Drafting an effective shareholders’ agreement requires expertise in company law, shareholders’ rights and directors’ duties. It’s perplexing that some people think a shareholders’ agreement can be put together quickly and easily by using an online template and changing the parties’ names and a few details.

While online templates are easily accessible, they often miss the nuances and application of laws specific to a given situation. An agreement that overlooks key legal considerations may undermine its intended purpose of protecting shareholders’ interest.

The following are some key areas of a shareholders’ agreement that require a solid understanding of company law:

– the rights of directors and shareholders to access company information and documents  which differ between directors and shareholders.

– directors have duties to the company notwithstanding they are nominee directors representing certain shareholders.

– certain company actions require shareholders’ approval under the Companies Act 2016 of Malaysia.

– the separation of powers between shareholders and directors as set out under the Companies Act 2016 of Malaysia.

A shareholders’ agreement should align with the needs of the shareholders and take into account the applicable laws. Don’t settle for a generic online template that may not fully address the interests of all stakeholders.

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This post was first posted on LinkedIn on 2 January 2025.