Introduction to Company Law (Part 2)

In Part 2, I am going to discuss issues regarding post commencement of a company and also the legal issue regarding company management. Here are some of the common questions;

1) How is the structure of management in a company, sole proprietorship and also partnership?

For a company, members are neither its managers or directors nor its agents. For sole proprietorship, owner owns and manages the firm himself and can employ employees to run and manage the firm for him. Meanwhile, members in partnership are agents of the firm. They are responsible to carry out the business in ordinary course of business and generally entitled to manage the firm.

2) How is the capital and liability are managed for a company, sole proprietorship and partnership?

For a company, capital subscribed by the member s for their shares cannot ordinarily be returned to them, but(in a limited company) they are not liable for its debts once they hold fully paid shares. In contrast, sole proprietor may withdraw capital and his liability for the firm's debt is unlimited. Same with sole proprietorship, partners in a partnership may withdraw capital but their liability for firm's debt is unlimited as well.

3) Can a company,sole proprietorship and partnership borrow fund? What is their borrowing powers?

Companies can borrow for the purposes covered by their objects as contained in their Memorandum of Association. Meanwhile, partners in partnership have unrestricted powers of borrowing in terms of amount and purpose. A sole proprietor has unrestricted powers of borrowing.

4) Can company, sole proprietorship and partnership use its assets as security??

Companies can use its current assets as security by creating floating charges. Defined by Wikipedia, A floating charge is a security interest over a fund of changing assets of a company or a limited liability partnership (LLP). A partnership and sole proprietorship cannot create floating charges but can mortgage the firm's assets.

5) How a company, partnership and sole proprietorship dissolve themselves?

A company can be dissolved using formal procedure such as winding up and liquidation. Partnerships may be dissolved informally, for example, by agreement of the partners. Sole proprietorships may be dissolved informally by the sole proprietor himself.

Introduction to Company Law (Part 1)

This post is to give an insight to readers regarding the company law in Malaysia. Part 1 of the Company Law will introduce the definition of company law and major difference between a company, partnership and sole partnership in terms of formation of the firms.

1) What is Company Law?

Company Law is the law relating to companies in Malaysia contained in the Companies Act 1965 (Revised 1973). There are few key areas of company law based on judicial precedents although company law in Malaysia is based mainly on said act.

2) What is the major difference in structure of a company, partnership and sole partnership?

By definition, sole proprietorship is formed by an individual in business on his own while partnership is formed by two or more persons carrying on business with a view of profit. On the other hand, a company is a person separate from its members.

3) How a company, partnership and sole partnership is registered in Malaysia?

A company need to be registered with Registrar of Companies as a company under Companies Act 1965. Mean while, partnership and sole partnership need to register their business under the Registration of Businesses Act 1956.

4) How is the constitution of company, partnership and sole proprietorship is formed?

A company must be constituted in writing for example, the Memorandum and Articles of Association. A partnership may be formed orally or by writing. For sole proprietorship, there is no agreement needed since sole proprietor is only one person by himself.



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Justice Anywhere??

I saw a movie today titled " Law Abiding Citizen" and here is the trailer from youtube website i get;

The story is about a a guy named Clyde Shelton who is an upstanding family man. His wife and daughter are brutally murdered during a home invasion. When the killers are caught, Nick Rice, a hotshot young Philadelphia prosecutor, is assigned to the case. Over his objections, Nick is forced by his boss to offer one of the suspects a light sentence in exchange for testifying against his accomplice. Fast forward ten years. The man who got away with murder is found dead and Clyde Shelton coolly admits his guilt. Then he issues a warning to Nick: Either fix the flawed justice system that failed his family, or key players in the trial will die. Soon Shelton follows through on his threats, orchestrating from his jail cell a string of spectacularly diabolical assassinations that can be neither predicted nor prevented. Philadelphia is gripped with fear as Sheltons high-profile targets are slain one after another and the authorities are powerless to halt his reign of terror. Only Nick can stop the killing, and to do so he must outwit this brilliant sociopath in a harrowing contest of wills in which even the smallest misstep means death. With his own family now in Sheltons crosshairs, Nick finds himself in a desperate race against time facing a deadly adversary who seems always to be one step ahead.

The movie shows that justice system do have flaws and the prosecutor are not deserved what he get. This changed the life of a normal man drastically. In order to revenge against the suspect, the main actor has been into a no return road. Do our own justice system are flawless that every "bad guy" are actually prosecuted to what they actually deserved?? This is a big thought for all of us. 

Notes: I am just stating my opinion regarding the MOVIE and not on the justice system of any country! PLEASE take note!

Contract law and application

Chong and Wei went shopping and decided to shop at Super Supermarket. Wei looked at the goods which were on display and decided to purchase 3 bottles of face cream which were on offer. She took the bottles to the counter where she paid for them. As they were leaving that supermarket, the cashier came up to them and told them that they have to return the goods.

What are the issues? Discuss the law and cases used as reference in this case. Advise Wei according to Contract Act 1950 and relevant decided case(s).

 The issue on this case is whether Wei should return the goods to the cashier or not.

Let do some analysis on the case. Firstly, Super Supermarket displayed the face cream in it shop and displaying of goods is actually an invitation to treat. Some cases could be use as reference to support this statement, such as Fisher vs Bell case where the defendant displayed flick knives in his shop windows. He was then convicted of a criminal offence of offering such knives for sale. The conclusion of the case is display of any goods with a price tag on it in a shop window was not an offer but rather it was an invitation to treat.

Next, Wei showed his interest by taking the bottles to the counter and Wei offered to buy the goods [Section 2(a) of the Contracts Act]. Then, sale has take place where Wei paid for the items. Thus, the proposal of Wei to buy the goods is said to be accepted since the cashier had took the money from Wei    [Section 2 (b) of the Contract Act].

Followed the law and cases referred to, the contract is said to be legally binding and Wei can resist and not to return the goods to cashier.

Reference: General Principles of Malaysian Law by Lee Mei Pheng