Subsidiary legislation and revised Guidelines issued to regulate dispensation of “Berhad” from the name of Company Limited by Guarantee
21 July 2025
Section 45(3) of the Companies Act 2016 (“
CA 2016”) permits a company limited by guarantee (“
CLBG”) to apply to the Minister of Domestic Trade and Cost of Living (“
Minister”) for a licence to omit the word “
Berhad” or the abbreviation “
Bhd.” from its name (“
Licence”).
In exercise of the powers conferred under section 45(5) of the CA 2016 the Minister issued the
Companies (Licence for Omission of “Berhad” or “Bhd.”) Regulations 2025 [P.U.(A) 213/2025] (“
Regulations”) which came into operation on
15 July 2025 (“
Enforcement Date”).
The Registrar also issued the revised
Guidelines on Company Limited by Guarantee on 15 July 2025 (“
2025 Guidelines”) in place of the previous guidelines of the same name issued on 27 September 2021 (“
2021 Guidelines”).
Application for Licence
Regulation 2(1) of the Regulations permits a CLBG to apply to the Minister through the Registrar for a Licence. Regulation 2(2) of the Regulations requires the application to be in the form as determined by the Minister and accompanied by the following:
- the application fee of RM300.00;
- a copy of a special resolution passed at a general meeting of the CLBG to omit the word “Berhad” or “Bhd.” from its name;
- a copy of the latest bank statement of the CLBG or any other document which proves that the CLBG owns at least RM1.0 million in cash or any cash equivalent at the time of application; and
- any other document as may be required by the Registrar to assess the eligibility of the CLBG.
It is to be noted that regulation 3 of the Regulations prohibits a CLBG from applying for a Licence under regulation 2 unless the CLBG has a total financial contribution of not less than RM1.0 million.
Issue of Licence
The Minister may issue a Licence pursuant to regulation 4 of the Regulations to a CLBG if he is satisfied that all requirements under regulations 2 and 3 are complied with.
Conditions
A CLBG which holds a Licence must comply with all the conditions set out in regulation 5, namely:
- ensure that its financial resources are used in accordance with its constitution at all times;
- unless approved by the Registrar, the CLBG shall not:
- amend its constitution;
- appoint any new director after the issuance of the Licence;
- subject to paragraph (3) below, allow the payment of any fee, salary or fixed allowance to its directors;
- solicit any contribution or donation from the public; and
- establish or hold any subsidiary; and
- where the CLBG intends to pay any fee, salary or fixed allowance based on the performance of a financial year to its directors, the total amount payable shall not exceed 30% of the current assets of the CLBG before the payment is made on the condition that the CLBG:
- shall have been incorporated for not less than two years; and
- shall be able to pay its debts when they become due and payable within 12 months immediately after the payment.
The Minister may, in addition to the foregoing, impose any other condition on the CLBG.
Revocation of Licence
The Minister may, upon the recommendation of the Registrar, revoke a CLBG’s Licence if it fails to comply with any of the conditions prescribed in regulation 5 or imposed by the Minister (Regulation 6(1)). Before doing so, the CLBG must be informed in writing of the grounds and date on which the Licence is to be revoked and be required to explain the non-compliance within a specified period (Regulation 6(2)).
Unless the Minister determines otherwise upon receiving the CLBG’s explanation, the revocation shall take effect on the date specified in the notice and the word “Berhad” or “Bhd.” shall be inserted at the end of the CLBG’s name (Regulation 6(3)).
A CLBG whose Licence is revoked shall not be eligible to apply for a Licence under section 45 of the CA 2016 within 24 months after the revocation of its Licence (Regulation 6(4)).
Saving and transitional
Any licence issued by the Minister before the Enforcement Date will continue to be valid and be dealt with as if it has been issued under the Regulations. In particular, the conditions in regulation 5 shall apply to a licence issued before the Enforcement Date upon the expiry of 30 days after the CLBG has been notified of the Enforcement Date and any condition of licence which is inconsistent with regulation 5 shall cease to have effect to the extent of the inconsistency.
Where a CLBG which has been issued with a licence under section 45 of the CA 2016 subject to the condition that it obtains a financial contribution amounting to RM1.0 million, fails to meet that condition within six months from the Enforcement Date:
- the Minister may, upon the recommendation of the Registrar, revoke the licence of the CLBG; and
- the CLBG may apply for a new licence in accordance with the Regulations at any time thereafter.
The 2025 Guidelines
Paragraphs 25, 26, 27 and 28 of the 2025 Guidelines now broadly reflect the requirements set out in regulations 2(1), 4, 6(3) and 6(4) respectively of the Regulations.
The new paragraph 29 of the 2025 Guidelines follows on from regulation 6(4) and paragraph 28 by stating that a CLBG may re-apply to the Minister, through the Registrar, for a Licence to omit the word “
Berhad” or “
Bhd.” from its name 24 months after its Licence has been revoked pursuant to the Regulations.
The 2025 Guidelines provide several checklists, including
Checklist 2 (“
Checklist 2”) which is to be submitted by a CLBG for an application or, in the case of a revocation of a previous Licence, a re-application, for a Licence to omit the word “
Berhad” or “
Bhd.” from the CLBG’s name. The documents stated in Checklist 2 that are to be submitted are as follows:
- the application in the section 45 form of CA 2016;
- the fee of RM300.00;
- a copy of a special resolution for omission of the word “Berhad” or the abbreviation “Bhd.”;
- a copy of the latest bank statement of the CLBG or any other document which proves that the CLBG owns at least RM1.0 million in cash or any cash equivalent at the time of application.
The above requirements are aligned with those set out in regulations 2(1) and 2(2) of the Regulations.
It is to be noted that paragraphs 5 and 6 of Checklist 2 impose the following additional conditions in the case where a CLBG re-applies for a Licence after the revocation of an earlier Licence:
- all directors and the CLBG must not have any outstanding compound prior to the submission of the application; and
- the CLBG must have lodged its latest audited financial statement and annual return.
Comments
Four noteworthy points are as follows: (i) as a CLBG is required to provide documentary evidence that it has RM1.0 million in cash or cash equivalent at the time of its application for a Licence, it is doubtful that a CLBG may be incorporated without the word “
Berhad” or “
Bhd.” as part of its name at the point of incorporation; (ii) the requirement in paragraph 28 of the 2021 Guidelines that a CLBG must be incorporated for at least two years before it is eligible to apply to omit the word “
Berhad” or “
Bhd.” from its name has been dispensed with under the Regulations and the 2025 Guidelines; (iii) Checklist 2 can be used by a CLBG which is re-applying for a licence to omit the word “
Berhad” or “
Bhd.” as part of its name after its previous licence has been revoked; and (iv) two additional conditions, as set out in paragraphs 5 and 6 of Checklist 2, have to be satisfied in the case where a CLBG reapplies for a new licence after its previous licence has been revoked.
Article by Phua Pao Yii (Partner) and Chong Cai Yi (Associate) of the Corporate Practice of Skrine.
This article/alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.