Contract Of Sale Of Shares Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that documents the terms and conditions for the sale and purchase of shares in a company. The agreement complies with the Malaysian Companies Act 2016 and other relevant legislation, detailing the transaction specifics including share price, payment terms, warranties, and completion mechanics. It incorporates necessary provisions for regulatory compliance, tax considerations, and includes customary protections for both seller and purchaser while addressing specific Malaysian legal requirements such as stamp duty obligations and any relevant securities regulations.

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What is a Contract Of Sale Of Shares?

The Contract Of Sale Of Shares is a fundamental document in Malaysian corporate transactions, used when transferring ownership of shares from one party to another. It is essential for both private and public company share transfers, though specific requirements may vary. The agreement must comply with Malaysian legislation, particularly the Companies Act 2016, Capital Markets and Services Act 2007, and Stamp Act 1949. This document is typically used in scenarios ranging from simple transfers between individual shareholders to complex corporate acquisitions. It includes crucial elements such as purchase price, payment terms, warranties and representations, conditions precedent, and completion mechanics. The agreement also addresses Malaysian-specific requirements such as stamp duty obligations, securities regulations, and any necessary regulatory approvals.

What sections should be included in a Contract Of Sale Of Shares?

1. Parties: Identifies and defines the Seller(s) and Purchaser(s) with their full legal details

2. Background: Recitals explaining the context of the transaction and basic information about the company whose shares are being sold

3. Definitions and Interpretation: Defines key terms used throughout the agreement and sets out interpretation rules

4. Sale and Purchase: Core transaction terms including the number and class of shares being sold

5. Purchase Price: Specifies the consideration amount and payment terms

6. Conditions Precedent: Conditions that must be satisfied before completion can occur

7. Pre-Completion Obligations: Parties' obligations between signing and completion, including conduct of business requirements

8. Completion: Details of the completion process, timing, and deliverables

9. Warranties and Representations: Seller's warranties about the shares, company, and business

10. Limitations on Claims: Limitations on warranty claims including time limits and financial thresholds

11. Confidentiality: Obligations regarding transaction confidentiality and public announcements

12. Notices: Process and requirements for formal notices under the agreement

13. General Provisions: Standard boilerplate clauses including governing law, assignment, and entire agreement

14. Execution: Signature blocks and execution formalities

What sections are optional to include in a Contract Of Sale Of Shares?

1. Regulatory Approvals: Required when the transaction needs specific regulatory clearances

2. Tax Covenant: Detailed tax indemnities, used for larger transactions or where specific tax risks exist

3. Non-Competition: Restrictions on seller's future activities, used when seller could compete with the business

4. Employee Matters: Specific provisions regarding key employees or employee arrangements

5. Intellectual Property: Specific provisions for companies where IP is a crucial asset

6. Post-Completion Adjustments: Mechanisms for price adjustments based on completion accounts

7. Earn-out Provisions: Used when part of purchase price is contingent on future performance

8. Break Fee: Provisions for payment if the deal fails to complete, used in larger transactions

What schedules should be included in a Contract Of Sale Of Shares?

1. Share Details: Details of the shares being sold including share certificates numbers and share history

2. Company Information: Key details about the company including corporate information and structure

3. Warranties: Detailed warranties about the company, business, and shares

4. Properties: Details of company's real estate assets and leases

5. Material Contracts: List and details of key business contracts

6. Intellectual Property: Schedule of company's IP rights and registrations

7. Completion Deliverables: List of documents and items to be delivered at completion

8. Disclosed Matters: Specific disclosures against the warranties

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use

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