Page 21 - Ebook Financial Accounting 3

2.1 Classification of companies

2.1.1 Companies can generally be classified as:

➢ limited and unlimited liability companies; and
➢ public and private companies.

Section 10(1) CA 2016 states that a company may be incorporated as

➢ a company limited by shares;

➢ a company limited by guarantee; or
➢ an unlimited company.

2.1.2 Companies formation

Requirements for Company Incorporation
The incorporation of companies under the Companies Act 2016 may be made

by individuals who intend to form a company.

The basic requirements are:

➢ Private company - at least one (1) director who ordinarily resides in Malaysia

by having a principal place of residence in Malaysia and one (1) promoter; or
➢ Public company - at least two directors who ordinarily reside in Malaysia by

having a principal place of residence in Malaysia and minimum one promoter.

Capital Structure
Capital structure is the particular combination of debt and equity used by a company to

finance its overall operations and growth. Equity capital arises from ownership shares in a

company and claims to its future cash flows and profits.

Debt

Assets
Capital Structure
Equity

Figure 2.1

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