Minority shareholders are powerful.

Shareholders who either singularly or collectively hold at least 25% of the voting shares in a company may veto on the following matters in relation to the company as provided under the Companies Act 2016 of Malaysia:

• Change of name (s. 28)

• Adoption of constitution (s. 32)

• Amendment of constitution (s. 36)

• Conversion from an unlimited company to a limited company (s.40)

• Conversion from public companies to private companies or private companies to public companies (s. 41)

• Alteration of share capital (unless provided otherwise in the constitution) including by way of consolidation and division of share capital, conversion of paid-up shares into stock, reconversion of stock into paid-up shares and subdivision of shares (s. 84)

• Variation of rights attached to shares in a class of shares (s. 91)

• Reduction of share capital (ss. 115 -117)

• Financial assistance by a company whose shares are not quoted on a stock exchange for the acquisition of a share in the company or its holding company or for reducing or discharging a liability incurred for such an acquisition (s. 126)

• Payment of interest on share capital issued to raise money to defray construction expenses (s. 130)

• Members’ right for management review (s. 195)

• Payments to director way of compensation for loss of office or as consideration in connection with his retirement from office (s. 227)

• Voluntary winding up (s. 439)

• Removal of liquidator in members’ voluntary winding up (s. 445)

• Arrangement entered into between a company about to be or in the course of being wound up and its creditors (s. 460)

• Winding up by Court (s. 465)

In M&A transactions, being aware of shareholders’ rights as provided under the Companies Act helps in negotiating shareholders’ agreement where there is more than one shareholder post completion.

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This post first appeared on LinkedIn on 25 May 2023.