Most people I know are reluctant to pay for proper legal advice when it comes to shareholders’ agreements.

Many assume shareholders’ agreements are just templates.

However, in practice, especially in M&A or fundraising, these agreements must align with the Companies Act 2016 and other relevant regulatory requirements. Otherwise, what is agreed in writing may not hold up.

The following are 3 legal issues that, if overlooked, may lead to regulatory breaches or delay investments:

1. Director/auditor removal can only be done at a meeting

Under section 297(2) of the Companies Act 2016, a shareholders’ resolution to remove a director or auditor cannot be passed by written resolution.

It can only be passed at a shareholders’ meeting. This surprises many who rely on written resolutions for everything.

2. The main meeting venue must be in Malaysia

Section 327 requires the main venue of a shareholders’ meeting to be in Malaysia, with the chairperson physically present there.

For companies with all foreign shareholders, this creates logistical challenges (if a meeting is required) and non-compliance if overlooked.

3. Loans or advances from foreign shareholders may trigger foreign exchange rules

If a non-resident shareholder provides funding, Bank Negara Malaysia’s foreign exchange policy may apply. Early planning helps avoid unnecessary delays in the investment or funding process.

A well-drafted shareholders’ agreement must do more than reflect commercial intent. It should anticipate regulatory requirements in the context of the company’s operations and business goals.

If your company is navigating M&A, fundraising or onboarding foreign shareholders, these details matter.

#MalaysianCorporateLawyer

This post was first posted on LinkedIn on 12 August 2025.