Shareholder Agreement Malaysia

Shareholder/Director Territory Matters: Issues that constitute reserve issues and the amount of vote required by shareholders/directors before such a decision is considered adopted. What is a shareholder contract? A shareholders` pact is a document involving several shareholders of a company, which details the results and concrete measures that are taken in the event of the departure of a shareholder of the company, whether voluntarily, involuntarily or when the company ceases operations. « Reserved questions » are a number of issues on which the company must vote unanimously in deciding. This clause would be particularly important for minority shareholders, as it protects guarantees against the rights of majority shareholders (which can most likely exceed all others at company meetings). Frequent examples of reserved business would be a change in the company`s activities, an increase in the company`s share capital (which would dilute everyone`s participation), the exercise of credit powers (. B for example, taking over a huge bank credit) or creating charges (for example. B the registration of a charge on the company`s assets). Can the management (directors) of a majority or majority company, for any reason, liquidate the shares of a small shareholder? PandaTip: This model of shareholder agreements defines the conditions for shareholder interaction and what happens when one or more of them want to leave the company or something happens that forces the exit of a shareholder or the closure of the company. Nevertheless, minority shareholders should also insist on the right to appoint at least 1 director of the company – although you may have no control over the company at the executive level, your representative on the board of directors would allow you to easily control the company`s activities and preserve your rights as a minority shareholder. A shareholders` pact is an agreement between the shareholders of a company that contains information about the rights, obligations and privileges granted to the shareholders of the company. It also explains how the company will be created and managed.

Shareholder agreements often minimize the impact of problems that can affect businesses, specifying how certain issues are handled and providing a way to resolve future disputes. Objective: the objective of the company is agreed in the shareholders` pact and any change of management usually requires liquidation by shareholders. However, this does not apply to several small limited companies in Malaysia. These companies generally have few shareholders. These shareholders are usually the directors of the company. In such cases, shareholder agreements are useful because all shareholders of the company must ensure that their rights have been properly protected, especially where the company`s statutes do not contain details on the protection of shareholder rights. This is especially the case if you are a minority shareholder of the company. Although the Companies Act 2016 offers some kind of protection to shareholders (for example. (b) derivatives transactions or the repression of minorities), these can give rise to long and costly litigation for all parties involved.

A dispute resolution clause may allow shareholders to decide for themselves how to resolve disputes. For example, the shareholders` pact may contain a compromise clause, which means that all disputes must be settled through arbitration and not through the courts. 1.1 The shareholders are all shareholders of the company, a company [STATE OF INCORPORATION] and are the sole directors and senior executives of the company.