Malaysia: Incorporation of Companies and its effects
What is the effect of Registration?
Upon incorporation the Company becomes a body corporate and is vested with powers recognised by law. These are:o Ability to sue and be sued
Company can bring any action and sue on its own name. The origin of this rule is from the English law case of Foss v Harbottle . This was acknowledged in Abdul Rahim bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd.
o Perpetual Succession
Death or incapacity of the shareholders will not stop the company from continuing to exist. This is because the members and the company are separate people.
o Common Seal
A company is required to have a common seal. Section 121(2)(a) provides that where an officer of the company or any party thereto on behalf of the company authorizes or uses the seal without the appearance of the company name, shall be guilty of an offence.
o Power to own property
Company can purchase property distinct from the shareholders. This means that shareholders have rights over these properties. This was illustrated in Macaura v Northern Assurance Co Ltd.
o Liability of members
Members must contribute towards the assets of the company in light of insolvency. However, S214 states there are some limitations depending on the type of company in corporate.
Where company is limited by shares the liability is limited to the amount, in any, remains unpaid – S214(1)(d).
In the event it is an unlimited company the limitation under subsection 214(1)(d) is not applicable.
Further Information:
Companies Act 1965
Sample of Memorandum and Articles of Association
Suruhanjaya Syarikat Malaysia (Companies Commission Malaysia)
