Malaysia Company Law lecture slides for students. With Bahasa and Chinese translation for critical terms.

1. You can cite this information as follows :
 In-text citation : Ng and Chang (2021)
 Reference list : Ng, M.Y. and Chang, C.F. (2021) “Corporate Law of Malaysia : Corporate Constitution of Malaysia Companies” Social
Science Research Network, at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3797482
Note : These slides may provide extra information or illustration that are not found in the full article. This is to facilitate students’ learning.
Undang-undang syarikat  公司法
Corporate Law of Malaysia :
3. Corporate Constitution
• A quick reference for Undergraduate Students
• With translation of key terms in “Bahasa” and “中文”

2. Topics in this Series (search SlideShare using this title) URL to the full Article
1 Boleh Law Introduction to Malaysian Company Law & Companies https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779693
2 Boleh Law Incorporation of Companies https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3797479
3 Boleh Law Corporate Constitution https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3797482
4 Boleh Law Share Capital & Capital Maintenance https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3797487
5 Boleh Law Rights of Shareholders & Members https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3797485
6 Boleh Law Loan Capital https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3797494
7 Boleh Law Directors & Officers https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3806994
8 Boleh Law Accounting and Auditing of Corporate Accounts https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830195
9 Boleh Law Anti-money laundering and anti-terrorist funding https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830185
10 Boleh Law Taxation https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830197
11 Boleh Law Meetings https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830189
12 Boleh Law Rescuing a Company https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830190
13 Boleh Law Winding-up a Company https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830192

3. Company constitution
prior to CA 2016
Under CA 1965, companies must file 2
statutory documents with Registrar :
(1) Memorandum of Association (‘M&A’)
(2) Articles of Association (‘A&A’)
CA = Companies Act

4. Memorandum of Association (‘M&A’)
• contain crucial information about the company, such as :
– object clause (type of business or undertaking that the company has power to enter
into)
– amount of shares
– limited liability of its members
• a document that outsiders relied upon to assess capability of the company

5. Example of Object
Clause
Extracted from the
M&A of Top Glove
Corporation Bhd
available at:
https://www.topglove.
com/App_ClientFile/7ff
8cb3f-fbf6-42e7-81da-
6db6a0ab2ef4/Assets/
pdf/Memorandum_an
d_Articles_of_Associati
on.pdf

6. Articles of Association (‘A&A’)
• contains internal regulation that governs the day-to-day administration of the company’s
affair.
• Example : class rights, members voting rights, meeting rules, transferability of shares,
rules for capital alteration, rules for Directors, dividends, reserves etc.
• CA 1965 provided a sample of A&A in Table A, for companies that are unable to draft a
comprehensive A&A

7. Example of
Procedural Clause
Extracted from Table
A of 4th Schedule.
CA 1965

8. Legal implication of M&A and A&A
(1) Doctrine of constructive notice
• M&A and A&A are open for public inspection.
• anyone dealing with the company is deemed to have full notice of the company’s object
clause.
• they cannot later claim misrepresentation
(2) Doctrine of ultra vires
• The company enters into a contract that is not expressly permitted in the M&A – ultra
vires act
• ultra vires contract cannot be ratified (diiktiraf ; 批准) by members
• Directors will receive disciplinary penalty or even face civil suit filed by members.

9. (3) Bind members inter se
• Each member is contractually bound to another members as if each and every one of them
has signed and accept all the terms in the A&A
• A member can enforce their right by taking action against another member who defy the
A&A.
• A&A cannot be relied upon by non-members

10. Corporate Constitution under CA 2016
Sec. 31(1), CA 2016 – company may :
a) Continue to operate with both existing M&A and A&A, or part of it
b) Revoke both existing M&A and A&A
Note : Company limited by guarantee MUST have a constitution

12.  Companies incorporated under CA 1965 must have a M&A and A&A
Upon coming into effect of CA 2016, companies may opt to :
 Revoke the existing M&A and A&A; and continue to operate without a constitution.
 Retain the existing M&A and A&A that becomes the company’s constitution
 Retain only the M&A and revoke the A&A. The former become the constitution of the
company.

13. (a) Continue to operate with both existing M&A and
A&A, or part of it
• If both M&A and A&A are adopted, both will automatically become the company’s new
constitution under CA 2016
• The constitution cannot contravene with provisions in CA 2016
• As such, the Company has to make relevant amendments in the constitution to be in line
with CA 2016
• Changes can be made by passing a special resolution (see Chapter 9 : Meetings) and file
with the Registrar within 30 days from the date of the resolution.
• The company may opt to adopt only one of the document – i.e: maintain the M&A and
abolish the A&A, vise versa

14. (b) Revoke both existing M&A and A&A
• In the event that the company decides to revoke the existing M&A and A&A, it can
continue to operate without a constitution.
• All rights, powers, duties and obligations of the company, each director and each member
will be as prescribed in the CA 2016.
• The company will have no opportunity to offer more favourable treatment to certain class
of shareholders or creditors

15. Practical and Legal Implication of CA 2016
(1) Weakened protection for investors
• Non–mandatory filing of constitution means companies will not be constrained by object
clauses
• Doctrine of constructive notice and ultra vires no longer relevant
• Investors have to monitor the company on their own initiative.
(2) Cumbersome enforcement
• company that does not has a constitution will have unrestricted ability (kuasa tidak
terbatas ; 不受限制的权力) to enter into any business it desires
• whereas those that opt to adopt a constitution will be constrained by its object clause.
• In future, a dispute that comes before the court for decision will need to be distinguished
on whether it has or does not has a constitution
• will increase litigation cumbersomeness (proses litigasi yang lebih rumit ; 诉讼繁琐)

16. The End
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