- Incorporation
- Constitution (Memorandum & Articles of Association)
- Shares and no par value regime
- Annual returns and financial reporting
- Execution of documents
- Accounts, audit, annual general meetings
- Boardroom excellence
- Meetings and decision making
- Enforcement data and transitional issues
Part 2 - Constitution (Memorandum & Articles of Association)
Question 1. What happens to existing companies with memorandum & articles of association which were incorporated under Companies Act 1965?
Answer: Under section 619(3) of the Companies Act 2016, for existing companies already registered under the previous law, their M&A remains valid and enforceable under the Companies Act 2016, unless otherwise resolved by the company. The company may decide whether to revoke entirely the Constitution or amend certain clauses.
If the existing company decides to revoke the existing M&A and NOT to have a specific constitution, the company must pass a resolution to that effect. In that scenario, under section 31(3) of the Companies Act 2016, the company, each director and member shall have the rights, powers, duties and obligations as set out in the Companies Act 2016.
Similarly, a company must also pass a resolution to amend any part of its constitution should the company wish to harmonise its constitution with the provisions of the Companies Act 2016. For example, a private company may want to amend provisions relating to minimum directorships from current 2 to 1.
Question 2. Since M&A is optional, if an existing public company intends to do away it's M&A, what is the procedure? Is shareholders’ approval required? To notify SSM and other regulators such as BNM for FI?
Answer: Except for a company limited by guarantee, a public company has the option of whether to have a constitution or not. As such, in cases where an existing public company (other than a company limited by guarantee) opts to do away with its constitution, it must obtain approval from its shareholders.
The company is required to notify SSM of its decision. It is advisable for public companies which are subject to the requirements of other written laws to observe such requirements, including the resolution for doing away with the constitution or informing the respective regulators/authorities as the case may be.
Question 3. With no constitution, how can the public be assured when dealing with companies? Companies can start new businesses anytime?
Answer: Although a company is not required to have a constitution, it is still required to notify the Registrar of its nature of business or when there is a change to the company’s nature of business. This information will be publicly available.
Question 4. Since object clauses are now less significant, can we abolish the Memorandum of Association and adopt only the Articles of Association?
Answer: Yes, a company may adopt partially of its existing Memorandum of Association or Articles of Association as its constitution. Such adoption must be approved by the members.
Question 5. What is the procedure applicable for existing companies to contract out from its Memorandum and Articles of Association?
Answer: Under the general transitional provisions (section 619(3)) existing companies may contract out from its Memorandum and Articles of Association by passing a resolution to that effect.
Question 6. If a company is incorporated without a constitution, how is the majority of signatories to a resolution being determined?
Answer: In cases where a company does not a constitution, the company may rely on the following:
(a) Passing a resolution of members/shareholders – sections 290 to 296; and
(b) Passing a resolution of board – paragraphs 9 – 12 of the Third Schedule of the Companies Act 2016.
Question 7. If a company opted to adopt a constitution, does the constitution need to be lodged?
Answer: Yes, the constitution must be lodged with the Registrar. Similarly, any amendment/alteration to the constitution must also be lodged.
Question 8. If a company opts to have constitution post incorporation, does it need to be stamped?
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.
Source: SSM
