COMPANY

LAW
 Topics

Formation
of
compan
Company’s
y
management:
White
duties and collar
liabilities of crime
company
Whistle directors and
blowing
 DEFINITION

A company is a legal entity formed

by a group of individuals to engage
in and operate a business—
commercial or industrial—
enterprise.
Companies in Malaysia are governed by
the Companies Act, 1965.
 Business Types
Sole
proprietor
ship.

Private limited Public Limited

partners company Company
• one owner hip,
who is
personally
responsible
for the
company's
owned by two separate legal • company's
profits.
• The or more entity from its shares are
company individuals owners, which sold to the
has to be with a implies that general
owned by maximum shareholders public.
one amount of 20 have limited
partners. liability and • country's
Malaysian
 Sole
proprietorship.

 one owner who is personally responsible for the

company's profits.
 The company has to be owned by one Malaysian
citizen or a permanent resident.
Here are some key points to consider
 Business Registration

 To operate as a sole proprietor in Malaysia, you need to register your

business with the Companies Commission of Malaysia (SSM) or the
relevant state authorities, depending on your business structure and
location.
 Business Name

 Choose a unique business name that complies with the guidelines set
by the SSM.
 The name should not infringe on any existing trademarks and should
not be offensive or misleading.
Business License and Permits

 Depending on the nature of your business activities, you may

need to obtain specific licenses or permits from relevant
authorities.
 For instance, if you're operating a food business, you might
need licenses from local health authorities.
 Personal Liability

 One important consideration is that as a sole proprietor, you

have unlimited personal liability for the debts and obligations
of your business.
 This means your personal assets could be at risk in the event
of business debts or legal issues.
Business Bank Account

ccounting and Record Keeping

PARTNERSHIP

 owned by two or more individuals with a maximum

amount of 20 partners.
 business owner must be Malaysian citizen or permanent
resident.
are some key points regarding partnerships in M
Types of Partnerships

 General Partnership: All partners have unlimited liability and share

both profits and losses.

 Limited Partnership:
Comprises both general partners (with unlimited liability) and
limited partners (with liability limited to their capital
contribution).
 Limited Liability Partnership (LLP): Introduced in 2012, LLPs
combine features of partnerships and corporations, providing
limited liability to partners while allowing flexibility in
management.
Registration

 Partnerships in Malaysia must be registered with the Companies

Commission of Malaysia (SSM).

 The registration process involves submitting the necessary documents,

including the partnership agreement, to the SSM.
Partnership Agreement

 While not mandatory, it is advisable for partners to draft a

partnership agreement detailing the rights, responsibilities, and
profit-sharing arrangements among partners.

 This agreement can help prevent misunderstandings and

disputes in the future.
 Termination

 Partnerships can be dissolved through mutual agreement,

expiration of the partnership term
(if specified), bankruptcy of a partner, or court order.

 The process of dissolution involves settling debts, liquidating

assets, and distributing remaining assets among partners according
to their share.
 Private limited
company

 separate legal entity from its owners, which implies that shareholders have
limited liability and are only liable for corporate obligations up to the
amount invested and the funds in the firm
 often referred to as a Sendirian Berhad (Sdn. Bhd.)
ere's an overview of private limited companies in Mal
Incorporation

 To set up a private limited company in Malaysia, you need to register

with the Companies Commission of Malaysia (SSM).

 The process involves submitting the necessary documents, including the

company's constitution, details of directors and shareholders, and the
company's proposed name.
Limited Liability

 One of the key advantages of a private limited company is that its

shareholders' liability is limited to the amount they have invested in
the company.

 This means that their personal assets are generally protected

from the company's debts and liabilities.
Separate Legal Entity

 A private limited company is considered a separate legal

entity from its shareholders.

 This means that the company can own assets, enter into
contracts, sue, and be sued in its own name.
 Taxation

 Private limited companies are subject to corporate tax on their

profits at a flat rate.

 As of my last update, the corporate tax rate in Malaysia is generally

24%, although there may be lower rates available for certain
categories of companies or income.
Transferability of Shares

 Shares in a private limited company can typically be

transferred, subject to any restrictions set out in the
company's constitution or shareholders' agreement.
nancial Reporting and Compliance

 Private limited companies in Malaysia are required to comply with

various legal and regulatory requirements, including filing annual
returns, holding annual general meetings, and maintaining
proper accounting records.
 Financial statements must be audited annually by a licensed
auditor unless the company meets certain criteria for audit
exemption.
  company's shares are sold to the general publi

Public Limited  country's stock exchange market

Company

 often referred to as a Berhad (Bhd.)

s an overview of public limited companies in Ma
Incorporation

 Similar to private limited companies,

public limited companies are registered
with the Companies Commission of
Malaysia (SSM).

 The incorporation process involves submitting the

necessary documents, including the company's constitution,
details of directors and shareholders, and the company's
proposed name.
Limited Liability

 Shareholders of public limited companies have limited

liability, meaning their liability is generally limited to
the amount they have invested in the company.
Separate Legal Entity

 Like private limited companies, public limited

companies are considered separate legal entities from
their shareholders.
 They can own assets, enter into contracts, sue, and be
sued in their own name.
Listing Requirements

 Public limited companies seeking to list their shares on Bursa

Malaysia must comply with listing requirements, including
minimum capital requirements, corporate governance standards,
and disclosure obligations.

 These requirements aim to protect investors and ensure

transparency in the capital markets.
QUESTION
"James and Sarah are considering starting a new business
venture in Malaysia. They have some savings to invest and
are debating between setting up a private limited company
(Sdn. Bhd.) and a partnership.

They plan to operate a small consulting firm offering

services in the field of digital marketing. James has
experience in business management, while Sarah
specializes in digital marketing strategies. They are unsure
about the legal and operational implications of each
business structure in Malaysia."
 Given James and Sarah's scenario, they should carefully consider
the advantages and disadvantages of both a private limited
company and a partnership in Malaysia before making their
decision.

 Recommendation:

Considering James and Sarah's expertise in their respective fields

and their desire to operate a consulting firm, a private limited
company (Sdn. Bhd.) might be more suitable for their business
venture.

The limited liability protection, separate legal entity status, and

potential for future growth through capital raising could outweigh
the additional compliance requirements and setup costs
associated with a private limited company.
 Who is director?

S.4 S.122(2):
S.122(1):Req
Companies Qualification
uirement for
Act 1965 s&
directors
disqualificati
ons

at least two human, of full

someone elected
directors who age & capacity
or appointed to
each has his (no other
manage a
principal or only positive
company's
place of qualifications
business and
residence within are prescribed).
affairs.
Malaysia.
 Duties of directors

duty to act in good

Fiduciary display skill, company's constitution
duties no
Honestly, faith
Interest of the
conflict of
standard of organisation
Follow the company's
interest care &
constitution
reasonable
Knowledge,skills
diligence
•A whistleblower is an employee, former
employee, or member of an organization,
especially a business or government agency,
who reports misconduct to people or entities that
have the power and presumed willingness to
take corrective.
•
Generally the misconduct is a violation of law,
rule, regulation and/or a direct threat to public
interest, such as fraud, health/safety violations,
and corruption .
Kinds Of Whistle Blowing

Intern Person Imperson

al
al al
lowing the
whiste on
who External
the
report offender, Whistle
misconduc here the Blowing.
t on a charge is
fellow not against
employee the
or organizatio
superior n or
system but
within
against
their one
company. individual .
 Whistleblowing Benefits
 Whistleblowing leads to good and bad results. First, the benefits of
carefully considered whistleblowing can lead to the end of unethical
business practices . The lives of individuals and whole communities
have been saved by whistleblowers .

 The actions of whistleblowers are potentially beneficial to society .

Businesses that engaged in unethical practices have been shut
down because of the actions of whistleblowers .
 How To Blow The Whistle ?

Do it anonymously Do it in a group
Present just the
evidence
 Whistleblower
Protection Act 2010
Legislative protection in Malaysia of whistleblowers is not an entirely new concept.
Legislation mandating personnel to disclose the existence of offences involving fraud or
dishonesty, and the attendant legal protections, already exist in certain sectors.

The Whistleblower Protection Act 2010 (“WPA”), which came into force on 15 December
2010, is intended to provide all-encompassing protection to the private and public sectors.
One of the WPA’s key objectives is to fill in the gaps left by the said sectoral-specific
legislation.

The Malaysian Parliament provides protection for whistleblowers through a few Acts of
Parliament.

A. Companies Act 1965 (Act 125) and Capital Services Act 2007 (Act 671)
B. Whistleblower Protection Act 2010 (Act 711)
 Are Whistleblowers
Honoured as Heroes?
doubt their
loyalty .

traitors

NO

someone
 White collar crime

White-collar crime is a crime committed by a respectable and high-

status job. Due to these crimes committed by their high status in
employment. Government officials or managers of an organization or
a company abusing public money for its own sake.
3 main causes of white-collar
crime:
Opportunitie Situational
pressures on
s to
the
commit individuals,
crime,

Issues
pertaining to
integrity.

Slide
 Example of white collar crime

-Sect. 415 to 420, Penal Code

-Deliberate deception to secure unfair or unlawful gain.
-2 types of fraud, civil wrong and criminal wrong.
-For example, a fraud victim may sue the fraud perpetrator to avoid the fraud and
recover monetary compensation.
-and a criminal wrong (example fraud perpetrator may be prosecuted and
imprisoned by governmental authorities)

- Anti-Corruption Act 1997

-Bribery is the offer or acceptance of anything of value in exchange for influence on
a government/public official or employee. Bribes can take the form of gifts or
payments of money in exchange for favourable treatment, such as awards of
government contracts. Other forms of bribes may include property, various goods,
privileges, services and favours

- Sect. 405 to 409, Penal Code

- An act by a trustee that is not authorised either by the trust document or by law. For
example, a breach of trust can occur if a trustee:
-Distributes trust assets to a beneficiary who is not entitled to them under the terms of the
trust document.
-Invests the trust fund in a way not permitted by his express or statutory powers of
investment.
 Example of white collar crime
- Sections 16(b) and 10(b) of the Securities Exchange Act of 1934
-The trading of a public company's stock or other securities (such as
bonds or stock options) by individuals with access to non-public
information about the company.

Anti-Money Laundering Act 2001

criminals disguise the original ownership and control of the proceeds of
criminal conduct by making such proceeds appear to have derived from a
legitimate source. any act or attempted act to conceal or disguise the
identity of illegally obtained proceeds so that they appear to have originated
from legitimate sources

Computer Crimes Act 1997,Digital Signature Act 1997, Telemedicine Act

1997. Offences committed against individuals or group who have the
motive of the crime to damage the reputation of victim by internet networks
Identity Theft and Assumption Deterrence Act of 1998
Deliberate use of someone else identity for financial advantages in company.
Someone using your personal information.
Identity theft is a form of stealing someone's personal information and pretending to be that person in order
to obtain financial resources or other benefits in that person's name without their consent.
Q U ES T I O N
Emily works as a senior accountant in a large multinational corporation
based in Malaysia. During her routine audit of financial records, she
discovers evidence suggesting that some senior executives are involved in
fraudulent activities, including embezzlement of company funds and
manipulation of financial statements to inflate profits. Emily is deeply
concerned about the unethical behavior and is unsure about what to do.“

Question: What steps should Emily take as a whistleblower in Malaysia to

report the fraudulent activities she has uncovered, ensuring her
protection and the proper investigation of the matter?
As a whistleblower in Malaysia, Emily should take the following steps to report the
fraudulent activities and ensure her protection:

 Document the Evidence: Emily should gather and document all evidence related to the
fraudulent activities, including financial records, emails, memos, and any other relevant
documentation. This documentation will be crucial in supporting her claims during the
investigation.

 Internal Reporting: Emily should first report her findings internally to the appropriate
authorities within the company, such as the compliance officer, internal audit department,
or senior management. She should follow the company's designated whistleblowing
procedures, if available, and ensure that her report is documented and acknowledged.

 External Reporting to Regulators: If Emily believes that the internal reporting channels
are not effective or if she fears retaliation, she can escalate her concerns to external
regulatory authorities, such as the Securities Commission Malaysia (SC), the Malaysian
Anti-Corruption Commission (MACC), or the Companies Commission of Malaysia (SSM).
These agencies have mechanisms in place to handle reports of corporate fraud and
 Protection under Whistleblower Protection Act: Emily should be aware that she is protected under the
Whistleblower Protection Act 2010 (WPA) in Malaysia, which safeguards whistleblowers from victimization or
retaliation by their employers. This act prohibits any adverse actions, such as termination, demotion, or harassment,
against whistleblowers who report wrongdoing in good faith.

Confidentiality and Anonymity: Emily may choose to report anonymously to protect her identity,
especially if she fears reprisals from senior executives or colleagues involved in the fraudulent
activities. However, providing her identity may facilitate a more thorough investigation.

Legal Advice: Emily should consider seeking legal advice from a qualified lawyer
specializing in employment or whistleblower protection laws to understand her
rights, obligations, and the potential consequences of her actions.
Follow-Up: Emily should follow up on her report to ensure that appropriate
actions are taken to investigate the allegations and address the fraudulent
activities. She should cooperate with investigators and provide any additional
information or assistance required for the investigation.
By following these steps, Emily can fulfill her ethical obligation to report the
fraudulent activities while protecting herself under the whistleblower protection
laws in Malaysia. It's essential for Emily to act promptly and responsibly to
THANKS FOR LISTE
NING
MULTIPLE CHOICE
QUESTIONS
Which government agency is responsible for the
registration and regulation of companies in
Malaysia?

a)Securities Commission Malaysia

b)b) Ministry of Finance Malaysia
c)c) Companies Commission of Malaysia (SSM)
d) d) Bank Negara Malaysia
Which type of company in Malaysia offers
limited liability to its shareholders while also
allowing shares to be traded on a stock
exchange?

a)Private limited company (Sdn. Bhd.)

b)b) Public limited company (Berhad)
c)c) Limited liability partnership (LLP)
d) d) Sole proprietorship
Which legislation governs the incorporation and
operation of companies in Malaysia?

a) Companies Act 1965

b) Partnership Act 1961
c) Securities Commission Act 1993
d) Financial Services Act 2013
What is a whistleblower?

a) Someone who blows a whistle to alert others of

danger
b) A person who reports illegal or unethical activities
within an organization
c) An employee who constantly complains about minor
issues
d) A government official responsible for investigating
corruption cases
Which of the following is NOT a common motivation
for whistleblowers?

a) Personal gain
b) Ethical concerns
c) Desire for justice
d) Fear of retaliation
Whistleblower protection laws are primarily
designed to:

a) Encourage employees to spy on their

colleagues
b) Punish employees who report wrongdoing
c) Provide legal safeguards for employees
who report misconduct
d) Protect companies from external scrutiny
In Malaysia, whistleblowers are protected under
which legislation?

a) Whistleblower Protection Act 2010

b) Companies Act 1965
c) Securities Commission Act 1993
d) Malaysian Anti-Corruption Commission Act
2009
What is the primary duty of directors under
company law?

a) Maximizing shareholder wealth

b) Maximizing personal profits
c) Acting in the best interests of the company
d) Following instructions from shareholders
Which of the following is NOT considered a duty
of directors?

a) Duty of care and skill

b) Duty of loyalty
c) Duty of profitability
d) Duty of obedience
What is the consequence of a director breaching their
fiduciary duties?

a) A warning from the company secretary

b) Shareholders may file a lawsuit against the director
c) A pay increase for the director
d) The director receives a promotion