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Memorandum and Articles of Association (M&A) & Constitution in Malaysia

In Malaysia, Memorandum and Article of Association (M&A) are part of the registration documents in company incorporation. Generally speaking, the “Memorandum of Association” outlines and elaborates the essential components [of the structure] of the company.

What Is Memorandum And Articles of Association?

The submission of the Memorandum and Articles of Association to Suruhanjaya Syarikat Malaysia (SSM) upon the registration of a company is mandatory. The memorandum of association of a company, also called the memorandum, is the legal document that defines and reins the relationship between the company and the outside.

The essential information in the Memorandum of Association is as follow:

i. The name of the company (private company’s name must end with the words “Sendirian Berhad” and public company’s name must end with “Berhad”);

ii. The location of the registered office of the company;

iii. Object clauses – The nature of business [intended to be carried out] of the company;

iv. The liability of the members is limited

v. The nominal amount of the authorized share capital with SSM.

The articles of association of a company, often simply called the articles, constitute the constitution of a company. Simply put, the Articles detailing the rules and regulations governing the internal management of the affairs of a company and the conduct of its business.

The Latest Updates about Memorandum and Articles of Association (M&A)

Under section 619(3) of the Companies Act 2016, for existing companies [that already registered under the previous law], their M&A remains valid and enforceable under the Companies Act 2016. The company may decide whether to revoke entirely the Constitution or amend certain clauses. However, the existing company must pass a resolution to that effect if it decides to revoke the existing M&A and not to have a specific constitution. In that case, the company, each director and member will have the rights, powers, duties and obligations as set out in the Companies Act 2016 (under section 31(3) of the Companies Act 2016)

Also, under the new Company Act, a public company can opt to have a constitution or not (except for a company limited by guarantee). If an existing public company (except for a company limited by guarantee) opts to do away with its constitution, it must get approval from its shareholders and the company is required to notify SSM of its decision. As such, it is advisable for public companies which are subject to the requirements of other written laws to observe such requirements, which include the resolution for doing away with the constitution or informing the respective regulators/authorities as the case may be.

Please note that the adoption of Constitution is optional under the Companies Act 2016 (CA 2016) and if you are interested to adopt the 3E Accounting’s standard Constitution for your company, the fee is RM400 which includes stamping fee (RM200). Extra charge for customisation of Constitution applies.

Amongst the special clauses included in our standard Constitution are as follow:-

i. Signing of board resolution by majority of directors (signing by all directors as required under CA 2016)

ii. Adoption of common seal (which is useful when client purchase properties)

iii. Main venue of meeting of members may not be in Malaysia (must be held in Malaysia under CA 2016))

Feel free to contact us if you need help to prepare for the new constitution for your company.