PCL0012

INTRODUCTION TO COMMERCIAL LAW

Chapter 1: Incorporation of Company
By Ms Saidatul Nasuha binti Jamaludin

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 INCORPORATION OF COMPANIES
• In general, there are three types of companies that can be incorporated in Malaysia –
limited by shares and company unlimited (fee is RM1,000) while limited by guarantee
(fee is RM3,000). All these have few common features including a name, as well as one or
more members and company directors.
• But the most common type is a company limited by shares. If such a limited company has at
least one director who has a principal place of residence in Malaysia and one promoter, it is
a private limited company. (or locally known as SDN BHD)
• While it is a public company (or locally known as BHD), if it has at least two directors who
have a principal place of residence in Malaysia and a minimum of one promoter.
INCORPORATION OF COMPANIES
1. Process of incorporation
2. Application
3. Registration
4. Post-Registration Requirements
5. Refusal to register a Company
6. Issuance of Notice of Registration
7. Effects of incorporation
8. Lifting of corporate veil
PROCESS OF INCORPORATION
CORPORATION :
 Artificial legal person created by law
 Companies Act 2016
 Companies Regulation 2017
 Guideline on Company Names
 Guideline for the Incorporation of Local Companies
 SSM
PURPOSE OF INCORPORATION : PUBLICITY &
DISCLOSURE
 To deter fraud
 Investor and Creditors Protection
 Supervision and control by Registrar
 Corporate Personality : entity separate from members
 Limited Liability : for members
 Legal compulsion : to conduct business legally
 Funding : capital investment / raise funds from public
 Taxation : tax benefit
APPLICATION
S. 14 CA : APPLICATION FOR INCORPORATION
1) An application to form company by a person shall be made to the registrar
2) Purpose of incorporation – lawful
3) What must be included in the application form? (a)-(j)
4) The application must be accompanied with the consent statement from the promoter/director
1) Consent to act as a promoter or to his appointment as director
2) That he is not disqualified

DISQUALIFICATION : S199 CA

S. 196(1) : DIRECTORS OF COMPANY

Min number of company director
- Private company : 1 director
- Public company : 2 directors

S 196(4) CA: The min number of director shall ordinarily reside in Malaysia
REGISTRATION
S.15 CA: Upon Registrar’s satisfaction with all the compliance & fee payment:
a) To enter particulars of the company in the register
b) Assign registration number
Issue a notice of registration
 S.15(c) CA : Issue notice of registration
S.19 CA : Notice of registration is conclusive evidence that the requirements of
this Act is respect of registration and matters precedent and incidental to such
registration have been complied with and that the company duly registered under
this Act – Date where the company comes into existence, equip with legal capacity.
S. 17 CA: The Registrar may issue certificate of incorporation upon application by
the company
REGISTRATION
Refusal of registration
S.16 CA: Refusal to register a company – (Registrar’s discretion)
1. If the requirement pertaining to the registration under the Act are not been
complied with.
2. If the Registrar is of the opinion that the company is likely to be used for an
unlawful purpose or for purposes prejudicial to public order, morality or security
of Malaysia.
CASES OF REFUSAL REGISTRATION
R v Registrar of Companies, ex parte Bowen [1914] 3 KB 1161
- the court held that the Registrar could only refuse to register a proposed company under
the Dentists Act 1878 if the use of the proposed name was an offence under the Act, and
since it was not the court would make an order compelling the registration of the proposed
company under the proposed name.However, the Registrar may refuse to register a
company where its objects are unlawful according to the law of the country.
R v Registrar of Joint Stock Companies (ex p. Moore)[1931] 2KB 197
- the Court of Appeal held that selling lottery tickets through the intended company would
have been an offence under the law in force at the time in question and therefore the
decision of the Registrar of Companies to refuse registration of the company was correct.
The company was not being formed for a lawful purpose and the refusal to register it
was valid.
CASES OF REFUSAL REGISTRATION
R v. Registrar of Companies, ex parte Her Majesty’s Attorney General[1991] BCLC 476
- it was held that a prostitute should not be allowed to register acompany where the
purpose stated in the memorandum of association is ‘to carry onthe business of
prostitution’, because the business was contrary to public policy.
POST REGISTRATION REQUIREMENTS
POST- REGISTRATION
S.46 – Registered office
S. 61 – Common seal
1. Optional
2. If have seal, must have the name and registration number – legible romanised
3. Contravention of (2) – offence
4. Personal liability on the person who contravene (2)
S.64 - Company contract