M&A: Minority shareholders’ protection

Image by Clker-Free-Vector-Images from Pixabay
Linkedin Post

Today’s post is about provisions in shareholders’ agreement for the benefit of minority shareholders.

It is common to have a shareholders’ agreement when an M&A transaction results in more than one shareholder in the target company.

Some provisions to include in a shareholders’ agreement for the benefit of a minority shareholder include:

1.      The minority shareholder to have board representation. This includes the right to appoint and remove director(s) nominated by the minority shareholder.

2.      The minority shareholder to have the first right of refusal in the event the majority shareholder intends to dispose the majority shareholder’s shares.

3.      The minority shareholder to have tag along rights in the event of disposal of the majority shareholder’s shares to a third party.

4.      Have a list of board reserved matters, which cannot be passed without unanimous consent of the board of directors or without the vote of the director nominated by the minority shareholder.

5.      Have a list of shareholders reserved matters, which cannot be passed without unanimous consent of all shareholders or without the minority shareholder’s vote.

6.      The minority shareholder to have a representative as a bank account signatory to authorise bank transactions which exceed certain threshold.

#malaysiancorporatelawyer
#shareholdersagreement
#mergersandacquisitions

This post was first posted on Linkedin on 27 April 2023.

Company Law
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) …

Due Diligence
The Mind That Never Rests

What does a corporate transactional lawyer do while waiting in the lift, at a restaurant counter or for coffee at a café? I read the licenses on display, check their validity periods, and scan for conditions. When I see certificates on the walls, I can’t help but examine them too. …

Lawyering
Learning to Appreciate the Small Things

One afternoon, I walked into the office, feeling unsettled after a discussion with another adviser. As I took my laptop from my bag and placed it on my desk, something caught my eye-a small handmade paper box, stapled at the sides, neatly holding some binder clips. The day before, I …