Aside from the usual company limited by shares that most of us know, there is another type of company that can be registered under Suruhanjaya Syarikat Malaysia, ie. Company Limited By Guarantee (CLBG) under Companies Act 2016 (CA2016).

Under CA2016, CLBG is defined as a company limited by guarantee (CLBG) is a public company incorporated with the principle liability of its members is limited by the constitution to such amount as the members undertake to contribute to the assets of the company if the company is wound up.

There are two types of CLBG under the CA 2016 which are:

1. CLBG without the word "Berhad" or "Bhd"; and
2. CLBG with the word "Berhad" or "Bhd".

CLBG is normally registered for non-profit purposes and can only be formed for the following objects:

1. providing recreation or amusement;
2. promoting commerce and industry;
3. promoting art;
4. promoting science;
5. promoting religion;
6. promoting charity;
7. promoting pension or superannuation schemes; or
8. promoting any other objects useful for the community or country, such as:
   - environment;
   - health;
   - education;
   - research;
   - social;
   - sports; and
   - any other categories which the Minister thinks fit.

Once a CLBG is to be incorporated, the Directors, Trustee, and/or all related officers need to ensure that the CLBG has complied with the “Checklist” issued by SSM. A CLBG is prohibited to do the matters in the “Checklist” before getting approval from the Minister / Registrar of Company which are;

1. LICENCE TO OMIT THE WORD “BERHAD” OR THE ABBREVIATION “BHD” FROM A CLBG’s NAME
   - For new incorporation of a CLBG; or
   - From an existing CLBG
2. FORMATION OF A COMPANY LIMITED BY GUARANTEE (CLBG) WITH THE WORD BERHAD
3. APPOINTMENT OF DIRECTOR / TRUSTEE OF A COMPANY LIMITED BY GUARANTEE (CLBG)
4. AMENDMENT OF CONSTITUTION FOR COMPANY LIMITED BY GUARANTEE (CLBG)
5. TO HOLD, ACQUIRE, CHARGE, MORTGAGE, SELL, LEASE OR DISPOSE OF LAND OR PROPERTY BY A COMPANY LIMITED BY GUARANTEE (CLBG)
6. SOLICITATION OF DONATION FROM THE PUBLIC BY A COMPANY LIMITED BY GUARANTEE (CLBG)
7. PAYMENT OF SALARIES, FEES, FIXED ALLOWANCES & OTHER BENEFITS TO THE DIRECTOR OF A COMPANY LIMITED BY GUARANTEE (CLBG)
8. HOLDING OF SUBSIDIARY COMPANY BY A COMPANY LIMITED BY GUARANTEE (CLBG)

Some of us might have the honour to be the Founder / Director / Trustee of a CLBG. Before the appointment of any person to become the Founder / Director / Trustee, there are a few requirements that need to be observed which are;

A director shall be a person who is fit and proper and is not disqualified under the CA 2016. To determine whether a person is fit and proper, the Registrar may:

1. consider the experience, qualification, and competency of the founder or director which would assist him in carrying out his duties as director of the CLBG;
2. consider the reputation, character, and integrity of the founder or director;
3. conduct security vetting the potential founder or director, and a safety filter (security vetting) for the potential founder or director shall be conducted by the Royal Malaysian Police and other agencies.

The Registrar may, if he is satisfied that the applicant is fit and proper, and competent to perform the duties of a director under this Act, approve the applicant as a director of a CLBG.