What is a Company Constitution?
A company constitution provides important information to the company, its shareholders, its directors, and its company secretary.
It is a formal document that specifies the rules governing a company. It also defines the relationship between the company, shareholders, directors, and other important figures of the company.
As long as the constitution of the company does not violate the Companies Act or any related legislations, it represents a binding agreement between the company and its shareholders and officers.
The company’s constitution must be carefully considered during the registration of a new company. When a new constitution is adopted or a change to the constitution has been made, a resolution made by the shareholders of the company must be passed in order for such changes to officially take effect.
Importance of a Company Constitution
A company’s constitution may be regarded as a contract between the company and each member or administration of the company.
These are the people under which each person agrees to abide by the stipulations of the constitution which are applicable to that person. This therefore creates enforceable rights and obligations in relation to shareholders with regard to their role as shareholders of the company.
Company constitutions thus do not affect the personal status of a company’s shareholders. They also do not impose any excessive rights or obligations between the shareholders of a company and the company’s directors and company secretary. Consequently, a shareholder may not be allowed to enforce any provisions in a constitution which may confer personal rights.
A company constitution is created to:
What is Included in a Malaysian Company’s Constitution?
The Companies Act does not specify any rules that are to be included in the constitution of a company. However, there are certain matters which should always be addressed in the constitution of any company.
Some of the most important matters and common topics of a Malaysian company’s constitution include:
Appointments of officeholders
Inspections of the company’s books
Annual general and extraordinary general meetings
Issues related to the company’s shares and dividends
Type of company
Shares & share certificates
Transfer of shares
Meetings of the members of the board of directors
Voting rights during meetings
How directors are remunerated
Official company documents
Conflict of interests
Powers and responsibilities of directors
Powers and responsibilities of a company secretary