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Society vs. Company Limited by Guarantee

Societies vs. Companies Limited by Guarantee in Malaysia

Choosing the right legal structure for your organization in Malaysia is an important decision that can impact its operations, governance, and liability. Here's a breakdown of the key differences between societies and companies limited by guarantee (CLGs) in Malaysia:


  • Definition: A voluntary association of individuals with a common purpose, established under the Societies Act 1966.

  • Liability: Members have limited liability, meaning their personal assets are not at risk if the society incurs debts.

  • Structure: More flexible structure, governed by a constitution and managed by a committee.

  • Activities: Can engage in a wider range of activities, including social, cultural, recreational, religious, or educational purposes.

  • Profits: Profits must be reinvested into the society's activities.

  • Registration: Relatively simpler and less expensive registration process compared to CLGs.

  • Regulation: Subject to the Societies Act 1966 and any relevant by-laws.

Companies Limited by Guarantee (CLGs)

  • Definition: A type of company incorporated under the Companies Act 2016, with members' liability limited by the amount they guarantee to contribute in case of winding up.

  • Liability: Members have limited liability, similar to societies.

  • Structure: More formal structure, governed by a memorandum and articles of association, and managed by directors.

  • Activities: Primarily focused on non-profit activities, with restrictions on profit distribution.

  • Profits: Profits must be used to further the company's objectives or reinvested.

  • Registration: More complex and expensive registration process compared to societies.

  • Regulation: Subject to the Companies Act 2016 and relevant regulations.

Choosing the right structure:

The best structure for your organization depends on several factors, such as:

  • Your organization's purpose and activities.

  • The level of formality and governance required.

  • The size and complexity of your organization.

  • Your preferred level of regulation.

In general:

  • Societies are a good option for informal groups with social, cultural, or recreational purposes.

  • CLGs are a good option for organizations with more formal structures and non-profit activities.

It is recommended to consult with an accounting professional to determine the best structure for your specific organization.

Additional notes:

  • Both societies and CLGs must register with the relevant authorities and comply with their respective regulations.

  • Both can apply for tax-exempt status if they meet the eligibility criteria.

How Bestar can Help

Society vs. Company Limited by Guarantee

, a Malaysian firm, offers different services depending on whether you choose to operate as a Society or a Company Limited by Guarantee (CLG) in Malaysia. Here's how we can help in each case:


  • Registration: Bestar can guide you through the registration process with the Registrar of Societies, ensuring all necessary documents are prepared accurately and filed timely.

  • Constitution Drafting: We can help you draft a clear and concise constitution outlining your society's objectives, membership rules, governance structure, and dissolution procedures.

  • Compliance: Bestar can advise you on your statutory obligations under the Societies Act 1966 and ensure your society remains compliant.

  • Tax Exemptions: If applicable, we can assist you in obtaining tax-exempt status for your society.

  • Management Support: Bestar can provide ongoing support with bookkeeping, financial reporting, and meeting management, making society administration smoother.

Company Limited by Guarantee (CLG):

  • Incorporation: Bestar can handle the entire incorporation process with the Suruhanjaya Syarikat Malaysia (SSM), guiding you through all the necessary steps and requirements.

  • Memorandum & Articles of Association: We can assist in drafting your Memorandum and Articles of Association, defining your company's objectives, structure, and limitations.

  • Regulatory Compliance: Bestar can ensure your CLG complies with the Companies Act 2016 and other relevant regulations.

  • Secretarial Services: We can take care of secretarial tasks like maintaining statutory records, managing meetings, and filing annual returns.

  • Audit & Accounting: Bestar's qualified auditors and accountants to ensure your financial reporting meets statutory requirements.

  • Taxation: We can advise you on your tax obligations and assist with tax filings for your CLG.


  • Bestar offers training and workshops: We can help your society or CLG members understand their roles and responsibilities, governance best practices, and legal requirements.

  • We can advise on fundraising strategies: Bestar can provide guidance on raising funds for your organization, whether through grants, donations, or other means.

  • We have a network of professionals: Bestar's accountants, and experts can address specific legal, financial, or operational needs.

Ultimately, the best way to understand how Bestar can help your specific organization is to consult with us directly. We can assess your needs and recommend the most suitable services based on your chosen legal structure and goals.

Remember: Consulting with an accounting professional is crucial for choosing the right structure (Society or CLG) for your organization.

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