Description
- A Shareholders' Agreement is a legally binding contract between the shareholders of a company, outlining their rights, responsibilities, and obligations. It governs how the company will be managed, how shares can be transferred, and how disputes among shareholders will be resolved, ensuring the smooth operation of the business.
GOV Department
- Suruhanjaya Syarikat Malaysia (SSM) / Companies Commission of Malaysia
License Name (Malay)
- Perjanjian Pemegang Saham
Details
- Covers key aspects such as voting rights, decision-making processes, profit-sharing, and dividend distribution.
- Includes terms for the sale or transfer of shares, including pre-emption rights and restrictions.
- Protects minority shareholders by outlining their rights and ensuring fair treatment.
- Establishes procedures for handling disputes, deadlocks, and changes in management.
- Ensures compliance with the Companies Act 2016 and the company’s constitution.
Important Rules
- The agreement must be agreed upon and signed by all shareholders to be enforceable.
- Terms should align with the company’s constitution and applicable laws.
- Share transfer terms, such as rights of first refusal or buyout clauses, must be clearly defined.
- Disputes or deadlocks must be resolved using the mechanisms outlined in the agreement.
- Amendments to the agreement require unanimous consent from all shareholders.
Compound & Punishment
- Failure to formalize a shareholders’ agreement may lead to:
- Misunderstandings or disputes regarding shareholder roles and rights.
- Legal action if conflicts arise and no clear resolution mechanism is in place.
- Breach of the agreement may result in:
- Financial penalties or compensation claims by the aggrieved party.
- Possible loss of shareholder rights, such as voting privileges or profit-sharing.
Advisor
Penny Lim , Legal Consulting
Ms. Penny is responsible for identifying possible legal issues and implementing solutions in the areas of government regulation, customer protection, and fair employment. Legal Counsel. Ms. Penny can advise on legal issues such as government and business permits, review legal documents before signing them, and complete legal research as needed by the company
Commonly Asked Questions
A Shareholders’ Agreement is a legally binding contract between a company’s shareholders that defines their rights, responsibilities, and obligations, ensuring smooth management and fair treatment of all parties.
It prevents disputes by clearly outlining voting rights, profit distribution, share transfer rules, and procedures for resolving conflicts among shareholders.
All shareholders of a private or public company should have a formal agreement to safeguard their interests, especially in joint ventures or companies with multiple investors.
Typical terms include voting rights, dividend distribution, share transfer restrictions, pre-emption rights, minority shareholder protections, dispute resolution, and deadlock procedures.
Yes. Once signed by all shareholders, it is enforceable under the Companies Act 2016 and aligned with the company’s constitution.
Yes. It can include specific clauses that safeguard minority shareholders’ rights and ensure fair treatment in decision-making and profit distribution.
The breaching shareholder may face financial penalties, compensation claims, or loss of certain rights, such as voting privileges or profit entitlements.
Yes. It can include pre-emption rights, buyout clauses, and restrictions on share sales to maintain control and protect shareholder interests.
Disputes are handled through mechanisms outlined in the agreement, which may include negotiation, mediation, arbitration, or specific buyout procedures.
Yes. All shareholders must agree in writing to any changes to ensure the agreement remains enforceable and legally binding.