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
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
- JAKIM — MPPHM (Domestik) 2020, Amendment 2026 — see in particular Procedure 18(8), pages 50–52; fees in Procedures 7–8, pages 13–14.
- JAKIM — Pekeliling Pensijilan Halal Malaysia Bil. 2/2026 (Malaysia Halal Certification Circular No. 2/2026) — cancellation of the HCA circular; it does not cancel the OEM contract obligation in the MPPHM.
- Portal Halal Malaysia — Circulars.
- MyGovernment — Getting Halal Certification — application through MYeHALAL.