Shareholders' Agreement

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