What agreements are required for investment into a company?
When determining what agreements are required for investment into a company, consider the following: 1. What is the mode of investment? For example, is the investment by way of acquisition or subscription of shares of the company? 2. What is the subject matter and purpose of the agreement? 3. Who …
Subscribing or acquiring shares: check the pre-emptive rights first
An investor who wants to subscribe to shares or acquire shares in a private company should first consider whether there are any restrictions to do so in the following documents: 1. Constitution of the company (if the company has adopted a constitution); and 2. Shareholders agreement (if the current shareholders …
Sale and purchase of assets versus shares
The following are some points to consider when deciding whether to structure a deal as a sale and purchase of assets or shares. 1. Stamp duty Sale of assets in Malaysia attracts stamp duty at 1% to 4% of the sale consideration or market value of the assets, whichever is …
Change of name for M&A and IPO exercise
Today’s post is on change of name of a company in M&A and IPO context. Consider the following scenario. A shareholder incorporated a few companies with similar names. Now, the shareholder wants to dispose all shares held in one of the companies (target company) and undertake IPO for the remaining …
M&A: Basis for purchase price
A buyer and a seller in an M&A transaction may value the business or target company based on an agreed basis such as by reference to a multiple of profits for an agreed period of time. The buyer may want to consider including a clause in the sale and purchase …
M&A: What should and shouldn’t survive termination?
Sale and purchase agreements for M&A transactions usually provide for certain clauses of the agreements to survive termination. In other words, if the agreements are terminated. some clauses continue to be effective. Termination of agreements only terminates the parties’ duties to carry out contractual obligations which have not been performed …
Structuring payment of purchase price for M&A transactions
You need to consider the following when structuring payment of purchase price for M&A transactions: 1. Amount of purchase price/ the way in which it is to be determined 2. Time for payment of the purchase price 3. Manner in which the purchase price is to be satisfied Purchase price …
Key issues to consider for a term sheet for joint venture
1. Parties Who are the parties to the joint venture? 2. Objective What is the objective of the joint venture? What business is the joint venture undertaking? 3. Structure What form/legal entity is the joint venture? 4. Shareholding What is the shareholding proportion of each party? What class of shares …
M&A due diligence: Charge over shares
One of the objectives in M&A due diligence is to ascertain that the seller has good title to the seller’s shares in the target company. This include verifying whether any charges or encumbrances have been created over those shares. Three ways to do this: 1. Include questions in the legal …
Three things to take note of in shareholders’ agreement
Shareholders’ agreement is a common agreement in an M&A transaction where there is more than one shareholder in the target company after completion of the transaction. The following are three requirements under the Companies Act 2016 of Malaysia (“𝗖𝗔”) to take note of when preparing a shareholders’ agreement: 1. Save …