M&A transactions often involve allotment of shares in a company. Understanding the legal requirements for allotment of shares is essential to ensure compliance and avoid potential disputes over the validity of allotment of shares.

The following are the key steps for allotment of shares under the Companies Act 2016 (CA) of Malaysia:

1.    Prior approval by way of shareholders’ resolution must be obtained for directors to exercise their powers to allot shares, subject to certain exceptions (section 75 and 76(1), CA).

2.    The board of directors pass resolution to formally exercise their powers to allot shares under section 75(1) of the CA.

3.    Shareholders’ approval for the allotment of shares must be lodged with the Registrar within 14 days from the date of the approval (section 76(2), CA).

4.    The company must register the allotment of shares in the register of members within 14 days from the date of the allotment (section 77(1), CA).

5.    The company must lodge with the Registrar a return of the allotment within 14 days from the allotment of shares (section 78(1), CA).

6.    The company must notify the Registrar of the changes in the particulars in the register of members within 14 days from the date of the change (section 51(1), CA).

When conducting legal due diligence for M&A transactions, how far do you go in checking compliance for share allotments?

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This post was first posted on LinkedIn on 26 December 2024.