A Sound OEM Contract: Halal, Formula, Audit and Recall Clauses

Identify the manufacturing agreement clauses that protect halal status and the brand's responsibilities.

Last reviewed 5 November 2026

ManaHalal note: Educational material for SME operators in Malaysia; not a verification, an application decision or advice that overrides JAKIM/JAIN/MAIN (Majlis/Jabatan Agama Islam Negeri, the state Islamic religious councils and departments). The scope of a certificate must be checked by holder, type of scheme, factory address, product and validity period. Amendments after 5 November 2026 must be checked before publication or application.

An OEM agreement is not only about price, MOQ (minimum order quantity) and exclusivity. For a product that wants to keep its SPHM (Sijil Pengesahan Halal Malaysia, the Malaysia Halal Certificate) eligibility, the agreement needs to set out who controls the ingredients, formula, process, documents and label.

An important difference: two separate agreements

JAKIM issued Pekeliling Pensijilan Halal Malaysia (Malaysia Halal Certification Circular) No. 2/2026, which cancels the implementation of the earlier Halal Certification Agreement (HCA). However, MPPHM (Manual Prosedur Pensijilan Halal Malaysia, the Malaysia Halal Certification Procedure Manual) (Amendment 2026) Procedure 18(8)(h) still requires a written contract/agreement or mutual consent for the relationship between the OEM manufacturer ↔ brand owner/customer. Do not mistakenly assume that the cancellation of the HCA means an OEM contract is not needed.

10 key points in the contract

Clause What should be stated
Identity and scope Company names, production address, category and SKUs
Certification roles Who holds the OEM SPHM; who coordinates the product SPHM
Ingredient control Approved list, halal evidence, no substitution without approval
Formula Version number, IP owner, access for authorised auditors
Subcontracting Written permission required, check the third party's certificate eligibility
Label/logo No use of the logo before the product scope is approved
Records Batch, invoice, purchasing, QA, retention period as required
Incident/NCR (non-conformance report) Hold stock, report immediately, investigation and CAPA (corrective and preventive action)
Recall Who decides, who notifies customers, who bears the cost
Termination Transfer of data, stock, old labels and remaining ingredients

Change approval pathway chart

Change control in an OEM contractA proposal to change a material, formula, address or manufacturer is notified in writing, assessed for risk and for its effect on the SPHM. If the authority needs to be notified or must approve, consult JAKIM, JAIN or MAIN and wait for the decision. If not allowed, keep the existing process. If allowed or not required, give written approval, update the specification, labels and records, then approve the first batch after the change.Yes / unsureNoNoYes

Proposal to change material / formula / address / manufacturer

Written notice to the brand owner and the person responsible for halal

Risk assessment and check of the effect on the SPHM

Does the authority need to be notified or approve?

Consult JAKIM/JAIN/MAIN; wait for the decision

Internal written approval

Allowed to proceed?

Keep the existing process; hold the change

Update the specification, labels and records

Approve the first batch after the change

Change control in an OEM contract

Sample clause (a guide, not legal advice)

The Manufacturer must not change the source or producer of raw materials, the formulation, the production location, halal-critical processes or the subcontractor for the agreed products without first obtaining the written consent of the Brand Owner and, where required, the confirmation or approval of the halal certification authority before the change is implemented.

Actions

  • Include responsibility for the product certificate, not only the factory certificate.
  • State the ban on silent changes of ingredients/sources.
  • Make sure audit rights, records and the recall pathway are agreed.

Official references