M&A: What representations and warranties to get from seller?
In an agreement for sale and purchase of business or shares of a company (“SPA”), it is typical for the seller to represent and warrant to the purchaser that the target business or target company is of certain calibre. Typically, there would be fundamental representations and warranties in the SPA …
Related party transaction within an M&A deal
When a buyer enters into an agreement with a seller to acquire shares of a company from the seller (“Transaction”), the buyer and the seller may negotiate for some other deals involving the target company to be included in the sale and purchase agreement in respect of the Transaction. For …
Financial assistance: Can business owners acquire shares with the companies’ money?
The provisions under the Companies Act 2016 which have the effect of restricting business owners from using funds of companies to acquire shares of those companies catch some business owners off guard. Some business owners, who are directors and shareholders of private limited companies which they set up to carry …
M&A: Why shouldn’t the agreement for retention of key personnel be deferred to post completion?
The Pitfalls of Deferring the Agreement It all started well in the first case. Both the seller and the purchaser of the subject company in the first case agreed that the sale and purchase of the company would be on friendly terms and that the transaction should be completed as …
Can an independent director of a public listed company sit on the board of a subsidiary?
In the context of a Malaysian public listed company (“PLC”), an “independent director” means a director who is independent of management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the PLC, …
Capital reduction: Why do some companies still go to court?
Under the Companies Act 2016 of Malaysia, a company which intends to carry out reduction of share capital may do so by any of the following methods unless provided otherwise in its constitution: a special resolution and confirmation by the Court (“Court Confirmation Procedure”) in accordance with section 116; or …
Disposal of business: What to take note
Business owners or sellers who are disposing their business, whether by way of disposal of business assets or disposal of shares of companies which own the business assets, should take note of the issues set out below. The disposal of business assets and/or disposal of shares of companies which own …
Seller beware: Discharge of guarantee after disposal of shares
In a share sale and purchase transaction, the transfer of shares to the buyer and payment of consideration to the seller may not necessarily signify the end of the parties’ obligations. After completion of the sale and purchase of shares, it is important to the seller to have all guarantee …
Selling or buying a business-Use a term sheet
When selling or buying a business, whether via a sale and purchase of shares or via a sale and purchase of assets, the seller and the purchaser should consider using a term sheet to set out the principal terms and conditions of the transaction. Having a term sheet enables the …
High Court clarified simple majority required to pass ordinary resolution in writing
Section 291(1) of the Companies Act 2016 (“CA 2016”) provides that an ordinary resolution of members or a class of members of a company means a resolution passed by a simple majority of more than half of such members who are entitled to vote and do vote, whether in person …