I came across the following definition of “MAE” from the American Bar Association’s Canadian Private Target M&A Deal Point Study:

“MAE” means any result, occurrence, fact, change, event, or effect that has, or could reasonably be expected to have, a materially adverse effect on the business, assets, liabilities, capitalization, condition (financial or other), results of operations, or prospects of the target or its ability to consummate the Transaction.

This definition is a helpful reference when drafting an MAE clause, particularly in well-established legal systems. However, adopting it verbatim in Malaysia may be overly complicated, given the limited case law on MAE clauses in the Malaysian M&A context.

One potential approach is to narrow the scope of the MAE clause to exclude issues that can be resolved within a short time frame (e.g., 21 days)—a so-called “MAE carve-out.” This carve-out ensures that minor issues, which can be resolved quickly, are not used to trigger an MAE, making the clause less prone to being invoked over trivial disputes.