Corporations and Legal Personality

Hanna and her friends wish to set up a small business. Hanna is concerned that, following her initial investment, she will have no access to additional funds and is worried what might happen if anything goes wrong

• She should form a private limited company

• She should form a public limited company

• She should form a limited partnership

A partnership is a relationship between two or more persons but is not SLE; but a company exists as a formal and legal entity in its own right, it is separate from SH

• True

• False

A sole trader is entitled to all profits; while in PT the profit shared among partners in agreed profit sharing ratio; but in company the entire profit belongs to company and some may distributed to members as dividends

• True

• False

Explain meaning and effect limited liability?

• suggest that liability of SH for debts of company is limited to value of their issued shares

• suggest that liability of SH for debts company limited to the present value of their shares

• limited to number of shares

• liability of corporation for debts of corporation is limited

A person possess legal rights and is subject to legal obligations. In law, term 'person' is used to denote two categories of person. An individual human being [A or B]; while the companies and LLP are [C or D]

• natural persons

• legal persons

• corporate persons

• artificial persons

which statement legally true?

• members of CLBS required to pay amount they guaranteed if required when company wound up

• members of CLBG required to pay amount they guaranteed if required when company wound up

• members of CLBG required to pay amount they guaranteed as when required by directors

• members of CLBG required to pay amount they guaranteed

There is important distinction between public companies and listed public companies. Listed public companies are those that [A or B] while private companies are [C or D]

• trade their shares on stock exchange

• have option to trade

• not entitled to sell

• entitled to sell

a multinational company is company that produces and markets its products in more than one country

• true

• false

a foreign company is one that may be in the form of corporation, society, association or other body incorporated outside Malaysia

• true

• false

Jack was a skilled worker in leather and ran a business as a sole trader in making bridles, saddles and other leather goods. He was advised by his solicitor to incorporate his business as a private limited company. He took this advice, buying 98 of 100 shares in Lush Leather Sdn Bhd. The company's liabilities quickly exceeds its assets and the company become insolvent, owing RM87000. Is Jack liable to indemnify Lush Leather Sdn Bhd against its debts

• yes, veil of incorporation will be lifted and reveal the company as sham

• yes, in practice there's no diff between Jack as sole trader of business and Jack as 98% SH of company

• no, debts belong to the company alone

• no, company's liability is limited and members' liability also limited