Need the Right Constitution Drafted for Your Sdn Bhd?
Talk to the SASCO team about your company constitution and whether you need one, and let us handle the drafting and lodgement with SSM.
Many new company directors hear the term "company constitution" during the Sdn Bhd registration process but aren’t sure whether it’s mandatory or optional. The confusion is understandable — under the old Companies Act 1965, every company was required to have a Memorandum & Articles of Association (M&A). When the Companies Act 2016 came into force, that requirement changed completely.
Short answer: under Section 31 of the Companies Act 2016, a company constitution is no longer mandatory for companies incorporated after 31 January 2017. A company can operate fully without its own constitution, and its internal governance will simply follow the default provisions of the Companies Act 2016. That said, many companies — especially those with more than one shareholder — still choose to adopt a constitution because it provides flexibility and protection that the Act’s default rules don’t cover.
This article explains what a company constitution actually is, when you genuinely need one, its key contents, and how to amend it under the Companies Act 2016.
What Is a Company Constitution?
A company constitution is the document that sets out a company’s internal rules — how it’s governed, shareholder and director rights and duties, meeting procedures, share issuance, and other administrative matters. It replaces the Memorandum & Articles of Association (M&A) concept used under the Companies Act 1965.
Under Section 32 of the Companies Act 2016, a registered constitution has contractual effect — it binds the company and every shareholder as if each party had signed and sealed it as an agreement.
Is a Company Constitution Mandatory?
No. Section 31 of the Companies Act 2016 clearly states that a company may have a constitution, but it is not obligatory. This is a major shift from the old regime — previously, every Sdn Bhd had to have an M&A registered with SSM upon incorporation.
That said, companies incorporated before 31 January 2017 (when the Companies Act 2016 took effect) that already had an existing M&A will have that M&A continue to apply as their constitution, unless formally amended or revoked.
What Happens If a Company Has No Constitution?
If your company doesn’t have its own constitution, its internal governance follows the default provisions set out directly in the Companies Act 2016. This includes matters such as:
- Directors’ powers and liability limits (Sections 211-213 and related provisions)
- General meeting procedures and shareholder resolutions
- Share transfers and issuance
- Winding up and shareholder rights in various scenarios
For most small companies with one or two shareholders who are also the directors, the Act’s default provisions are usually sufficient. Problems tend to arise once ownership structures become more complex — which is where the next section matters.
When Should a Company Have Its Own Constitution?
Even though it’s not mandatory, we advise clients to consider adopting their own constitution in the following situations:
| Situation | Why a Constitution Helps |
|---|---|
| More than one shareholder | Clearly sets out pre-emptive rights, deadlock mechanisms, and shareholder exit procedures |
| Different share classes | The Act’s default rules don’t provide for share class structures (e.g. preference shares, non-voting shares) — these must be set out in the constitution |
| Joint venture with a foreign partner | Aligns the constitution with a separate shareholders’ agreement |
| External investors or venture capital | Investors typically require special rights (veto, anti-dilution) to be formally documented in the constitution |
| Family succession planning | Sets restrictions on share transfers to non-family members |
What Should a Company Constitution Contain?
There’s no fixed format mandated by SSM, but a complete company constitution typically covers:
- Company name and type of liability (limited by shares)
- Company objects (if you want to restrict them — most modern companies opt for unrestricted objects)
- Share capital structure and share classes
- Directors’ powers and limits
- Board and general meeting procedures
- Share transfer rules and pre-emptive rights
- Entrenchment provisions (if any) — clauses requiring a higher threshold of consent to amend
How to Amend a Company Constitution
Under Section 36 of the Companies Act 2016, a company’s constitution can only be amended via a special resolution — requiring approval from at least 75% of voting shareholders. The amendment process:
| Step | Details |
|---|---|
| 1. Pass a special resolution | At least 75% of voting shareholders must approve the amendment |
| 2. Lodge with SSM | Notice of the amendment must be filed via the MBRS portal within 30 days of the resolution being passed |
| 3. Amendment takes effect | The amendment takes effect from the date the resolution was passed, or another date specified in the resolution |
Failing to file the amendment notice within the 30-day window can expose the company (and its officers) to enforcement action by SSM under the Companies Act 2016. We recommend always confirming current lodgement fees with SSM or your registered Company Secretary, as fees can be updated from time to time.
Common Mistakes With Company Constitutions
- Assuming a constitution automatically exists — many new directors assume their company has a constitution when it actually doesn’t (common for companies set up via fast incorporation packages without a specifically requested constitution).
- Constitution not aligned with a shareholders’ agreement — if there’s a separate shareholders’ agreement, it needs to be consistent with the constitution; conflicts can trigger legal disputes.
- Forgetting to lodge the amendment within 30 days — an amendment that’s approved but not filed on time can still have its compliance validity questioned.
- Using a generic template without legal/corporate review — especially risky for companies with investors or multiple share classes.
A constitution is just one part of a company’s overall governance. For the full picture of other annual compliance obligations, read Statutory Forms & Section 78 of the Companies Act 2016 and Annual Return for a Sdn Bhd in Malaysia: Complete Guide.
How Can SASCO Help?
SASCO helps companies assess whether they need their own constitution, drafts a constitution aligned with your shareholder structure and business needs, and manages the amendment and lodgement process with SSM when required.
Our services include:
- Drafting a new company constitution during Sdn Bhd incorporation
- Reviewing and amending an existing constitution
- Aligning the constitution with a shareholders’ agreement
- Lodging amendment notices with SSM via MBRS
Not sure if your company needs its own constitution?
Contact SASCO for a free consultation on your company’s governance structure.
Official References
Section provisions and lodgement fees may change. Confirm with SSM or your registered Company Secretary before acting.
Frequently Asked Questions
Is a company constitution mandatory for a Sdn Bhd in Malaysia?
No. Under Section 31 of the Companies Act 2016, a company may choose whether or not to have its own constitution. If it doesn’t, internal governance follows the Act’s default provisions.
What’s the difference between a constitution and the old Memorandum & Articles of Association (M&A)?
The constitution under the Companies Act 2016 replaces the M&A concept under the Companies Act 1965. Older companies that still use an existing M&A can continue using it as their constitution unless amended.
What percentage of votes is needed to amend a constitution?
At least 75% of voting shareholders must agree — this is called a special resolution under Section 36 of the Companies Act 2016.
How long do you have to lodge a constitution amendment with SSM?
The amendment notice must be filed via MBRS within 30 days of the special resolution being passed.
Who should draft a company’s constitution?
Usually a registered Company Secretary or corporate lawyer, especially where share class structures or complex investor rights are involved.
Can an operating company adopt a constitution later even if it started without one?
Yes. A company can adopt a constitution at any time via a shareholder special resolution, not only at incorporation.
What happens if the constitution conflicts with the Companies Act 2016?
Any constitution provision that conflicts with the Act is invalid to the extent of the conflict — the Act overrides the company’s constitution.
Does a single-shareholder company need a constitution?
Not necessarily mandatory, but still advisable if you plan to bring in investors or other shareholders in future, so the governance framework is already in place.
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