅ a partnership may at the option of the other partners be dissolved if any partners suffer his shares of  the partnership property to be charged under this Act for his separate debt

5.by supervening illegality  Section 36 Partnership Act 1961

✅Every partnership is dissolved by the happening of any event which makes it unlawful for the business of the firm to be carried on

6. by court order Section 37 Partnership Act 1961

✅Section 37(a) Partnership Act 1961- insanity of a partner

✅Section 37(b) Partnership Act 1961- permanent incapacity of any partner to perform his duties

✅Section 37(c) Partnership Act 1961- conduct calculated to prejudicially affect the carrying on of the business

✅Section 37(d) Partnership Act 1961-willful and persistent breach of the partnership agreement (by any partner other than applicant)

✅Section 37(e) Partnership Act 1961- when the business of the partnership can only be carried on at a loss

✅Section 37(f) Partnership Act 1961- where in the opinion of the court, it is just and equitable to dissolve the partnership