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Q：
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Is a company constitution mandatory?
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A：
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No, according to the Companies Act 2016 (CA 2016), a company does not need to have a constitution unless it is a guarantee-limited company or if it voluntarily decides to adopt one. In the absence of a constitution, the regulations set forth in the CA 2016 will automatically take effect.
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Q：
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What is the purpose of the company constitution?
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A：
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In Malaysia, the company constitution serves as a legally binding document that outlines the regulations for overseeing a company's internal operations, safeguards the rights of stakeholders, and facilitates efficient business operations, either in accordance with or supplementary to the CA 2016.
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Q：
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Can a private company restrict share transfers in its constitution?
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A：
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Yes, a private company may include pre-emption rights, board approval clauses, or first-right-of-refusal clauses to restrict share transfers.
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Q：
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What distinguishes a constitution from a shareholder’s agreement?
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A：
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In Malaysia, a constitution and a shareholders' agreement are both vital documents that dictate the management of a company. A constitution outlines the basic legal and operational framework of the company, while a shareholder’s agreement deals more with specific business arrangements. Although these two documents can complement each other, the constitution generally takes precedence in most legal disputes.
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Q：
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What happens if there is no constitution?
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A：
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A Malaysian company without a constitution will still function legally and be governed by the CA 2016 by default. The company has more flexibility but may lack customised internal governance rules that suit its business needs.
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FAQ
