The veto power of minority shareholders
Minority shareholders are powerful. Shareholders who either singularly or collectively hold at least 25% of the voting shares in a company may veto on the following matters in relation to the company as provided under the Companies Act 2016 of Malaysia: • Change of name (s. 28) • Adoption of …
Introversion and Lawyering
Some seem to exude natural self-assurance, assertiveness, and confidence. Others lean towards a more reserved, quiet, or introverted disposition. I’m referring to lawyers. If you identify with the latter category and you are starting out on your legal career, I want to say this based on my own experience: It’s …
M&A: Categorising vendor’s representations and warranties
One of the most negotiated points in a M&A transaction is the buyer’s remedies for breaches of vendor’s representations and warranties (“Vendor’s Warranties”) in a sale and purchase agreement (“SPA”). The various representations and warranties given by the vendor, if breached, may affect the transaction in varying degree. It may …
My Linkedin journey
When I first started posting on Linkedin, I posted anything related to corporate law that crossed my mind, mostly M&A, corporate finance/equity capital market and company law. Occasionally I shared stories about being a corporate lawyer. I gradually narrowed down my post to M&A and ECM. Nowadays, I post mostly …
M&A: Three representations and warranties sellers should avoid
1. Representations and warranties about the future A seller should avoid providing representations and warranties in respect of future events due to uncertainty about the future. Further, after the seller disposes of the seller’s shares, the seller may no longer be in control of the target company and hence, not …
M&A: Minority shareholders’ protection
Today’s post is about provisions in shareholders’ agreement for the benefit of minority shareholders. It is common to have a shareholders’ agreement when an M&A transaction results in more than one shareholder in the target company. Some provisions to include in a shareholders’ agreement for the benefit of a minority …
M&A: Consider the following when structuring earnout payment
Earnout provisions in M&A sale and purchase agreements require careful consideration as there are many parts to the provisions. It is important to ensure there is no ambiguity to avoid dispute. Consider the following when structuring earnout payment: 1. What is the performance metric that needs to be achieved in order …
M&A: When a buyer is induced by pre-contractual representations
A buyer may decide to acquire shares or assets or accept certain terms in a sale and purchase agreement (SPA) based on verbal representations made by a seller. If these verbal representations turn out to be false, does the buyer have any cause of action against the seller? The seller …
M&A: The pitfalls of earnout
Earnout is commonly used to reconcile the differences between a seller’s expectation and a buyer’s willingness to pay the sum expected by the seller. It a contractual mechanism whereby the buyer will pay additional payment beyond the initial purchase price to the seller if the target company achieves certain business …
M&A: Why should buyer conduct due diligence instead of just relying on warranties
Buyer: “Why can’t we just rely on warranties given by the seller in the SPA? Why should we conduct due diligence on the target?” Here’s why: 1. Due diligence allows the buyer to: · identify any consents from authorities or other third parties that are required for the acquisition pursuant to the …