The party system in Malawi has been characterized by instability and fragmentation since the re-introduction of multiparty democracy in 1993. In part this instability is rooted in the legal framework regulating political parties as organizations and the functions that parties perform in a democracy. The paper outlines the constitutional and legal framework of political parties, But more importantly for party system developments are how regulations of the functions which parties perform in a democracy, such as candidate nomination, campaigning and representation in parliament, interact with the structure of the political system, leading to party system instability. Moreover, the effect of regulation of political parties and their activities are strongly influenced by ‘selective' application of the formal regulations and weak party organizations. Formal rules meant to strengthen political parties have therefore not functioned as intended.