In Search of a Regime of Limited Liability in Malaysian Partnerships

For many years, partnership has been the oldest and the most basic entity choice which combines the efforts of more than one individual. As commerce progresses, partnership has to compete with other business entities, especially the company which gains much favour due to the advantage of limited liability. Being an unincorporated business association, partnership applies the principle of unlimited liability whereby partners are jointly and personally liable for partnership obligations to the extent they exceed the assets of the partnership. The principle of unlimited liability in partnership is constantly criticized as it imposes heavy obligations and high business risks upon the partners. However, despite the disadvantages it carries, the principle of unlimited liability in partnership is neither replaced nor modified. Instead, the partnership laws are expanded to include alternatives, such as limited partnerships and limited liability partnerships, which provide the advantages of limited liability to the partners. The practice of limited partnerships and limited liability partnerships is already recognized and widely accepted in developed countries such as the United States of America, the United Kingdom of Great Britain and Northern Ireland, France and Germany. In Malaysia, the practice of partnership is still confined to general partnerships. There is neither development nor major amendment being made to the existing partnership laws. The latest development in Malaysian partnership laws was seen in Labuan when the Labuan Offshore Limited Partnership Act 1997 was passed to allow limited partnership to be practised in the Island. With the development and expansion of partnership laws that allows limited liability to be practised in a partnership, it is high time for Malaysia to look at these alternatives as one of the means to expand business options and increase investments in this country. Nonetheless, in proposing the practice of limited liability in partnerships, there are many aspects which need to be clarified, such as the entity of the firm, the extent of limited liability which a partner has, the effect on partners' and third parties' rights and also the dividing line which differentiates a partnership with limited liability from a limited liability company. With the above queries and concern in mind, it is the aim of this thesis to clarify the legal aspects of partnerships in the search of the application of limited liability in Malaysian partnerships

Ownership v control: Fault lines in directors-shareholders relationship: A special reference to Malaysian family business

In an ideal corporate management structure, directors should act in the best interest of the shareholders. In doing so, the directors' actions are governed by certain legislation which specifies their duties and this legislation is also relevant to the shareholders with respect to their rights. Although there are legislations which govern the relationship between directors and shareholders, there are still latent problems. These hidden problems could be regarded as fault lines in the relationship of these two parties. In a family business structure, these fault lines could bring worse effect compared to “non-family” companies as the directors are dealings with shareholders who are also family members. Another arising scenario which could arise is where directors are not part of the family members but have to deal with shareholders/members who are related to the owner of the company. This paper intends to highlight the fault lines which could occur between directors and shareholder in family owned companies.The main term of reference of this paper is the corporate governance principles and practices. This paper also aims to propose some mechanisms, through legislations in which problems which arise from the fault lines could be reduce if not resolved

‘Two in One’ regulating two business entities under one statute; Labuan Limited Partnership and Limited Liability Partnerships Act 2010

In Malaysia, the business vehicles are merely confined to sole proprietorship,partnerships and company. However, in its offshore, Labuan there are additional business vehicles which are offered, namely limited partnerships (LP) and limited liability partnerships (LLP). Recently, Labuan regulatory centre, LOFSA came out with a new and inimitable statute known as Labuan Limited and Limited Liability Partnership Act 2010 which is a unique legislation as it combines the laws for two business vehicle;limited partnership (LP) and limited liability partnerships (LLP) under one statute. In other countries, the limited partnerships and limited liability partnerships are regulated under different statutes as they are different both in substance and in practice. This paper intends to discuss the main features of Labuan Limited Partnership and Limited Liability Partnerships Act 2010 and to highlight the distinctiveness of this new business law. Research methodology adopted for this paper is mainly statutory analysis

Confidentiality of company's information: Challenges for nominee director

Company directors are subject to certain fiduciary duties discussed under common law and in statutory provisions. Directors’ fiduciary duties include duty to protect the confidentiality of company information. Any information that belongs to the company is to be used only by the company for the company. Such information is considered the property of the company and it must be used to the advantage of the company. The objective of this paper is to discuss the duty of nominee directors concerning the confidentiality of company information. Nominee directors who actually represent their nominators on a board of directors will find their duty challenging as they might be expected by their nominators to provide them with certain company information. The study is based on doctrinal and statutory analysis of selected jurisdiction as well as cases based on various jurisdiction. It is argued that nominee directors are in a vulnerable position as directors who are representing their nominators at the same time. Though it has been clearly legislated that their loyalty is to the company they should to a certain extent be allowed to disclose information that would not jeopardise their companies