A company is a legal entity that is separate and distinct from its members and shareholders. A company is capable of owning property, making contracts, employing people and being sued or of suing. Unlike sole proprietorships or partnerships, companies have continuity of succession, as it is unaffected by the death or incapacity of one or more of its members. There are three types of companies - A company limited by shares where the members personal liabilities are limited to the par value of their shares, a company limited by guarantee where the liabilities of the members will be restricted to the amount each agrees to contribute to the assets of the company in the event of dissolution or liquidation and an unlimited company where there is no limit to the members liabilities.
Company limited by shares is the most common type of company structure in Malaysia.
Companies limited by shares falls into two categories - Public limited companies and Private limited companies. A Private limited company cannot sell shares to the general public. Public limited companies raise capital by selling shares and are run by a board of directors elected by shareholders. Public limited companies can only offer shares to the public if a prospectus which complies with the requirements of the Companies Act 1965 has been registered with the Registrar of Companies. Before a prospectus can be accepted for registration, the proposal for the issue or offer of shares to the public have to be submitted to the Securities Commission for approval.