Advantages Possessed by Public Limited Companies in Malaysia
A public limited company in Malaysia, as is the case with any other company, is governed by Malaysia’s Companies Act. There are also several advantages possessed by public limited companies in the country. For example, through an initial public offering, the company may raise capital for its projects. Another important advantage of public limited companies lies in the fact that the shareholders have limited liability towards only their contributed share capital. They are not entitled to pay any amount of money beyond that. Furthermore, the financial statements are made public and the company’s financial position accounts are to be displayed to both the shareholders of the company and the general public, so there will not be any malpractice or fraud involved. It is also relatively simple to transfer shares to new shareholders because with the permission of the director, the existing shareholders can transfer their shares to the new investors either partially or completely.
Another advantage of public limited companies lies in the fact that they never need to be wound up. In a sole proprietorship or partnership, in the event of the death of the directors or shareholders, the company must be wound up. However, a public limited company in Malaysia can have new shareholders or directors elected in annual general meetings of the company. The share capital of a public limited company can be raised from the public because there is no limit to the maximum number of shareholders. This allows the company to receive more funds and more significant investments. Public limited companies are also among the most stable companies in Malaysia. Thus, many investors choose to invest in public limited companies. For this reason, public limited companies have a greater degree of credibility than do most other companies in Malaysia.
Disadvantages Possessed by Public Limited Companies in Malaysia
Although there are many advantages possessed by public limited companies in Malaysia, they also have certain disadvantages which may sometimes take a toll on either the company’s confidential matters or public affairs. One key disadvantage of public limited companies in Malaysia lies in the fact that they must go to far greater lengths than must other companies in order to remain compliant with the Companies Act. Compliance with the Companies Act involves much effort which a public limited company must put forth for the regulation of the proceedings of the company. Such is not the case with any other business entity in Malaysia such as a partnership or sole proprietorship. Another disadvantage is that the general public has much access to the information of a public limited company. In any public limited company, there is nothing which is truly hidden from the public. Any member of the public has the right to understand the company’s profit and losses in detail. The full access to financial affairs may sometimes lead to the loss of several shareholders because upon learning about the true state of the company’s financial well-being, some of these shareholders may deem the company’s financial position to be excessively unfavorable and therefore leave the company.
In public limited companies in Malaysia, the directors alone are not permitted to make any decision regarding the business because there is a requirement for the shareholders to be involved. Should there be significant disagreement among the shareholders of the company, the business progress of the company could possibly be adversely affected. Public limited companies based in Malaysia are also to adhere to a higher level of financial reporting standards than other companies based in the country. All reports are to include concise details of every financial transaction conducted by the company. There will also be a requirement to pay fees to any accounting firms which have either been auditing or preparing the financial reports.
A public limited company in Malaysia enjoys certain rights and privileges which are not available to other business entities based in the country. However, those who intend to own a public limited company in Malaysia should also be aware of the specific disadvantages which may be incurred if they are not careful about how they run the company. However, those who own and operate a Malaysian public limited company in an intelligent and well-planned manner will soon find that the company will receive much profit and corporate success.