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 …
High Court clarified simple majority required to pass ordinary resolution in writing
Section 291(1) of the Companies Act 2016 (“CA 2016”) provides that an ordinary resolution of members or a class of members of a company means a resolution passed by a simple majority of more than half of such members who are entitled to vote and do vote, whether in person …
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 …
The concept of disclosure letter in M&A
In a merger and acquisition (“M&A”) transaction, it is common for the seller to give representations and warranties about the subject matter of the sale, be it shares or assets to be disposed of by the seller. The representations and warranties given by the seller are for the purchaser’s benefits, …
Issues which may delay an IPO in Malaysia
A company which intends to undertake an initial public offering (“IPO”) and list on Bursa Malaysia Securities Berhad (“Applicant Company”) must undertake a due diligence exercise on the Applicant Company and its group of companies (collectively, “Group”). One of the objectives of the due diligence exercise is to ensure any …