Most companies in Malaysia can be incorporated without a constitution at all — the Companies Act 2016 makes the document optional for a company limited by shares. That surprises many founders, who assume every Sdn Bhd must file one before it can trade.
In this blog, we discuss when a company constitution is required and what the law provides without one. We also cover key clauses and how to adopt or amend a constitution with the Companies Commission of Malaysia (SSM).
Is a Constitution Mandatory for Companies in Malaysia?
No for most companies — a company limited by shares may incorporate with or without a constitution, while a company limited by guarantee must have one.
The Companies Commission of Malaysia (SSM) confirms in its official incorporation guidance that a constitution is a non-mandatory option for a company limited by shares. The position comes from section 31 of the Companies Act 2016, which leaves the choice to the promoters at incorporation.
The rules differ for a company limited by guarantee. A guarantee company has no share capital. Section 38 requires it to lodge a constitution upon incorporation. Every incorporation also requires a qualified company secretary to be appointed within 30 days after incorporation.
A limited liability partnership, by contrast, does not have a company constitution. Its registration application includes a statement signed by the proposed partners. The partnership agreement governs internal rights and duties; a copy must be kept at the registered office under section 19 of the Limited Liability Partnerships Act 2012. That is one reason some professional and joint-venture setups choose the LLP route instead.
What Happens When a Malaysia Company Has No Constitution?
The Companies Act 2016 steps in: its default provisions on members' rights, share transfers, meetings and directors' powers apply as though written into the company's own rulebook.
For a simple single-member Sdn Bhd with no outside investors, the statutory defaults may be adequate for routine governance, so the company may notice little practical difference at first. A small local venture, such as a coffee shop business in Malaysia, can often operate for years without noticing a difference, but gaps can emerge when shares change hands or external funding is sought.
The defaults fall short once ownership gets complicated. Under section 85, qualifying new shares must first be offered to existing shareholders to maintain their relative rights. This applies where the new shares rank equally for voting or distribution rights, subject to the constitution. If an offer expires unaccepted, directors may dispose of those shares as they consider most beneficial to the company. The Act does not provide general tag-along or drag-along protections. Founders who skip the document and later take in investors often adopt one anyway, on less favourable terms.
Table 1 summarises the practical differences between a bespoke rulebook and the statutory defaults.
Constitution vs Default Rules Under the Companies Act 2016
| Aspect | With a Constitution | Without One (Act Defaults) |
|---|---|---|
| Governing rules | Bespoke document drafted around the company's shareholding | Statutory default provisions in the Companies Act 2016 |
| Share transfers | Pre-emption and board refusal rights as drafted | Basic transfer procedure set by the Act |
| Share classes | Custom dividend, voting and redemption rights | Different classes must be described in a constitution; preference shares require constitutional authorisation and specified rights |
| Cost | Drafting fee plus RM0 lodgement under section 32; RM200 e-stamping | No additional cost |
| Visibility | Public document on the SSM register | Nothing filed |
What Should a Company Constitution Include?
A well-drafted company constitution for a Malaysia Sdn Bhd typically covers six areas: identity, share capital, member rights, directors, meetings and amendment mechanics.
Think of the list below as a working example to measure any draft against. Each clause group maps to a real decision the members must make — this is not boilerplate to sign blindly.
1. Name, Objects and Registered Office
The document opens by restating the company's name, any restriction on its objects or powers, and the registered office address in Malaysia. This section keeps the SSM register and the internal rules consistent.
2. Share Capital and Classes of Shares
It sets out the classes of shares the company may issue and the rights attached to each — dividends, voting and redemption. This is where founders and investors split economic ownership from control. Under section 90, a company with different share classes must state the classes and their voting rights in its constitution; preference shares require constitutional authorisation and specified rights. A temporary difference in dividend rights during the first 12 months after allotment does not, by itself, create a different class under section 89.
3. Share Transfers and Pre-Emption Rights
Transfer mechanics, first-refusal rights for existing members and the board's discretion to refuse registration belong here. Remember that share transfers attract stamp duty, settled through LHDN's e-stamping process before registration.
4. Appointment, Powers and Retirement of Directors
It fixes the number of directors, appointment and removal procedures, and the board's power to delegate. Clear board rules prevent the control disputes that stall small companies.
5. General Meetings, Voting and Resolutions
Quorum, notice periods, proxies and the availability of written resolutions keep decision-making predictable. Well-drafted meeting rules matter most when members fall out.
6. Amendment, Entrenchment and Indemnity
The document should state how it can be changed — normally by special resolution — and may entrench key clauses behind a higher approval threshold. A properly scoped indemnity also protects officers who act honestly.
Core Clauses in a Well-Drafted Constitution
| Clause | What It Covers | Why It Matters |
|---|---|---|
| Name, objects and registered office | Company identity, purpose limits, official address | Anchors the SSM register entry |
| Share capital and classes | Authorised classes, dividend, voting and redemption rights | Splits economic ownership from control |
| Transfers and pre-emption | Transfer procedure, first-refusal rights, board discretion | Keeps ownership within approved parties |
| Directors | Number, appointment, removal, powers and delegation | Prevents board control disputes |
| Meetings and voting | Quorum, notice, proxies, written resolutions | Makes decision-making predictable |
| Amendment and entrenchment | Special resolution thresholds, higher bars, indemnities | Protects minorities and honest officers |
When Does Adopting a Constitution Make Sense?
The further the shareholding departs from a single founder holding 100 per cent, the stronger the case for a bespoke document.
The statutory defaults were written for the simple case. The following situations are where a tailored rulebook earns its drafting fee.
1. Joint Ventures and Multi-Shareholder Companies
The Act provides basic rules on board composition and share transfers, but tailored deadlock and exit mechanisms generally need to be agreed separately. Joint venturers who rely on the Act alone are negotiating blind.
2. Foreign-Owned and Multinational Subsidiaries
Overseas parents often require local rules to mirror group policies. Many multinational companies in Malaysia adopt a constitution at incorporation for consistency across the group.
3. Startups Preparing to Raise Funds
Investors expect pre-emption rights, reserved matters and share-class structures before they subscribe. A startup that adopts these clauses early can close its rounds more smoothly, but it still needs investor due diligence and negotiated terms.
4. Family Businesses and Succession
Transfer restrictions keep shares within the family and set an agreed valuation basis. Succession disputes are far cheaper to prevent than to litigate.
How Do You Adopt or Amend a Constitution with SSM?
Members normally adopt or amend by special resolution, with separate SSM lodgement requirements and fees for each.
A company limited by shares can choose a constitution when incorporating or adopt one later. Adoption requires a special resolution under section 32. The company must lodge the constitution within 30 days of adoption. For an existing company adopting a constitution, SSM's Notification of Lodgement of Constitution guidance lists no lodgement fee and RM200 for e-stamping. SSM says a section 32 lodgement through its Corporate Registry System does not require separate LHDN stamp-duty verification. The RM200 is not the RM30 SSM fee for lodging an amendment; check any stamp duty applicable to a particular amendment separately.
A later amendment normally requires a special resolution under section 36, unless the constitution prohibits it. Notify SSM and lodge the amended constitution within 30 days of the resolution. SSM's Table of Fees lists RM30 for this amendment lodgement. Where the Companies Act 2016 permits, a private company may pass these special resolutions by written resolution instead of holding a general meeting.
Keep a record of the special resolution under section 341. Check SSM's requirements for any separate submission; not every resolution must be lodged. Late lodgement fees may apply, subject to any applicable SSM waiver.
These charges sit within the broader picture of incorporation costs in Malaysia. Registration of a company limited by shares costs RM1,000. A name reservation costs RM50 for every 30 days or part thereof, up to a maximum of 180 days.
Most founders delegate the drafting, resolutions and lodgement to a Corporate Services Provider, which bundles them into the incorporation package. Table 3 sets out the steps and fees.
Steps and Fees to Lodge a Constitution with SSM
| Step | Requirement | Fee (RM) |
|---|---|---|
| 1. Draft the document | Prepared by a qualified company secretary or Corporate Services Provider, tailored to the shareholding | Professional fee (varies) |
| 2. Pass a special resolution | Members approve the adoption or amendment at a general meeting | 0 |
| 3. Lodge with SSM | Within 30 days of adoption or the amendment resolution, through SSM's electronic filing system | Adoption: RM0 lodgement and RM200 e-stamping; amendment: RM30 lodgement |
| 4. Receive confirmation | SSM records the document against the company's file | Included |
Conclusion
For a straightforward, single-owner Sdn Bhd, a constitution is optional and the Companies Act 2016 supplies workable default rules. For anything more complex — joint ventures, funded startups, family businesses and foreign-owned subsidiaries — a tailored constitution is inexpensive governance insurance.
Drafting quality matters as much as the decision itself. Poorly worded clauses can conflict with the Act and prove unenforceable, so the document should be prepared by someone who works with company law in Malaysia every day.
As a Corporate Services Provider, 3E Accounting Malaysia drafts and lodges tailored constitutions. We assist with the appointment of a qualified company secretary within 30 days. We also manage incorporation through technology-enabled workflows. Speak to our team before your next incorporation or shareholder change.
Get Your Company's Governance Documents Right From Day One
Our corporate secretarial team drafts, adopts and lodges constitutions for new and existing Sdn Bhd companies, so your shareholder and director rules hold up when they matter most.
Frequently Asked Questions
No. Under section 31 of the Companies Act 2016, a company limited by shares may incorporate with or without a constitution. A company limited by guarantee, however, must have one.
Yes. Members pass a special resolution adopting the document, and the company lodges it with SSM. For an existing company adopting a constitution, SSM lists no section 32 lodgement fee and RM200 for e-stamping.
A constitution is a public document lodged with SSM that binds the company and its members. A shareholders' agreement is a private contract between shareholders that can cover matters SSM never sees.
Normally by special resolution under section 36 of the Companies Act 2016. The company must notify SSM and lodge the amended constitution within 30 days of the resolution. Entrenchment clauses can require a higher approval threshold for key provisions.
The six clause groups above are a starting point. Corporate Services Providers can tailor a draft to the company's needs.
Abigail Yu
Director
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
