A sole proprietorship is where a business is owned by one person. In Malaysia, this is allowed but the owner of business must be a Malaysian citizen or a permanent resident, residing and operating its business in Malaysia.

To close down one’s business, one must do the following:

• Notify the local municipal council in writing of your decision to close down the business; and

• Place a Notification of Disclosure of Business with the Registrar of Business (ROB) within 14 days from the date of termination.

Take note that it would be an offence if the business owner fails to inform the local municipal council and/or inform ROB in the event of closure of business. Should the business be terminated due to the death of the business owner, then owner’s personal representative or heir will need to notify the ROB and the local council as well as fill in the necessary form needed to notify ROB. This must be done within 30 days from the date of death of the business owner.

The sole trader is personally responsible for all the debts and liabilities accrued by the business. To voluntarily wind up the business, you will need to:

The shares owned in a company incorporated under the Companies Act 1967 can be transferred to another person or entity by changing the ownership of the shares. These shares can be disposed of by valuing the net assets of the company (i.e. by deducting the liabilities of the company from its assets). The balance is termed as net asset.

The net asset value (NAV) per share is obtained by dividing the net asset with the number of paid-up capital / number of paid-up shares of the company.

You may dispose of the shares based on their net asset value or at any value, depending on how you perceive the value of the business to be and how urgent you wish to dispose of the shares.

Arrangement to dispose of the shares can be documented and finalised by filing the necessary form with the Companies Commission of Malaysia (CCM) through your company secretary.

Closing and de-registering a company requires a lot of time and effort.

Whether a company is active or dormant, so long as it remains registered with CCM, it is the Directors’ legal responsibility to submit the company’s annual reports to CCM. These include annual returns, audited accounts, taxation and any other statutory duties to be performed and duly submitted.

There are two ways to dissolve a company, namely by way of striking off a company or by way of winding up a company.

Striking off a company may be done voluntarily by asking CCM to strike off your company (Section 308, Companies Act 1965). This particular section enables the Registrar to strike off (also known as “to dissolve”) your company accordingly. There are some procedures that need to be complied with as follows:

Apart from the above, under certain situations, a company is not allowed to be dissolved:

In the event that a company has outstanding debts and legal issues, it should appoint a liquidator to handle the matters before the company can be dissolved.

There are two ways to wind up a company namely:

(i) Winding by an order of the Court; and

(ii) Voluntary winding-up by the shareholders.

When Form 65(A) is submitted to the Registrar, a provisional liquidator will already be appointed beforehand. Then feedback is required by the Registrar to when is this ‘winding up resolution’ is to be approved.

The key task of a liquidator is to wind up a company by distributing assets to the creditors (and other parties involved); and once this process is completed, the balance of the realised assets will be distributed to the company shareholders.

Upon his appointment, a liquidator will step in and take control all of the company’s assets and liabilities. The directors and shareholders will cease to have any power nor say on the company.

A court order can also be served for a company to be dissolved due to several reasons as follows :

1. Insolvency - a situation where a company is unable to pay its debts owed to a financial institution, supplier, creditor or any other related entities;

2. One or more of the company’s directors has acted in his/her/their personal interest or being unjust to other directors or acted against the interest of the company and has been served a court order;

3. The Court is convinced that it is equitable that this company should be dissolved;

4. The number of directors or shareholders is reduced to one (a private limited company in Malaysia requires two or more shareholders);

5. No business operations began since company was registered (period of one year) or has suspended business operations for at least one year;

6. Where the Memorandum and Articles of Association of the company set an expiry date of the business; and/or

7. The company has performed an unlawful business that threatens national security or is against the laws of Malaysia.

A “Partnership” is an enterprise in which more than one person is involved with a common view of profit. The Partnership Act 1961 allows for not more than 20 persons to set up a partnership. This is usually called a “firm”.

Like a proprietorship, a partnership must be registered with the Registrar of Business under the Registration of Business Act 1956. It is advisable to formulate an agreement when forming a partnership so as to regulate the conduct and affairs of the partnership.

However, any changes pertaining to the partnership must be duly registered - a new business venture, a change of address, adding a new partner, an old partner leaving the partnership, etc.

Partners are entitled to enjoy the profits but are jointly and severally liable to pay and settle the debts and liabilities of the enterprise. Essentially, this means one, several or all of the partners are responsible to pay off the firm’s debts and liabilities.

Dissolving a partnership can be done by way of agreement, operation of law or in the event that any partner dies, resigns or becomes bankrupt. Unlike companies where the company is still “alive” even if all the Directors die, the Partnership shall too cease to exist if the partners die.

Partners are at liberty to fix the duration of the partnership. Where no fixed term has been agreed upon for the duration of the partnership, any partner may terminate the partnership at any time by giving notice of his intention to do so to all the other partners – Section 28(1) Partnership Act 1961.

There are six ways in which a partnership can be dissolved:

(i) Expiration or Notice (Section 34 Partnership Act 1961) A partnership may be dissolved due to the following reasons under this section:

(a) if entered into for a fixed term, when that term expires; or

(b) if entered into for a single adventure or undertaking, when that adventure or undertaking ends; or

(c) if entered into for an undefined time, by any partner giving notice of dissolution to the other or others of his intention to dissolve the partnership.

(ii) Death, Bankruptcy or Charge (Section 35 Partnership Act 1961)

Every partnership will be dissolved if a partner dies or becomes a bankrupt. When it comes to charge, a Partnership may, at the option of the other partners, be dissolved if any partner suffers his share of the Partnership property to be charged under this Act for his separate debt.

(iii) Dissolution by illegality of partnership. (Section 36 Partnership Act 1961)

A partnership may be dissolved if there is an event which makes it unlawful for the business of the firm to be carried on or for the members of the firm to carry it on in partnership.

(iv) Dissolution by the court. (Section 37 Partnership Act 1961)

On application by a partner, the court may decree the partnership be dissolved in any of the following cases -

(a) when a partner is found to be lunatic or of unsound mind or is shown to be as such to the satisfaction of the Court;

(b) when one of the partners becomes permanently incapable of performing his part of the partnership contract;

(c) when one of the partners conducts an unlawful business;

(d) when one of the partners commits a breach of the partnership agreement;

(e) when the business of the partnership can only be carried on at a loss; or

(f) whenever in any case, circumstances have arisen which, in the opinion of the Court, render it just and equitable to dissolve the partnership.

The whole process of dissolving a partnership will only be completed when distribution of assets and final accounts has been settled.

If the owners / business could not pay off its debts when they fall due, and have not been able to reach an agreement with the creditors, as a sole proprietor or partner, you may decide to go bankrupt.

Bankruptcy will affect your daily life. Among other things:

· you may find it difficult to borrow money,

· you must have written permission from your trustee to travel overseas,

· it could affect your job opportunities, and

· a bond or surety is needed to secure rent, electricity, water or telephone connections.

All companies, no matter how big or small, have the obligations to have proper accounts, in line with Income Tax Act 1967. This however does not apply to sole proprietorships and partnerships registered with Registration of Business (ROB), wherein there is no obligation whatsoever to lodge their accounts to Suruhanjaya Syarikat Malaysia (SSM). The concept underlying the ROBA and the Companies Act 1965 is very different and may create confusion as it would be normal practice for any business to have a proper balance sheet.

For companies with proper balance sheet, depending on your level of taxable income, you may actually obtain a tax refund from the Inland Revenue Board (IRB) if your tax bracket is at 24% or below. The IRB officer will verify your submission with the physical dividend vouchers. So remember to declare and keep the dividend vouchers.

You do not need to declare the dividend received when the Tax is Exempted. Since there is no physical form submission, you are required by the Law to kept all records pertaining to the tax deduction and the exempted amount, for a period of seven (7) years for tax audit purposes.

Business succession planning is a process involving the smooth continuation and success of a business which depends greatly on the availability of competent personnel. This could happen because sooner or later, everyone wants to retire. And retirement to a business owner isn’t just a matter of deciding not to go into the office any more

What are the key issues to be considered while developing a business succession plan? Who’s going to manage the business when you no longer work the business? How will ownership be transferred? Will your business even carry on or will you sell it?

To answer the above questions, it all comes to business succession planning. In today’s world, either by choice or other circumstances, one of the concerns for profit or non-profit organization is there may be no successor to drive it once the leader or key person leaves – and it is people, or more aptly, the right people, that make things happen.

What is likely to happen to the organization when a key leader is eliminated without succession planning in place? The highest chance would be a business that has become successful can just as easily fail. The future success of the business is left to chance once that leader with experience, drive and ability is gone.

As you can see by now, it is very important for a business to have a succession planning. This is different from business continuity plan as the business succession planning involves more about HR or people, to be exact. Typically, a business succession planning will involve activities such as:

Let’s look at the key elements in a business succession planning.

In summary, when doing your business succession planning, keep in mind that any transition must preserve the continuity of leadership and it is most important that the succession of ownership and management be perceived as a process rather than an event.

Source : http://www.corporatejourney2u.com/business/business-succession-planning.html