Dividend of a Malaysian company: What directors and shareholders should know
1. It is permissible to use preference shares as an instrument to give investors (i.e. preference shareholders) priority to receive payment of dividend over ordinary shareholders. This preferential right must be stated in the constitution of the company. 2. A company may only distribute dividend to the shareholders out of …
Terms of preference shares
When drafting the terms and conditions of preference shares, you may want to consider the following: 1. Number of preference shares to be issued 2. Issuance price 3. Dividend • Rate of dividend • Whether dividend is cumulative • Time for dividend payment 4. Tenure of preference shares Whether the …
Voting rights of non-voting shares (preference shares)
Under the Companies Act 2016, “preference share” means a share by whatever name called, 𝒘𝒉𝒊𝒄𝒉 𝒅𝒐𝒆𝒔 𝒏𝒐𝒕 𝒆𝒏𝒕𝒊𝒕𝒍𝒆 𝒕𝒉𝒆 𝒉𝒐𝒍𝒅𝒆𝒓 𝒕𝒐 𝒕𝒉𝒆 𝒓𝒊𝒈𝒉𝒕 𝒕𝒐 𝒗𝒐𝒕𝒆 𝒐𝒏 𝒂 𝒓𝒆𝒔𝒐𝒍𝒖𝒕𝒊𝒐𝒏 or to any right to participate beyond a specified amount in any distribution whether by way of dividend, or on redemption, in …
Limited voting rights of preference shares
Preference share, by definition under the Companies Act 2016 (“𝐂𝐀 𝟐𝟎𝟏𝟔”) of Malaysia, does not entitle the holder to the right to vote on a resolution. See sections 2(1) and 71(1) of the CA 2016 . Under section 148(2) of the repealed Companies Act 1965, preference shareholders may vote: *when …
Shareholders’ prior approval required for allotment of shares
The consequence of not getting shareholders’ prior approval for allotment of shares (if the approval is required under the Companies Act 2016 of Malaysia) could be severe. Therefore, if the scope of due diligence for an M&A transaction includes verifying shares in the target company have been duly allotted, the …
What are the legal requirements to transfer shares of a Malaysian company?
It’s a question that foreign counsels ask in every cross-border M&A transaction involving a Malaysian company. What are the legal requirements to transfer shares of a Malaysian company? The requirements are as follows: 1. Directors of the company to pass directors’ resolution to approve (1) the registration of the transferee …
CEO, CFO and COO are subject to directors’ duties
Directors’ duties are not limited to formally appointed directors. The definition of a “director” is not limited to a person who is formally appointed as a director. Whether a person is a director depends more on the person’s responsibilities than title. The definition of a “director” under section 2 of …
Points to consider when investing in shares in a private limited company
1. Should the investor subscribe to new shares issued by the company or acquire shares from the current shareholder(s) of the company? The stamp duty for instrument of transfer of shares is 0.3% of the price or value of the shares on the date of transfer, whichever is higher. The …
Transfer of shares of a Malaysian company
How do investors who want to invest in a company in Malaysia check whether the legal requirements relating to transfer of shares in the company have been complied with? The things you need to check include: 1. Whether there are any provisions in the constitution of the company or shareholders’ …
Matters requiring shareholders’ approval for PLC
Which corporate actions undertaken by public companies listed on the Main Market or ACE Market of Bursa Malaysia (“PLC”) require shareholders’ approval? A PLC is required under the Listing Requirements to obtain shareholders’ approval for, among others, the following: 1. Issuance of securities by the PLC including rights issue, bonus …