What approvals and notifications required for M&A transactions?

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At the start of a M&A transaction, ascertaining the approvals and notifications required for the transaction would help you plan the workflow and timeline.

The approvals and notifications required typically relate to change of control, shareholders, shareholding or directors of the target company.

The approvals and notifications required for the sale and purchase of shares of a company may include:

1. Approvals of or notifications to regulators pursuant to legislative requirements.

e.g. Acquisition of interest in shares of a company carrying on banking business or insurance business requires prior written approval of the Central Bank of Malaysia if the acquisition results in shareholding exceeding the thresholds prescribed under the Financial Services Act 2013.

2. Approvals of directors and shareholders of the seller and buyer (if they are corporations) for the transaction.

Shareholders’ approval may not always be required. Whether shareholders’ approval is required depends on, amongst others, the respective constitution and shareholders’ agreement (if any) of the seller and buyer.

A seller or buyer which is a public company listed on Bursa Malaysia requires its shareholders’ approval if the transaction exceeds the thresholds prescribed under the Listing Requirements.

3. Approval of directors of the target company for the transfer of shares from the seller to the buyer.

4. If there are any shareholders who are not selling their shares in the target company, their approval or waiver may be required pursuant to the terms of shareholders’ agreement or constitution, if any.

5. Approvals of or notifications to banks and other financiers for change of control, shareholder, shareholding or directors of the target company pursuant to the terms of financing documents.

6. Approvals of or notifications to counterparties pursuant to the terms of agreements.

7. Approvals of or notifications to relevant authorities pursuant to the conditions of licences, permits and approvals granted by the authorities to the target company.

What would you add to the list?

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First posted on Linkedin on 17 December 2021.

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