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Q：
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How is a Company Limited by Guarantee (“CLBG”) defined in Malaysia?
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A：
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A CLBG is a type of company commonly formed for non-profit objectives. It is established under the Companies Act 2016 and does not have share capital. Instead of shareholders, the company has members who guarantee a specific amount to be contributed in case the company is wound up. The guarantee amount is limited, and members' liability is restricted to the agreed sum of contribution.
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Q：
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Can a CLBG be incorporated as a private company?
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A：
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No, a CLBG is required to be set up as a public company.
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Q：
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What is the minimum number of directors a CLBG must have?
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A：
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A CLBG, being required to be incorporated as a public company, must have a minimum of two directors. The minimum number of the directors must be originally resided in Malaysia.
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Q：
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Does a CLBG need to have a constitution?
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A：
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Yes, a CLBG must have a constitution that adheres to the guidelines provided by the Registrar. The constitution should include the following:-
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the company’s name;
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the company’s objects;
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the company’s legal capacity, authorities, rights, and privileges;
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the contribution each member agrees to make towards the company’s assets in the event of its winding up;
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the subscribers’ name, residential address, and occupation; and
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a statement confirming the subscribers' desire to form the company in accordance with the constitution.
Additionally, any amendments to the constitution require prior approval from the Registrar before the amendments can be implemented.
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Q：
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Can a CLBG exclude the word “Berhad” or “Bhd” from its name?
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A：
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Yes, an application may be submitted to the Minister for approval to exclude the word 'Berhad' or 'Bhd' from its name as per Section 45(3) of the Companies Act 2016.
For newly incorporated CLBGs, the abovementioned application can be made if they secure an initial fund of RM1 million. This fund ensures the CLBG can carry out its objectives upon incorporation and sustain operations for at least two years without the risk of winding up. To proceed with the application, the RM1 million initial fund must be fully received in cash by the CLBG from contributors within six months of its formation.
For existing CLBGs, they must have been in operation for at least two years to qualify for this application. Additionally, they must provide proof of the RM1 million fund in their bank account, as reflected in the latest audited financial statements. Furthermore, the CLBG must also provide its latest audited financial statements for the last two years, which must have been presented at the annual general meeting.
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FAQ
