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 …
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 …
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 …
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 …
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 …
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: …