Company Registration No : COMPANY NUMBER
1. Disclaimer: This is entirely the Speaker’s view of what a
model constitution of a JV Co. or company with
shareholders’ agreement should look like and it is not
exhaustive. One has to use his or her own discretion and to
change accordingly to suit each and every company’s own
requirements, needs and circumstances.
2. Note:-
a. Not to put in here something that needs to change
fairly more often than others say, share capital amount
of the company - why? One, it is because it will be
very tedious to go through the process and procedure
of changing or deleting such a clause; and two, it is
now “more prohibitive” given the filing fee of RM30
for each alteration or amendment of Constitution under
s36 of CA2016 or RM100 for adoption of a new
Constitution (“catch all” under item 48 of the Schedule
of Fee) each time there is a filing to SSM;
b. This sample Constitution is based on shareholders’
agreement which the Speaker has accessed to. One
should refer to the terms and conditions of the
shareholders’ agreement or Joint Venture Agreement
for their own terms and conditions to be included into
their own Constitution and should not take what is
provided in this sample lock stock and barrel.
c. It is for a company that holds both Board and general
meetings.
d. Can still rely on Part II Division 5 especially
subdivisions 4, 5 and 6, sections 309 to 338 for matters
relating to Meeting of members.
e. To refer to Third Schedule for Board proceedings
except where we have contracted out or opted out of it
in this Constitution.
Company Registration No : COMPANY NUMBER
THE COMPANIES ACT 2016
MALAYSIA
______________
PRIVATE COMPANY LIMITED BY SHARES
_______________
CONSTITUTION
of
COMPANY NAME
____________________________________
Incorporated on the day of .
_____________________________________
Company Registration No : COMPANY NUMBER
THE COMPANIES ACT 2016
COMPANY LIMITED BY SHARES
CONSTITUTION
OF
COMPANY NAME
PRELIMINARY
1. This is the Constitution of <COMPANY NAME>, a private company limited by
shares incorporated under the Companies Act 2016.
(Note: You can also set out the Objects Clauses here to clearly state the objectives
of this JV Company so that its business is confined to these objects only – a form
of assurance to the JV partners that the directors do not go ultra vires the objects.)
INTERPRETATION
2. In this Constitution the word standing in the first column of the table hereinafter
contained shall bear the meanings set opposite to them respectively in the second
column, unless is otherwise specified.
WORDS MEANINGS
Act : the Companies Act 2016 and subsidiary
legislations
Agreement : Shareholders’ Agreement entered into between
the Parties dated <date of agreement> and any
supplemental agreement thereto.
Auditors : the auditors for the time being of the Company.
Board : the board of directors for the time being of the
Company.
Business : Alternatively, you can set out the objects of
the company here.
Business Day : a day on which banks and financial institutions
are open for business in Kuala Lumpur.
Call Option Agreement : the call option agreement of <date of
agreement> entered into between the First
Party and the Second and Third Party pursuant
to which the First Party has the right to require
the Second and/or the Third Party to sell any
Share held by the Second and/or Third Party to
the First Party.
Directors : the directors for the time being of the Company
and “Director” shall mean any of them.
First Party : <Name of First Party>
Group or Group : collectively, the Company and any Subsidiaries
Companies which the Company may acquire or establish
from time to time, and “Group Company”
Company Registration No : COMPANY NUMBER
means any one of them as the context may
require.
Constitution : the constitution of the Company as amended
from time to time.
Ordinary Shares means the ordinary shares in the issued and
paid-up share capital of the Company and the
expression “Ordinary Share” means an ordinary
share in the capital of the Company.
Parties : collectively the First Party, the Second Party,
the Third Party and the Company and any other
person becoming a party to the Agreement and
the term “Party” shall refer to any one of them
as the context may require.
Pro Rata Share : the ratio determined immediately prior to a
proposed transfer, determined by dividing:
(i) the number of Shares held by the particular
Shareholder (as a numerator);
by
(ii) the total number of Shares held by the
Shareholders excluding the number of Shares
held by the transferor Shareholder undertaking
the proposed transfer (as a denominator);
Put Option Agreement : the put option agreement of <date of
agreement> entered into between the First
Party and the Second and Third Party pursuant
to which the Second and/or the Third Party has
the right to require the First Party to purchase
from the Second and/or the Third Party any
Share held by the Second and/or the Third
Party.
Revised Pro Rata Share : means the ratio determined immediately prior to
a proposed transfer, determined by dividing:
(i) the number of Shares held by the particular
Shareholder (as a numerator);
by
(ii) the total number of Shares held by the
Shareholders but excluding (a) the number of
Shares held by the transferor Shareholder
undertaking the proposed transfer and (b) the
number of Shares held by the Shareholders who
have not accepted their full entitlement of their
Pro Rata Share (as a denominator);
Second Party : <Name of Second Party>
Shareholders : the holders of Shares in the capital of the
Company and the expression “Shareholder”
means a person who is registered as a holder for
the time being of Shares in the capital of the
Company Registration No : COMPANY NUMBER
Company.
Shareholders’ Meeting : a general meeting of the Shareholders, whether
annual or extraordinary.
Shares : the shares (whether ordinary or preferred) in the
share capital of the Company, and the term
“Share” means a share in the capital of the
Company.
Subsidiaries : any corporation which by virtue of section 5 of
the Act or any other provision of the Act is
deemed a subsidiary of the Company.
Third Party : <Name of Third Party>
In this Constitution -
a. expressions referring to writing shall, unless the contrary intention
appears, be construed as including references to printing, lithography,
photography and other modes of representing or reproducing words in a
visible form;
b. words or expressions contained in these regulations shall be interpreted
in accordance with the provisions of the Interpretation Act 1948 and
1967 [Act 388], and of the Act as in force at the date at which these
clauses become binding on the company;
c. unless the context indicates otherwise, words importing the singular
include and apply to several persons, parties, or things; words
importing the plural include the singular; words importing the
masculine gender include the feminine as well; the words person and
whoever include corporations, companies, associations, firms,
partnerships, and societies.
PRIVATE COMPANY
3. The Company is a private company limited by shares and the liability of the Private
Shareholders shall be limited. Company and
Shareholders’
liability
MANAGEMENT OF THE COMPANY
4. The Board shall consist of five (5) Directors comprised of the Second Party, the Constitution of
Third Party, the First Party and two (2) other Directors to be nominated by the Board
First Party. Any additional Directors may be appointed from time to time by the
Board.
5. A Director shall be entitled at any time and from time to time to nominate any Alternate
person to act as his alternate and to terminate the nomination of such person and Director
in that connection the provisions of this Constitution shall be complied with. Such
alternate director shall be entitled while holding office as such to receive notices
of meetings of the Board and to attend and vote as a Director at any such meetings
at which the Director nominating him is not present and generally to exercise all
the powers, rights, duties and authorities and to perform all functions of his
nominator in his absence. Further, such alternate director shall be entitled to
exercise the vote of the Director appointing him at any meetings of the Board and
if such alternate director represents more than one (1) Director, such alternate
Company Registration No : COMPANY NUMBER
director shall be entitled to one vote for every Director he represents.
6. The directors may elect one of their numbers as chairperson of the Board and Chairperson
determine the period for which he is to hold office. If no chairperson is elected, and casting vote
or if at any meeting of the Board the chairperson is not present within fifteen
minutes after the time appointed for the commencement of the meeting, the
directors present may choose one of their number to be chairperson of the
meeting. In the event of any tie in votes, the Chairperson of the Board (if any)
shall not be entitled to a second or casting vote.
7. Meetings of the Board shall be held at such times as the Board may determine. Notice of
Not less than ten (10) Business Days’ notice (or such shorter period of notice in Meeting
respect of any particular meeting as may be agreed by all the Directors) of each
meeting of the Board specifying the date, place and time of the meeting and the
business to be transacted thereat shall be given to all Directors. An irregularity in
the notice of a meeting is waived where all directors entitled to receive notice of
the meeting attend the meeting without objection to the irregularity.
8. All meetings of the Board shall be convened and conducted in accordance with Quorum
the provisions of the Act and this Constitution. The quorum for any meeting of
the Board is three (3) Directors. No business may be transacted at a meeting of
directors if a quorum is not present.
9. At each meeting of the Board, each Director shall have the right to one (1) vote. Meetings and
The Directors present at such meeting must exercise their voting rights and Meeting by
cannot abstain from voting, except where required by law or by the Agreements electronic
or this Constitution. A resolution of the Board is passed if it is agreed to by all means
directors present at the meeting, in person, or by his alternate without dissent or if
a majority of the votes cast on it are in favour of it. A director present at a
meeting of the Board is presumed to have agreed to, and to have voted in favour
of, a resolution of the Board unless he expressly dissents from or votes against
the resolution at the meeting. The Directors may participate in a meeting of the
Board by means of a telephone conference or similar communications equipment
by means of which all persons participating in the meeting can hear one another,
without a Director being in the physical presence of another Director or
Directors, and participation in a meeting pursuant to this Constitution shall
constitute presence in person at such meeting provided all decisions arrived at
any such meeting shall subsequently be confirmed in writing.
10. A resolution in writing circulated to all the Directors for the time being and Resolutions in
signed or approved by all the Directors by facsimile, cable or electronic writing
communication shall be as valid and effectual as if it had been passed at a
meeting of the Directors duly convened and held. Any such resolution may
consist of several documents in like form, each signed by one or more Directors.
11. The Company may by ordinary resolution remove any Director before the Removal of
expiration of his period of office, and may by an ordinary resolution appoint Director
another person in his stead; the person so appointed shall be subject to retirement
at the same time as if he had become a Director on the day on which the Director
in whose place he was appointed was last elected a Director.
12. The Board may with the approval of the members by ordinary resolution remove Removal of
a secretary from his office. Secretary
SHAREHOLDERS’ MEETINGS
13. Unless otherwise agreed by the Shareholders, written notice of all Shareholders’ Meetings
Meetings stating the agenda, place, day and hour of the meeting, and for special
meetings, the purpose for which the meeting is called, shall, unless otherwise
Company Registration No : COMPANY NUMBER
prescribed by law, be given not less than ten (10) Business Days before the date
of the meeting, by direction of the Chairperson, or the Secretary, or the person
calling the meeting, to each Shareholder, as the case may be. The Chairperson of
the Board shall preside as the chairperson at a Shareholders’ Meetings. A
Shareholder at a Shareholders’ Meetings shall on a poll be entitled to one (1) vote
for each Ordinary Share registered in the name of such Shareholder.
14. The quorum at any Shareholders’ Meeting shall be two (2) Shareholders, present Quorum
in person or by proxy at the commencement of and throughout the meeting.
15. All written resolutions of the Shareholders, proposed by the Board or the Period for
members, shall lapse if they are not passed by the requisite majority of the type agreeing to
of resolution at the end of the period of fourteen (14) days (or even shorter or written
longer) beginning from the circulation date. resolution of
Shareholders
16. A proxy shall not be elected as a Chairperson at a meeting of members. Prohibition of
electing a
proxy as a
chairperson at
a meeting of
members
BUSINESS OF THE COMPANY
17. The Company shall not, whether directly or through a Subsidiary, undertake or Nature of the
carry on any other business other than the Business as set out herein without the Company’s
approval of the Shareholders at a Shareholders’ Meeting. Business
18. The Auditors of the Company and its Subsidiaries shall be appointed by the Auditors
Shareholders at a Shareholders’ Meeting for each financial year.
19. The Company shall not, and the First Party shall procure and ensure that the Actions
Company does not do the following, without the prior approval of the Second Requiring
and Third Party in their capacity as a shareholder or Director and which approval Approval of
shall not be unreasonably withheld:- the Second
and Third
19.1 cease to conduct or carry on its Business substantially as now Party
conducted and/or acquire or dispose of or dilute any substantial
interest in any Group Company and/or any other business or
investment venture;
19.2 change of the Company’s name;
19.3 effect any material change in the constitution or nature of the
Business;
19.4 alter any rights attaching to any class of Share in the capital of the
Company;
19.5 lend any monies to any party or grant guarantees, indemnities or any
securities to secure the liabilities or obligations of any party,
including offering any of the Company’s and/or its Subsidiaries’
existing or hereafter acquired properties or assets as security for any
loans or indebtedness of a third party;
19.6 resolve to voluntarily wind up or to dissolve the Company;
Company Registration No : COMPANY NUMBER
19.7 enter into a partnership, revenue sharing or profit sharing agreement;
19.8 create any encumbrance over the whole or any part of the
undertaking, property or assets of the Company or its Subsidiaries,
not for the purpose of securing the indebtedness of the Company or
its Subsidiaries, as the case may be, to its bankers for sums borrowed
in the ordinary course of its Business;
For the purpose of this sub-clause 19.8, “assets” includes any right,
interest, receivable, revenue and/or property movable or immovable
of any kind, present or future.
19.9 institute material legal proceedings and submission to arbitration of
any material dispute affecting the Company; and
19.10 the creation of an employee stock option or incentive scheme for the
Company.
20. Each Subsidiary shall not undertake any of the matters set out in above in Clause Actions
19 without the prior written approval of the Second and Third Party and which Involving
approval shall not be unreasonably withheld. In this respect, the First Party and Subsidiaries
the Company shall procure and ensure that each Subsidiary shall not undertake
any of such matters without the prior written approval of the Second and Third
Party and which approval shall not be unreasonably withheld.
21. The Shares issued by the Company to its employees pursuant to any employee Employee Share
share incentive scheme approved by the Board shall not exceed ten percent Incentive
(10%) of the then existing issued and paid-up share capital of the Company. Scheme
TRANSFER OF SHARES
22. If a Shareholder (in this Clause 22 called “the Transferor”) wishes to transfer all Pre-emption
or any part of its Shares:- Rights For Sale
of Shares
22.1 the Transferor shall serve on the Board a notice in writing of its desire
to so transfer. Such notification (in this Clause 22 called “the Transfer
Notice”) shall specify the number of Shares that the Transferor intends
to dispose of (in this Clause 22 called “the Sale Shares”) and the price
at which the Transferor is willing to dispose of the same (in this
Clause 22 called “the Sale Price”) and shall constitute the Board its
agent for the sale of the Sale Shares;
22.2 within five (5) Business Days after the receipt of the Transfer Notice,
the Board shall offer the Sale Shares giving the details in writing of the
number of the Sale Shares and the Sale Price to the other Shareholders
in accordance with their respective Pro Rata Share (as nearly as
circumstances permit), and inviting each such Shareholder to state in
writing within ten (10) Business Days from the date of the Transfer
Notice whether it is willing to purchase the whole or any part of its
entitlement to the Sale Shares at the Sale Price;
22.3 at the expiration of the period of offer stipulated in Clause 22.2, the
balance of any Sale Shares offered to any Shareholder but not so
accepted shall be offered to the other Shareholders who have accepted
all the Shares to which they are respectively entitled who shall, if more
than one, be entitled to purchase such balance of the Sale Shares in
accordance with their respective Revised Pro Rata Share (as nearly as
circumstances permit). Such further offer shall be deemed to have
been refused if not accepted within ten (10) Business Days of the date
of such further offer;
Company Registration No : COMPANY NUMBER
22.4 the Board shall on the expiration of the offer period stipulated in
Clause 22.2 or the further offer period stipulated in Clause 22.3, as the
case may be, give notice to the Transferor of the number of Sale
Shares which the other Shareholders are willing to purchase. If the
Board under the preceding sub-clause shall have found Shareholders
willing to purchase the Sale Shares, the Transferor shall be bound, on
receipt of the Sale Price per Sale Share, to transfer the Sale Shares (or
such of the same the entitlement to which shall have been accepted by
the relevant Shareholders) to the relevant Shareholders and to forward
to the Board the relevant share certificate(s) in respect thereof;
22.5 if the Transferor after having become bound to transfer any Sale
Shares, makes default in doing so, the Board shall authorise any
Director, and the Transferor shall be deemed to have appointed such
Director to execute all necessary transfers of the Sale Shares, on its
behalf, in favour of the relevant Shareholder and shall enter the
name(s) of the relevant Shareholder(s) in the register of members as
holder(s) of such of the Sale Shares as shall have been transferred to
them as aforesaid and shall cancel the share certificate(s) in respect
thereof in the name of the Transferor and issue new share certificate(s)
representing the relevant Sale Shares in the name of the relevant
Shareholder(s). The Board shall receive the purchase money on behalf
of the Transferor but shall not be bound to earn or pay interest thereon.
The receipt by the Board of the purchase money shall be good
discharge to the relevant Shareholder(s) who shall not be bound to see
to the application thereof, and after the name of the relevant
Shareholder shall have been entered in the register of members in
purported exercise of the aforesaid powers the validity of the
proceedings shall not be questioned by the Parties; and
22.6 if by the end of the period stipulated in Clause 22.4 the Board shall not
have found purchasers for all the Sale Shares pursuant hereto, the
Transferor shall be at liberty to sell and transfer all or any of the Sale
Shares the entitlement to which shall not have been accepted by the
relevant Shareholder, as the case may be, to any person or persons in
pursuance of a bona fide sale at a price not less than the Sale Price and
on terms no more favourable than those offered to the other
Shareholders aforesaid provided that such person(s) complies with the
provisions of Clause 23.
23. Subject to and without prejudice to this Clause 22, it shall be a condition Condition of
precedent to the right of any of the Shareholders to transfer Shares that the Transfer
transferee (if not already bound by the Agreement) executes an accession
agreement substantially in the form annexed as Schedule 2 of the Agreement
(“the Accession Agreement”) under which the transferee shall agree to be bound
by the obligations of and shall be entitled to the benefit of the Agreement as if an
original party hereto in place of the transferor.
24. The provisions of Clause 22 shall not apply in the following circumstances and Non-
the relevant Party is not required to comply with the same (provided that the applicability
transferee shall first sign the Accession Agreement):-
24.1 in the event of the Second and/or Third Party exercising any rights
under the Put Option Agreement and/or the First exercising any rights
under the Call Option Agreement;
24.2 in the event of a transfer of any Share to which the prior consent of all
Shareholders for the time being has been obtained.
Company Registration No : COMPANY NUMBER
25. For the avoidance of doubt, all Shareholders shall have a pro-rated pre-emptive Pre-Emptive
right of first refusal to subscribe for any new Shares allotted and issued by the right of first
Company. refusal
26. (a) The First Party and the Company will procure and ensure that in the event Anti-Dilution
of any subsequent issue of Shares (in this Clause 26 called “the New
Subscription Shares”) of the Company further to the date the Second and
Third Party are first registered as Shareholders, the New Subscription
Shares will be offered to the Second and Third Party for subscription (in
this Clause 26 called “the Subscription Offer”) in proportion (as nearly as
circumstances permit) to the Second and Third Party’s shareholding of
Ordinary Shares in the Company vis-a-vis all other Ordinary Shares. The
New Subscription Shares offered to the Second and Third Party will be at a
subscription price not more than, and have rights and preferences accorded
to the holder thereof not less favourable than, the subscription price and
rights and preferences offered to any other subscriber in the same issue. If
the New Subscription Shares will be issued for a non-cash consideration to
any subscriber, the New Subscription Shares offered to the Second and
Third Party will be at a subscription price not more than the amount (in this
Clause 26 called “the Non-cash Equivalent”) treated as paid by the said
subscriber for its New Subscription Shares as declared in the relevant
statutory form to be filed by the Company with the Companies Commission
Malaysia, provided that the First Party and the Company jointly and
severally undertake to ensure that the Non-cash Equivalent will be derived
based on a fair and reasonable valuation of the relevant non-cash
consideration
(b) In the event of a Subscription Offer, the Second and Third Party may (but
are not obliged to) subscribe and pay for any or all of such of the New
Subscription Shares as may have been offered to the Second and Third
Party.
(c) In the event of the Company agreeing to issue any New Subscription
Shares in accordance with the Agreement to any third party, it will be a
condition precedent to such issue that such third party agrees to be bound
by the terms and conditions of the Agreement as if a party hereto through
the execution of an Agreement with the Parties.
(d) In the event the Company proposes a bonus issue of new Shares, the
Second and Third Party will be entitled to such bonus issue on the basis of
all such Shares held by the Second and Third Party.
(e) If the Second and/or Third Party decline to accept a Subscription Offer, the
Board will be at liberty to deal as it deems appropriate, with the New
Subscription Shares declined by the Second and/or Third Party.
(f) In the event of the Company agreeing to issue any New Subscription Shares
in accordance with the Agreement to any third party, it shall be a condition
precedent to such issue that such third party agrees to be bound by the terms
and conditions of the Agreement as if a party hereto through the execution
of the Accession Agreement (amended accordingly).
27. The directors shall provide for the safe custody of the seal, which shall only be Seal
used by the authority of the directors or of a committee of the directors
authorized by the directors in that behalf, and every instrument to which the seal
is affixed shall be signed by a director and shall be countersigned by the secretary
or by a second director or by some other person appointed by the directors for the
purpose.
Company Registration No : COMPANY NUMBER
28. The Company shall not have any share certificate in issue with effect from the Share
adoption of this Constitution and any share certificate issued prior to this shall be certificate
deemed to have been cancelled and shall be void.
29. A member who is of unsound mind or whose person or estate is liable to be dealt Persons to
with in any way under the law relating to mental disorder may vote, whether on a vote on behalf
show of hands or on a poll, by his committee or by such other person as properly of member
has the management of his estate, and any such committee or other person may who is of
vote by proxy or attorney. unsound mind
30. (Note: This may be good to have so that it is clear on the valuation methods to be Share
used in assessing the share value of the company when a company decides to valuation
allot new shares.)
31. (Note: This may be good to have in the event if there is any dispute among the Alternative
directors or members themselves or the directors and the members. So instead of dispute
going to the courts to settle their dispute, they might want to refer to ADR for a resolution
resolution.)
