Existing shareholders can regulate the entry of a new shareholder into the company by limiting the transfer of shares. The Malaysian Companies Act 2016 stipulates that a private company has a restriction on the transfer of its shares. This is one of the opposite characteristics between a private company and a public company in which these shares are freely transferable to a public limited company. However, the Companies Act 2016 does not specify the nature of the restriction or the extent of the restriction required. On the other hand, in the case of an “asset sale” (not only limited to the sale of assets, but also liabilities and liabilities), the parties to the business sale contract are the company itself (i.e. as a seller) that sells the various components of the business owned by the company and the acquirer who becomes the new owner of the asset. Yes, yes. A private company is required to limit the transfer of its shares, but public companies are not allowed to restrict the transfer of shares. Directors of a limited company have the power to refuse the transfer of shares. However, the new law does not provide for share transfer mechanisms. The shareholders` pact in Malaysia is not a prerequisite.
The Malaysian Companies Act 2016 also does not require a private company to have a constitution. Nevertheless, it is strongly advised to have a shareholders` pact if you have more than one shareholder to ensure that all the rights of the parties are clearly defined, in order to avoid any misunderstanding and ensure the proper functioning of the company. If you have any doubts about the development of your shareholders` pact in Malaysia, please contact one of our lawyers. We advise start-ups, SMEs and companies (particularly in the area of AM transactions) on legal issues related to the share sale agreement. The seller of shares should check whether contractual restrictions or procedures must be followed as part of a shareholder contract or whether the company`s by-laws apply before signing an agreement to sell its shares. This could include pre-emption rights or rights transferred to other shareholders of the company. Obligations of the parties: the shareholders` pact should define the contribution of each shareholder to the company, such as the provision of management know-how and technical know-how to the company, the introduction of commercial activities and the guarantee of financing, etc. Shareholders may agree that the shareholders` pact succeeds the Constitution in the magnitude of a conflict. However, such a shareholders` pact does not engage the company unless the company is associated with it. As with any business transaction, it`s important to know what you`re committing to and what you`re prepared for.
Here is a list of the steps of the action to plan ahead and know what you expect in a business sale. Notwithstanding the above, the board`s agreement is necessary for the transfer of shares. A “share sale” usually involves the sale of a company`s shares. The legitimate contractors of the share sale contract are the actual shareholder of the company (i.e. as a seller) who sells its shares in the company and the acquirer who becomes the new shareholder of the target company. A shareholder or partner owns a company by holding its shares. It is a director who runs the company. A director is not obligated to be a shareholder and a shareholder does not have the right to be a director. Rights of the first refusal – a requirement for a shareholder to offer the other shareholders of the company the right (but no obligation) to acquire the shares before the sale or sale of shares to a third party. Law and jurisdiction in force: The parties that determine the law that is to be used in the interpretation of the shareholders` pact Objective: The objective of the company is agreed in the shareholders` pact and any change in the direction of the business generally requires the acceptance of the resolution by the shareholders.