SIDC Module 6 Business structures and the participating organisation question: count towards the 50-shareholder limit

SIDC Module 6Business structures and the participating organisation

Kayu Sdn Bhd's members are 42 individual non-employee shareholders, 4 joint holdings each held by 2 people, and 6 people who were employees when they became shareholders. How many count towards the 50-shareholder limit?

A 46
B 50
C 52
D 56

Show the answer and explanation

Answer: A. 46

Section 42(1) of the Companies Act 2016 allows a company limited by shares with not more than fifty shareholders to be a private company. Under section 42(3), joint holders count as one person, and a shareholder who was an employee of the company or its subsidiary when they became a shareholder is not counted. The count is 42 + 4 joint holdings (one each) + 0 employees = 46, within the limit. 50 counts each joint holder separately (42 + 8). 52 counts the employees (42 + 4 + 6). 56 counts every person. Source: Companies Act 2016 (Act 777) s.42(1), (3) (as at October 2026).

Common mistake

Counting joint holders individually or including employee shareholders in the 50 limit.

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