Companies limited by guarantee (CLBG) refer to public companies that are incorporated under a condition where the company constitution limits their principle liability (Also see Balance Sheet – Liability and Shareholders’ Equity Accounts) of their members to an amount that their members can undertake to contribute to the company’s asset (Also see Disposal of Fixed Asset in a Company) if the companies are wound up. There is a limitation for the activities that the companies limited by guarantee can carry out. Besides, these companies can only own land or property given that the KPDNHEP has issued a license to it.

According to the Companies Act 2016, there are two types of companies limited by guarantee. The first type is those with the word “Berhad” or “Bhd.”. The second type is those without the word “Berhad” or “Bhd.” behind them. A company limited by guarantee may send an application to the Minister to apply for a license for it to remove the word “Berhad” or “Bhd.” from its name. For those companies limited by guarantee that want to use to words “Foundation” or “Yayasan”, they must remove the word “Berhad” or “Bhd.” from its name. If you are one of those who operate a company limited by guarantee and you need more information regarding this, do not hesitate to contact a corporate secretarial firm Johor Bahru and get assistance from the experts.

Companies limited by guarantee that has been incorporated for three years may apply to get the word “Berhad” or “Bhd.” removed from its name. To get the approval of eliminating the word “Berhad” or “Bhd.” from its name, the company limited by guarantee must have a fund of RM 1 million cash. It should also obtain all the cash that the potential contributors have promised it in six months after its establishment.

Also, the Minister can impose the terms and conditions that he thinks is suitable upon giving approval to the application. If the company is unable to follow any of those terms and conditions, the authorities may remove its license. Companies limited by guarantee that has the word Berhad” or “Bhd.” in its name may omit the word if they have gotten the approval from the Minister and have followed all the terms and conditions listed in its license.

For companies limited by guarantee that would like to apply for this, they need to provide the information with remarks on their financial position for at least the last three years. Apart from this, they need to provide the latest financial statement (Also see Introduction to Financial Statements) for three years, and they should get those statements audited (Also see Steps of a Financial Statement Audit) and presented at its AGM (annual general meeting). Once the Minister has approved the application, the Minister will issue a license to the company limited by guarantee.