M&A vs Constitution

Under the Companies Act 1965, every company was required to have a Memorandum and Articles of Association (M&A). According to the Companies Act 2016, the Memorandum and Articles of Association (M&A) are now referred to as the Constitution. Companies incorporating under the Companies Act 2016 are not obligated to have a constitution immediately upon incorporation. However, they have the option to adopt a constitution after the company has been incorporated.

The Differences

You may notice the following differences between M&A and the Constitution.

1. Number of Directors

2. Annual General Meeting

3. Reduction of Share Capital

4. Share Certificate

Number of Directors

In the M&A under the Companies Act, 1965, a minimum of two directors is required for Sdn Bhd.

However, Constitution is under the Companies Act, 2016, therefore if not being fixed by the company itself, sole director is allowable.

Annual General Meeting

During M&A era, an AGM was a mandatory requirement for a company, therefore the compliance of the timeframe to call for an AGM needs to be complied.

Whereas, in the new act regime, a Sdn. Bhd is no longer required to call for an AGM if the constitution is silent, where to follow the Companies Act, 2016 requirement.

Reduction of Share Capital

Under the Constitution regime, the reduction of share capital is a more streamlined process that outlines the requirement for solvency statements and other procedures

Whereas if under M&A regime of the Companies Act, 1965, it must go through a court order.

Share Certificates

In M&A, issuing a share certificate is a mandatory requirement for all shareholders, whereas, if the Constitution is silent, the issuance of a share certificate is upon request.

Key Takeaways

The above outline highlighted key differences between M&A and the Constitution regime, there are some more variances in terms of requirements of directors, holding of meeting procedures, issuance of dividends, and other pertinent aspects. To provide a more in-depth and details examination of these distinctions, further exploration of specific areas or aspects is needed.

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