Chapter 1 FORMS OF BUSINESS STRUCTURES

FORMS OF BUSINESS STRUCTURES

Sole Trader Partnership Company

- usually done by an individual using - a partnership agreement is usually - bound by Companies Act 2006
his own savings drafted between the partners (hereinafter known as “CA 2006”)

- governed by Partnership Act - there is a constitution to the

Advantages 1890 company called Articles of
- less formal Association

Advantages - clearly structured (there are

- can be started at one’s own
convenience - capital shared between partners shareholders and directors)

- partnership agreement acts as a - also takes into account the interest

control between partners of shareholders
Disadvantages

- raising the sufficient capital Advantages

- unlimited liability
Disadvantages
- clearly structured
- Partnership Act is too vague,
there are many unclear areas
- limited liability, company is
protected by the corporate veil
- unlimited liability ; when one of incorporation
partner dies, the other can be
made liable
Disadvantages

- structure may be too complex

Note: The Companies Act 1985 with its concept “one size fits all” has presently been reformed to CA 2006
with the new approach called “think small first”

1 www.bac.edu.my