Corporate / M&A
Our Corporate / M&A Practice Group is one of the pioneer practice groups of its kind in Malaysia. We have crafted and worked on many transactions that have shaped the corporate and commercial landscape of this country.
We have also championed many firsts in this practice area. Our corporate practice is known in the market for our deep experience and proven ability to handle challenging and critical cutting-edge transactions and structuring work. We understand that corporations work in interconnected eco-systems and not in silos. To serve you better, we form seamless multi-disciplinary teams with other practice groups to deal with all pertinent issues to ensure your deals succeed.
Our clients include many highly respected foreign financial institutions, insurance companies and private equity firms as well as a broad base of loyal multinational clients, some of whom we have served for more than a decade. We frequently work closely with foreign law firms to ensure that our clients’ interests are secured, not only from a local perspective but also on a global level. Our lawyers have vast experience in international transactions as well as an intimate knowledge of many key industries.
The following are some of the matters this practice encompasses:
- Mergers and Acquisitions and Divestments
- Foreign Investment and Joint Ventures
- Private Equity
- Leveraged Buyouts
- Due Diligence
- Stock Exchange Listings and Securities Offerings
- Licensing and Regulatory Approvals/Advice
- Environmental Law
- Exchange Control Regulations
- Insurance and Financial Institutions Regulations
- Consumer Law
- Stamp Duty
- Insolvency and Liquidation
- Alternative Business Structures and Entities
- Compliance
- Corporate Advisory
- Corporate and Debt Restructuring
- Corporate Governance
- Automotive
- e-Commerce
- Logistics
- Microelectronics
- Education
- Solar
- Oil & Gas
- Infrastructure
What You Should Know — Malaysian Company Law, Governance & Transactions
Q1. What is the legal framework governing companies in Malaysia?
Companies in Malaysia are primarily governed by the Companies Act 2016 (CA 2016), which repealed and replaced the earlier Companies Act 1965. Key reforms introduced by the CA 2016 include the introduction of a single-director and single-shareholder company structure, removal of the requirement for private companies to hold annual general meetings, revised director duties and liabilities, and strengthened corporate governance standards.
All companies incorporated in Malaysia must register with and lodge returns/documents with the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia, or SSM). Listed companies are additionally subject to the Listing Requirements of Bursa Malaysia and oversight by the Securities Commission Malaysia (SC).
Q2. What are the duties and liabilities of directors under Malaysian law?
Directors owe both statutory duties under the Companies Act 2016 and fiduciary duties to the company. The principal duties are:
- Duty to act in good faith and in the best interests of the company (Section 213)
- Duty to exercise reasonable care, skill, and diligence (Section 213)
- Duty to avoid conflicts of interest and to disclose personal interests in transactions (Sections 219–221)
- Duty not to make improper use of position or information (Section 218)
Directors who breach these duties may be personally liable to the company. The CA 2016 also imposes personal liability on directors for fraudulent trading, failure to maintain proper accounting records, and other breaches. Directors of listed companies are subject to additional obligations under securities laws and Listing Requirements.
Q3. What is a shareholders' agreement and when is it necessary?
A shareholders' agreement is a private contract among the shareholders of a company governing their rights, obligations, and relationship beyond what is stated in the company's constitution.
While a shareholders' agreement is not legally required under the Companies Act 2016, it is strongly advisable for any company with more than one shareholder, particularly in joint ventures, private equity structures, or family businesses.
A well-drafted shareholders' agreement typically addresses shareholder obligations, management and decision-making, dividend distribution, share transfer restrictions, exit mechanisms, and dispute resolution procedures.
Q4. What steps are involved in a corporate restructuring in Malaysia?
Corporate restructuring in Malaysia may take several forms, including internal group reorganisations, mergers, schemes of arrangement, and financial restructuring.
- Identify required legal and regulatory approvals.
- Conduct legal, financial, and tax due diligence.
- Structure the transaction and prepare documentation.
- Obtain board and shareholder approvals.
- Make necessary regulatory filings.
- Complete post-restructuring implementation requirements.
The timeline and complexity depend on the nature of the business, the entities involved, and applicable regulatory requirements.
Q5. What are the rules on foreign equity ownership in Malaysian companies?
Malaysia has progressively liberalised its foreign equity ownership framework, and in many sectors foreign investors may hold up to 100% equity in a Malaysian company.
However, certain sectors retain equity participation requirements, including specific manufacturing sub-sectors, media and broadcasting, and businesses participating in government procurement subject to Bumiputera equity conditions.
Given that requirements vary by sector and may change over time, legal advice should be obtained early to identify applicable conditions, approval requirements, and timelines.
Q6. What is the significance of Section 17A of the MACC Act for businesses?
Section 17A of the Malaysian Anti-Corruption Commission Act 2009 (MACC Act), which came into force on 1 June 2020, introduced corporate liability for corruption.
A commercial organisation may be guilty of an offence if a person associated with it, including a director, partner, employee, or agent, corruptly provides or offers gratification for the benefit of the organisation.
The only statutory defence is to demonstrate that adequate procedures were in place to prevent corruption. Therefore, maintaining a documented and operational anti-corruption compliance programme is a legal necessity, not merely best practice.
The information above is provided for general reference only and does not constitute legal advice. Corporate and commercial matters are highly fact-specific and the applicable law is subject to change. If you have a specific matter you wish to discuss, please contact Shearn Delamore & Co to arrange a consultation with the relevant practice group.
