Legal Requirements for Allotment of Shares in Malaysia
M&A transactions often involve allotment of shares in a company. Understanding the legal requirements for allotment of shares is essential to ensure compliance and avoid potential disputes over the validity of allotment of shares. The following are the key steps for allotment of shares under the Companies Act 2016 (CA) …
The ESG Challenge in M&A: Why It’s Harder Than You Think
1. Fragmented Laws ESG laws and regulations are fragmented, with no centralised framework. This makes tracking relevant requirements and ensuring compliance particularly challenging for companies. Conducting legal due diligence on ESG in M&A transactions which goes beyond obtaining a target company’s’ confirmation on compliance and getting real data may be …
ESG in legal due diligence for M&A transactions
As ESG considerations become increasingly prominent in the business landscape, it’s prudent to consider ESG in M&A legal due diligence. Below are the key legal requirements and corporate governance code to consider in relation to ESG in M&A legal due diligence: Environmental 1. Environmental Quality Act 1974 (EQA) The EQA, …
Three Purposes of Representations and Warranties in M&A SPAs
When I first started in M&A, I found drafting and negotiating representations and warranties to be one of the most daunting aspects of the process. These clauses, often included in a long schedule towards the end of the sale and purchase agreements, are usually closely scrutinised by both parties’ legal …
How to Prevent Earn-Out Disputes in M&A Deals
1. Set rules for how business should be managed after completion In M&A deals with earn-out provisions, sellers often continue to run the business of the target companies after completion. Sellers are incentivized to maximise the profits of the target companies to meet the performance targets for the earn-outs. However, …
What powers does a shareholder have after acquiring a minority stake in a company?
This question often arises when a purchaser considers acquiring a minority stake in a private company. Under the Companies Act 2016, shareholders with a minority stake in a private company have the following rights and powers: Minority stake Rights and powers At least 5% of the total voting rights …
Post-Completion Integration in M&A: Key Considerations
Ever had an M&A deal stretch over a year due to integration issues? I learned a few lessons from such an experience. Despite the simplicity of the transaction, negotiations were protracted, driven by approvals needed from various departments within the corporate buyer. The acquisition involved a larger corporation acquiring a …
Consider this when deciding whether to use earn-outs in M&A transactions
An earn-out bridges the gap between the seller’s and the purchaser’s perception of the value of a target company. If the target company achieves the agreed metrics or milestones, the seller stands to receive more than the initial purchase price. However, the incentive to be paid more (from the seller’s …
M&A: Start by Asking for the Reason
During initial discussions with clients who are seeking to undertake acquisitions, it is useful to start by asking their reason for acquiring a particular company or business. Understanding the underlying motivation behind the clients’ decision for their acquisitions helps to achieve the following: (a) direct focus to what matters most …
Three Legal Developments in Malaysia for M&A Transactions
If you’re interested in sale and purchase of shares of companies in Malaysia, three significant legal developments are worth noting: 1. Beneficial Ownership Reporting Requirements The Companies Act 2016 has been amended on 1 April 2024 to introduce beneficial ownership reporting requirements. Companies have a 3 months’ time frame from …