What powers does a shareholder have after acquiring a minority stake in a company?
This question often arises when a purchaser considers acquiring a minority stake in a private company. Under the Companies Act 2016, shareholders with a minority stake in a private company have the following rights and powers: Minority stake Rights and powers At least 5% of the total voting rights …
Post-Completion Integration in M&A: Key Considerations
Ever had an M&A deal stretch over a year due to integration issues? I learned a few lessons from such an experience. Despite the simplicity of the transaction, negotiations were protracted, driven by approvals needed from various departments within the corporate buyer. The acquisition involved a larger corporation acquiring a …
Consider this when deciding whether to use earn-outs in M&A transactions
An earn-out bridges the gap between the seller’s and the purchaser’s perception of the value of a target company. If the target company achieves the agreed metrics or milestones, the seller stands to receive more than the initial purchase price. However, the incentive to be paid more (from the seller’s …
M&A: Start by Asking for the Reason
During initial discussions with clients who are seeking to undertake acquisitions, it is useful to start by asking their reason for acquiring a particular company or business. Understanding the underlying motivation behind the clients’ decision for their acquisitions helps to achieve the following: (a) direct focus to what matters most …
Three Legal Developments in Malaysia for M&A Transactions
If you’re interested in sale and purchase of shares of companies in Malaysia, three significant legal developments are worth noting: 1. Beneficial Ownership Reporting Requirements The Companies Act 2016 has been amended on 1 April 2024 to introduce beneficial ownership reporting requirements. Companies have a 3 months’ time frame from …
How to Draft Clear and Effective Conditions Precedent in M&A Transactions
The fulfilment of conditions precedent in an M&A transaction signifies that a sale and purchase agreement has become unconditional and the parties are obliged to complete the transaction. Failure by any party to complete the transaction after conditions precedent are fulfilled usually results in that party being liable to compensate …
M&A: Categorising Seller’s Representations and Warranties
M&A: Categorising Seller’s Representations and Warranties (particularly if you don’t have Representation & Warranty Insurance) The representations and warranties (R&W) given by a seller in an M&A sale and purchase agreement (“Seller’s Warranties”), if breached, may affect the M&A transaction to varying degrees. It is worthwhile categorising the Seller’s Warranties …
What should purchasers consider in M&A transactions?
Other than the purchase price, what should purchasers consider in M&A transactions? In M&A deals, purchasers should consider aspects beyond the purchase price that could impact their acquisitions. The following are three factors to consider: 1. Guarantee for the target’s borrowing If the target has financing facilities guaranteed by the …
Frequently Encountered Issues in Acquisition of Entrepreneurs’ Businesses
There are some issues that I frequently encounter in start-ups/ entrepreneurs’ businesses when conducting legal due diligence for buyers seeking to acquire such businesses. Here are some of the issues: 1. No Separation of Legal Entity A founder may own several companies at the same time. It’s common for a …
M&A: Is consent or notification required?
In an M&A transaction, it should be determined early on whether consent from or notification to the following parties is required for the change of shareholder or director of the target company: (a) regulatory body (pursuant to a condition imposed on a licence or regulatory requirements) (b) counterparty of a …