Linkedin Post

Shareholders’ Agreement: Getting It Legally Right

A shareholders’ agreement is an essential agreement in M&A transactions involving more than one shareholder. Understanding the key legal provisions is the foundation for a solid shareholders’ agreement. The following are three legal provisions to keep in mind: 1. Quorum for general meeting (Section 328, Companies Act 2016 (“CA”)) Other …

Linkedin Post

Why You Shouldn’t Rely on Online Shareholders’ Agreement Templates

Drafting an effective shareholders’ agreement requires expertise in company law, shareholders’ rights and directors’ duties. It’s perplexing that some people think a shareholders’ agreement can be put together quickly and easily by using an online template and changing the parties’ names and a few details. While online templates are easily …

Constitution

Why have a shareholders’ agreement?

Why have a shareholders’ agreement? Why not just rely on the company’s constitution? A shareholders’ agreement governs the relationship (1) between shareholders themselves; and (2) between the shareholders and the company (if the company is a party to the shareholders’ agreement). Three reasons to have a shareholders’ agreement when there …

Company Law

Why should a company adopt a constitution?

In the context of an M&A transaction, why can’t shareholders solely rely on a shareholders’ agreement after completion of the transaction? Where there is more than one shareholder after completion, the next step after execution of a shareholders’ agreement is to either amend or adopt a constitution that is consistent …

Contracts

Why You Need a Separate Subscription Agreement from a Shareholders’ Agreement?

Should/ could a subscription agreement be combined with a shareholders’ agreement? While it’s possible to combine the two agreements, I prefer to have a subscription agreement separate from a shareholders’ agreement for the following reasons: The parties to the agreements are different. The subscription agreement primarily involves the company which …

Linkedin Post

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 …

Company Law

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 …

Company Law

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 …

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Linkedin Post

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 …

Company Law

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: …