Let’s begin by defining what a business is; a business is basically an activity that provides goods or services with the objective of making a profit. Every business that is carried out whether it is for commerce, profession, trade or craftsmanship must be registered. There are also a business where their main aim is not in making a profit and that is what separates it from a non-business organization and a business organization.
What is the common type of business organizations that is found in Malaysia?
In Malaysia, a business may be carried out in anyone of the following forms and this includes companies, sole proprietorships and companies. A sole proprietorship is basically a business that is owned by one person only and is considered to be the simplest form of a business organization. However this does not mean that it has to be a one person business, as it can also have a large number of employees as well.
partnership is basically when at least 2 or more people pool their capital and work together. They share the investments and the profits but they also share the same risks. It is the same concept with the sole proprietorship but instead the partners are the owners of the properties and will also be responsible for meeting the partnership’s debt.
After a company has been formed it will become ‘incorporated’ under the Companies Act 1965. Once the company is formed it will then be treated as a separate entity and will be independent from its members. There are two common types of companies that us limited by its shares and this includes public limited companies as well as private limited companies.
For private limited companies, they cannot sell their shares to the general public and usually the name private limited companies will end with the word “Sendirian Berhad” or the abbreviation “Sdn. Bhd”. This is in contrast with the public limited companies, they instead raise their capitals by selling their shares and the company is administered by a board of directors that have been elected by the shareholders. For these types of companies they will show their statues by using the word “Berhad” or the abbreviation “Bhd” after the company’s name.