The person must be fit and proper and is not disqualified under the Companies Act, 2016.

For the purposes of determining whether a person is fit and proper, the Registrar may:

(a) 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;

(b) consider the reputation, character and integrity of the founder or director;

(c) conduct a security vetting on 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/or other agencies.

A new director may be appointed provided that the registrar (SSM) is satisfied that the applicant is fit and proper and competent to perform the duties of a director under Companies Act, 2016.

Unlike any other company, a CLBG is required to have a constitution with, among others, the following requirements:
(a) the name of the company;
(b) the objects of the company;
(c) the capacity, rights, powers and privileges of the company;
(d) the amount up to which the member undertakes to contribute to the assets of the company in the event of it being wound up;
(e) the full names, addresses and occupations of the subscribers; and
(f) a statement that the subscribers are desirous of being formed into a company in pursuance of the constitution.

Prior approval from SSM must be obtained to amend the constitution of a CLBG.

A CLBG must ensure that none of its members or directors uses the company or its financial resources to conduct any form of political or unlawful activities. In conducting its activities, it must ensure that it does not depart from the objects for which it was established for.

(a) is prohibited to appoint new director(s) unless prior approval obtained from SSM;
(b) is prohibited from paying any fees, salaries, fixed allowances or any benefits to director(s);
(c) must use the profits and other income for the purposes stated in the objects of the company;
(d) is prohibited to solicit any contribution or donation or make any money collection from the public;
(e) is prohibited from incorporating or holding any subsidiary (save for CLBG with the word Berhad incorporated prior to 31 January 2017 where its existing Constitution does not contain similar restriction); and
(f) is required to comply at all times with all the provisions set forth in the constitution.

A CLBG may apply to the Minister for a licence to omit the word “Berhad” or the abbreviation “Bhd” from its name. However, any CLBG intending to use the words “Yayasan” or “Foundation” must omit the word “Berhad” or “Bhd” from its name.

• A CLBG which had been incorporated for a period of three (3) years may apply.
• The basis to support the approval of omitting the word ”Berhad” or ”Bhd” is that the CLBG must have a fund amounting to RM1 million cash. The CLBG is required to get all of the cash which has been pledged by potential contributors within six (6) months after it is established.
• A CLBG with the word “Berhad” or “Bhd” could omit the said word subject to the approval of the Minister and the terms and conditions of licence as provided in paragraph
• The CLBG must provide an information with comments on the financial position at least for the last three (3) years and the latest financial statements for the period of three (3) years, audited and presented at the annual general meeting.
• A licence under section 45(3) or (4) CA 2016 is issued once the application obtains the approval of the Minister.

A CLBG may only hold any land or property if it is issued with a license by the Ministry of Domestic Trade, Cooperatives and Consumerism (Minister).

The Minister may impose special terms and conditions relating to the holding, acquiring, charging, mortgaging, selling, leasing or disposing the land or property as he thinks fit.