How does a company control its shareholder composition?
One common reason for a company to control its shareholder base is to prevent a shareholder who is no longer actively involved in the day-to-day operation of the company from exerting influence over the company. A company may achieve this control through compulsory transfer provisions. These provisions typically require officers …
What is the difference between a “𝘀𝘂𝗯𝘀𝘁𝗮𝗻𝘁𝗶𝗮𝗹 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿” and a “𝗺𝗮𝗷𝗼𝗿 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿”?
If you are a corporate lawyer and you ask your supervising partner the question above, be prepared that you may be told to do your own reading. In short, a “substantial shareholder” of a company refers to a person who has an interest in one or more voting shares in …
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 …
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: Dividend of a Malaysian company
When structuring an M&A transaction, declaration and distribution of dividend of the target company after completion may be one of the points that the parties want to include in a shareholders’ agreement. The following are some points to take note for declaration and distribution of dividend of a Malaysian company: …
M&A: Shareholders’ Rights
Preparing a shareholders’ agreement for an M&A transaction requires an in-depth understanding of shareholders’ rights and powers under the laws and the relationship between the shareholders. The table below sets out some of the rights and powers in respect of different levels of shareholding in a private company* limited by …
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 …
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 …
How to safeguard shareholders’ interest through shareholders’ agreement
When any sale and purchase of shares results in more than one shareholder in a company, the shareholders should enter into a shareholders’ agreement to set out their rights and obligations, no matter how amicable their relationships are. A minority shareholder and majority shareholder may consider including the following in …
Consider these two documents before investing in a private company
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 …