CONSTITUTION OF

COMPANIES
Step-by-step
Practical Guide on
Mastering the Constitution of Companies
Frequently Asked Questions
1. How to adopt a Constitution for the very first time post incorporation
or any time during the lifetime of a company if it has no separate
Constitution of its own?
2. What do I need to do if I wish to do nothing with the legacy MAA? Can
I sit around and look pretty?
3. How to amend the legacy MAA? Can I adopt a new Constitution
instead for an existing company?
4. What steps to take to do away totally with the legacy MAA?
5. What do I need to do if the company changes its mind and wish to
adopt a Constitution after it has done away with the legacy MAA
before? Can I then in turn do away with the Constitution after that?
6. How do I amend a Constitution?
 Part A
The Law and Practice
relating to Constitution
 The law under Companies Act

LAW
● Part II Division 5
○ Sections 31 to 39

RELATING TO
● Section 619(3)
● Third Schedule (Section

CONSTITUTION
212 - subject to
Constitution)
Section 31 - Constitution of a company

● A Company may or may not adopt

● Except for CLBG
● A tripartite contract binding the company, its directors and
members
● If no separate Constitution, then to refer to the Act as the
provisions are already in the substantive law
 Section 31 -
Commentaries:
Clause 31 seeks to provide that a
company may but does not need to

Constitution of have a constitution. The effect of a

company having a constitution is

a company
that the company, its directors and
members will be bound by that
constitution to the extent of being
modified by the proposed Act. If a
company has no constitution, the
Commentaries provisions of the proposed Act
shall apply on the company, its
directors of (sic and) members.
Section 32 - Company may adopt a constitution
● A company may adopt a
Constitution by special
resolution
● No effect if it contravenes or
is inconsistent with the
Companies Act 2016
● Once adopted, it binds the
company, its directors and
its members
● Lodge new Constitution (no
need to attach special resolution
but state date only as per the
form) to Registrar within 30
days from date of adoption
● Failure to lodge the new
Constitution within the time as
stipulated, the fine is maximum
RM50,000 with daily fine of a
maximum of RM500 if offence
continues post conviction
 Section 32 - Commentaries:
Clause 32 seeks to provide

Company may
that a company may adopt a
constitution once the company

adopt a
has been incorporated and it
shall be done by way of
passing a resolution. Once a

constitution constitution is adopted, it shall

be binding on the company, its
directors and members.
Commentaries
Procedure - Adopt a Constitution
(For Private Limited Company only)
1. Circulate a DCR or call for a Board Meeting (Proposal by Board
to adopt a Constitution);
2. If EGM, notice of 21 days (Note: no Constitution yet so no “or
such longer period”) to pass a special resolution to adopt a
Constitution;
3. Circulate MCR or convene the EGM;
Procedure - Adopt a Constitution (For Private
Limited Company only)
4. If special resolution is passed, lodge the Constitution to SSM with the
Form under section 32 of Schedule A within 30 days from the date of
adoption and pay the prescribed fee (RM100 to be confirmed - item 48,
Schedule of Fees);

(Note: to stamp Constitution at RM100 if adopting a Constitution for the

very first time or re-adopting one any time during the life of a company)

5. Thereafter, the company shall refer to the Companies Act 2016 and
the Constitution for matters regulating the company, its directors and its
members.
Section 33 - Effect of adopting a Constitution

● As if it had been signed and sealed by each member;

● Each member covenants to observe all provisions of the

Constitution; and

● If any moneys payable under the Constitution, it is a debt due by

such a member.
Section 33 -
Effects of
Commentaries:
Clause 33 seeks to

adopting a
provide that the effect of
adopting a constitution is

Constitution
that the document will
bind the company(, its
directors) and its
members.
Commentaries
Section 34 - Form of Constitution

1. For a company limited by shares incorporated under the

Companies Act 2016, a document adopted as its Constitution
under Section 32;
2. For a company limited by guarantee incorporated under
Companies Act 2016, a document lodged for registration of
the company under Section 38; or
3. For a company registered under CA 1965, the MAA as
originally registered or as altered under CA 1965, including
Table A.
 Commentaries:

Section 34 -
Clause 34 seeks to clarify as to
what constitute a constitution of a
company. This clause states that

Form of for companies which

incorporated under the proposed
are

Constitution
Act, the constitution shall be that
under clause 32 or 38, and for
companies which are incorporated
under the corresponding previous
Commentaries written law, the constitution shall be
the memorandum and articles of
association of the companies as
previously lodged with the
Registrar.
Section 35 - Contents

May contain the following -

1. The objects of the Company - full capacity and powers to achieve
such objects unless the Constitution provides otherwise and
restricted if outside such objects;
2. Capacity, rights, powers or privileges if the provision restricts any or
all of them;
3. Matters contemplated by Companies Act 2016 to be included in the
Constitution; and
4. Other matters, the company wishes to included in the Constitution.
Section 35 - Commentaries: Clause 35 seeks
to provide that a company may,

Contents
if it decides to adopt a
constitution, include matters set
out in this clause or any other
Commentaries matters including provisions
that restrict the company from
carrying out certain objects or
activities.
Section 36 - Alter or amend the Constitution

● By special resolution unless the amendment is prohibited by the

Constitution itself;
● Binding on company and its members accordingly from date of
resolution or such later date as specified in the resolution; and
● Lodge with SSM such amended Constitution within 30 days from the
date of the special resolution (no need to attach special resolution
but state date only as per the form).
● Failure to lodge the amended Constitution within the time as
stipulated the fine is maximum of RM10,000 with daily fine of a
maximum of RM500 if offence continues post conviction
 Section 36 -
Alter or amend
Commentaries:
Clause 36 seeks to provide

the
for the procedures to be
followed when a company
alters or amends its
Constitution constitution.

Commentaries
Procedure - Alter or amend the Constitution (For
Private Limited Company only)
1. Circulate a DCR or call for a Board Meeting (Proposal by Board to
alter or amend the Constitution);

2. If EGM, notice at least 21 days (or longer, see Constitution) to pass a

special resolution to alter or amend the Constitution (make sure
such alteration or amendment is not prohibited by the Constitution);

3. Circulate MCR or convene the EGM;

Procedure - Alter or amend the Constitution (For
Private Company only)
4. If special resolution is passed, lodge the Constitution to SSM with
the Form under section 36 of Schedule B within 30 days from the date of
the special resolution and pay the prescribed fee of RM30 (Item 5 -
Schedule of Fees); and

5. Thereafter, the company shall refer to the Companies Act 2016 and
the amended Constitution from the date of resolution or such later date
as specified in the resolution for matters regulating the company, its
directors and its members.
Section 37 - Court may alter or amend Constitution

● On application by a Director or a member;

● Court is satisfied not practicable to alter the Constitution using the
procedures as set in the Act 2016 or under the Constitution, make an
order to alter or amend the Constitution on such terms and
conditions as it thinks fit;
● Lodge with SSM an office copy of the court order and the amended
Constitution within 30 days from the date of the order.
● Failure to lodge the amended Constitution within the time as
stipulated the fine is maximum of RM10,000 with daily fine of a
maximum of RM500 if offence continues post conviction.
 Section 37 - Commentaries: Clause 37 seeks
Court may alter to provide for an alternative way
for companies to alter their
or amend constitution by applying to the
Court if the constitution could

Constitution not be altered in the usual

manner either in accordance
with the proposed Act or the
constitution.
Commentaries
Procedure - Court to alter or amend the Constitution
(For Private Limited Company only)

1. Director or a member submits an application to Court (if for

any reason it is not practicable to alter the Constitution using
the procedures as set in the Companies Act 2016 or under the
constitution);

2. If Court is satisfied with reason(s), it makes an order;

Procedure - Court to alter or amend the Constitution
(For Private Limited Company only)

3. To lodge with SSM an office copy of the court order and the amended
Constitution within 30 days from the date of the order with the Form under
section 37 of Schedule B and pay the prescribed fee (RM100 to be confirmed -
item 46, Schedule of Fees); and

4. Thereafter, the company shall refer to the Companies Act 2016 and the
amended Constitution from the date of the court order for matters regulating the
company, its directors and its members.
Section 38 - CLBG
KIV to future webinar dedicated
to CLBG

shall have a Commentaries:

Constitution Clause 38 provides that it is

mandatory for a company
limited by guarantee to have
Commentaries a constitution. This clause
further describes the matters
that should be stated in the
constitution.
Section 39 - Abolish Doctrine of Constructive Notice
No person shall be deemed to have notice or knowledge of the
content of the Constitution or any other document relating to a
company, due to the fact that such a Constitution or document :-

(a) Has been registered by the Registrar; or

(b) Is available for inspection at the Registered Office of the
Company,

With the exception of documents relating to instrument of

charges.
Section 39 -
Doctrine of
Commentaries:
Clause 39 seeks to provide

Constructive
for the non-application of the
doctrine of constructive
notice on the contents of a
Notice constitution or any other
document of a company
except with regard to
documents relating to
Commentaries
charges.
Section 619(3) - Transitional provision

● The Legacy Memorandum and Articles of Association of

existing company in force and operative at the
commencement of Companies Act 2016, and the provisions
Table A under the Fourth Schedule of the CA 1965 if adopted
as all or part of the articles of association of a company at the
commencement of Companies Act 2016, shall have the effect
as if made or adopted under Companies Act 2016, unless
otherwise resolved by the Company.
No Par Value

Need to amend legacy MAA to remove the Par Value?

Answer: No need to specifically amend the legacy MAA for this

abolition of par value because of the wordings of section 74 -

All shares issued before or upon the commencement of this Act

shall have no par or nominal value.
Unlimited Capacity
Objects of the Company

● Allow
● Prohibit
● Restrict

If a company has stated its objects, is it a re-introduction of the

ultra vires concept?

Note: Any change of business address or nature of business must

notify SSM within 14 days using the Prescribed Form PD2/2017

See Practice Directive 2/2017 and Form PD2/2017

Third Schedule of the Companies Act 2016
Proceedings of the Board
● Chairperson
● Notice of Meeting
● Modes or methods of holding meetings
● Quorum
● Voting
● Minutes
● Resolutions - at adjourned meeting and in writing
● Other proceedings
● Committees of the Board
● Managing Director
● Associate Director
 Effects of s212 pertaining to the Third Schedule

Effectively, the provisions under the Third Schedule shall apply by

default subject to the Constitution - means can contract out of it!
Sample comparison between Table A and Companies Act
2016
Sample comparison between Table A and CA2016

Comparing Articles 43 to 95 of Table A

Part B - More on the Practice
 So what is your QUESTION?
1. If I am incorporating a new company, do I want to have a constitution?
a. If yes, why?
b. If no, why?
2. If an existing company with the legacy Memorandum and Articles of
Association, what options do I have?
a. To continue as is? Status quo?
b. Do away with it?
c. Amend it?
3. If I had done away with the legacy MAA, can I adopt a Constitution
later? or
4. If a company has never had a Constitution before, can I adopt one any
time?
Stamping of Constitution?
● Tripartite contract between company, its directors and its
members.
● First adoption post incorporation or any time during the life of
a company, adopt a Constitution for the very first time.
● What is the effect of no stamping?
● Does it affects its validity?

Note: checked with SSM at the Briefing held on 9 March 2017 at

Menara SSM, stamp duty payable is RM100.
 FAQ 12. If a company opts to have
constitution post incorporation, does
it need to be stamped? Alternatively,

Stamping of
if a company adopts a constitution
for the very first time in any time

Constitution?
during the life of a company, do we
need to stamp the constitution at
least once?

Answer: A company which opts to

adopt a constitution will need to
stamp the constitution. The
e-stamping service is available
through the MyCoID 2016 Portal.
Constitution - Kept at registered office

If a company has a Constitution, it shall be kept at the registered

office of the company or elsewhere provided notice is given to the
Registrar (Section 47(1)(b) and (2)).
 Lodgment to SSM and penalty for failure - in Summary
1. Within 30 days from:-
a. Date of adoption (which may be the same date as the special
resolution) for the adoption of a new Constitution;
b. Date of special resolution for the alteration or amendment to a
Constitution by the company; or
c. Date of court order for the alteration or amendment to a
Constitution by the Court.
 Lodgment to SSM and penalty for failure - in Summary
2. Penalties for failure to lodge to SSM the above within the stipulated
Deadlines:-

a. RM50,000 for adoption of a new Constitution; or

b. RM10,000 for alteration or amendment to a Constitution by a
company or by the Court; and
c. A continuing penalty of RM500 for each day the offence continues
post conviction.
Part C - Magical Phrases
Magical Phrases relating to Constitution
Category 1 - Notwithstanding Clauses on Constitution

Notwithstanding anything in the constitution and its variations -

a. Notwithstanding anything to the contrary in the

constitution;
b. Notwithstanding anything provided in the constitution;
c. Notwithstanding any provision in this Act or the
constitution;
d. Notwithstanding the provisions of this Act or the
constitution;
 What does such a phrase

Magical
with the word
“notwithstanding” mean?

Phrases It means that the provisions

of the Act or that particular
relating to section prevails and no
matter what is provided in
Constitution the Constitution nothing can
override it. In other words,
we cannot contract out of it
at all.
Magical Phrases relating to Constitution (cont’d)
Category 2

Unless otherwise provided in the constitution and variations -

a. Unless provided otherwise in the constitution;
b. Unless constitution provides otherwise;
c. Unless constitution otherwise provides;
d. Otherwise provided by its constitution;
e. Unless provided otherwise, either expressly or impliedly in the constitution;
f. Unless the constitution itself prohibits;
g. Unless expressly prohibited in the constitution;
h. Unless stated in the constitution;
i. Unless it is authorised by the constitution;
j. Unless there is a specific provision in the company’s constitution;
k. Except as otherwise provided by this Act, the constitution.
What does a phrase with “Unless otherwise provided”
etc. mean?
It simply means that the constitution of the company can provide its own
provisions different or varied or modified from what is given in the
Companies Act 2016. In other words, it means that we can contract out
of the provisions of the Companies Act 2016 provided the provision is
not in contrary to or inconsistent with the Companies Act 2016.

If it has “Unless the constitution itself prohibits” etc. it means that no

amendment etc. can be done if the constitution itself prohibits; or

Unless expressly prohibited in the constitution - means must state in

writing the prohibition.
Magical Phrases relating to Constitution (cont’d)
Category 3

Subject to constitution …… and variations -

a. Subject to the company’s constitution;

b. Subject to any provision of the constitution;
c. Subject to the provision of the constitution

Category 4

Just the word “constitution” (198)

Types of Constitution

A. No separate Constitution of its own (newly incorporated company

under CA2016);
B. Constitution for a Private Limited Company without actual meetings;

C. Constitution for a Private Limited Company with actual meetings;

D. Constitution for a Private Limited Company with shareholders’

agreement or joint venture companies;
E. Constitution for a Public Limited Company;

F. Constitution for a Public Listed Company;

 Types of Constitution (cont’d)

G. Constitution for a Company Limited by Guarantee;

H. Constitution for a Private Limited Company with different classes of

shares;

I. Constitution for a Private Limited Company with debentures; and/or

J. Constitution for a Private Limited Company with conversion to stock.

Sample Special Resolutions
1. To do away totally with the legacy MAA or a Constitution, whichever is
applicable (Need a resolution of members? Special or Ordinary?);
2. To adopt a new Constitution in place of the legacy MAA for an
existing Company under the Companies Act 1965;
3. To adopt a new Constitution for the very first time for a newly
incorporated company post incorporation under the Companies Act
2016;
4. To adopt a new Constitution during the lifetime of a company
incorporated under the Companies Act 2016;
5. To amend or alter a Constitution.

Note: Item 3 same as item 4 and Item 2 same as Item 5

Sample resolutions
Special Resolutions

ADOPTION OF NEW CONSTITUTION OF THE COMPANY

“That the Constitution in the form and manner as set out in Appendix I be
and is hereby adopted as the Constitution of the Company.”

ALTERATION OF CONSTITUTION
“That the Amended Constitution in the form and manner as set out in
Appendix I be and is hereby adopted as the Constitution of the Company in
substitution for and to the exclusion of the existing Memorandum and
Articles of Association/Constitution (whichever is applicable) of the
Company.”
Sample resolutions
Special Resolutions

REVOCATION OF THE CONSTITUTION OF THE COMPANY

“That the Constitution of the Company shall hereby be revoked and that the
Company shall be without a separate written Constitution with immediate
effect unless otherwise resolved by the members.”

ABOLISH EITHER THE MEMORANDUM OR THE ARTICLES OF ASSOCIATION

“That the {Memorandum of Association or the Articles of Association,
whichever is applicable,} as contained in the Constitution of the Company
shall hereby be revoked and that the remainder clauses as contained in the
Constitution be the Constitution of the Company with immediate effect.
QUESTIONS
&
ANSWERS
THANK YOU