Does family-owned company require formal shareholders’ approval for issuance of shares?
- By : Wong Mei Ying
- Category : Company Law, Linkedin Post, Mergers and Acquisitions, Shareholders' Agreement
“This is my family-owned company. Do we still need formal shareholders’ approval to issue shares?”
Yes. Under section 75 of the Companies Act 2016, directors cannot exercise their power to allot shares without prior shareholders’ approval.
This is a legal requirement even if all the shareholders are family members. Skipping this step may lead to disputes and costly litigation.
In WTK Realty Sdn Bhd v Kathryn Ma Wai Fong & Anor & Other Appeal, family members ended up in prolonged legal battles over shares issued without prior shareholders’ approval.
The dispute went all the way to the Federal Court (the highest and final appellate court in Malaysia) and it took a court order to validate the issuance.
Even in a family-owned company, following statutory requirements is the simplest way to avoid unnecessary disputes.
If you’re planning a share issuance, get it right from the start by getting prior shareholders’ approval.
This post was first posted on LinkedIn on 19 August 2025.
