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 …
No mandatory requirement for a notice of directors meeting to contain specific particulars of matters to be discussed upon
It was held in the High Court case of Rozilawati bt Hj Basir v Nationwide Express Holdings Bhd & Ors [2019] 8 MLJ 8 (“Rozilawati’s case”) that as a matter of company law or the law of meetings, there is no mandatory requirement for a notice of directors meeting to …
Directors to take note: Changes under the Companies Act 2016
The Companies Act 2016 (“CA 2016”) of Malaysia repealed the Companies Act 1965 (“CA 1965”) with effect from 31 January 2017. The CA 2016 introduces some important changes relating to directors. This article highlights ten changes under the CA 2016, which directors should take note of. 1. Definition of Directors …