Preferred Stock Purchase Agreement for Malaysia

Preferred Stock Purchase Agreement Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that outlines the terms and conditions for the purchase of preferred stock in a company. This document details the rights, preferences, and privileges attached to the preferred shares, including dividend rights, liquidation preferences, voting rights, and potential conversion features. It incorporates specific requirements under the Malaysian Companies Act 2016 and relevant securities regulations, ensuring compliance with local corporate and investment laws while protecting both the issuing company's and investors' interests through detailed representations, warranties, and covenants.

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What is a Preferred Stock Purchase Agreement?

The Preferred Stock Purchase Agreement is a crucial document used in Malaysian corporate transactions when a company seeks to raise capital by issuing preferred shares to investors. This agreement is particularly common in venture capital and private equity investments, where investors require certain preferential rights and protections. The document must comply with Malaysian Companies Act 2016 and relevant securities regulations, making it essential for both domestic and international investment transactions in Malaysia. It comprehensively covers share purchase terms, investor rights, company obligations, and closing conditions, while incorporating specific Malaysian legal requirements and market practices. The agreement typically includes detailed provisions on dividend rights, liquidation preferences, anti-dilution protection, and governance rights, making it a fundamental tool for structuring sophisticated investment transactions in the Malaysian market.

What sections should be included in a Preferred Stock Purchase Agreement?

1. Parties: Identification of the Company and the Purchaser(s)

2. Background: Context of the transaction and purpose of the agreement

3. Definitions: Defined terms used throughout the agreement

4. Purchase and Sale of Preferred Stock: Core transaction terms including number of shares, price per share, and aggregate purchase price

5. Closing; Delivery: Timing and mechanics of the transaction closing

6. Representations and Warranties of the Company: Company's statements about its business, financial condition, and authority to enter into the transaction

7. Representations and Warranties of the Purchaser: Purchaser's statements about their authority and eligibility to invest

8. Covenants: Ongoing obligations of the parties

9. Rights, Preferences and Privileges: Specific rights attached to the preferred shares including dividend rights, liquidation preferences, and voting rights

10. Conditions to Closing: Prerequisites that must be satisfied before the transaction can close

11. Miscellaneous: Standard legal provisions including governing law, notices, amendments, and counterparts

What sections are optional to include in a Preferred Stock Purchase Agreement?

1. Anti-dilution Protection: Provisions protecting preferred stockholders from dilution in future rounds

2. Conversion Rights: Terms governing conversion of preferred stock to common stock

3. Registration Rights: Rights related to future public offerings or stock registration

4. Board Representation: Rights of preferred stockholders to appoint board members

5. Preemptive Rights: Rights to participate in future financing rounds

6. Tag-Along Rights: Rights to participate in sales by other shareholders

7. Drag-Along Rights: Ability to force other shareholders to join in a sale

8. Information Rights: Rights to receive financial and other company information

What schedules should be included in a Preferred Stock Purchase Agreement?

1. Schedule A - Schedule of Purchasers: List of purchasers with their respective investment amounts and share allocations

2. Schedule B - Company Capitalization: Detailed breakdown of company's capital structure pre- and post-investment

3. Schedule C - Rights, Preferences and Privileges: Detailed terms of the preferred stock

4. Schedule D - Company Disclosure Schedule: Exceptions to company representations and warranties

5. Appendix 1 - Form of Legal Opinion: Template for legal opinion to be delivered at closing

6. Appendix 2 - Form of Directors' Resolution: Template for board approval of the transaction

7. Appendix 3 - Form of Shareholders' Resolution: Template for any required shareholder approvals

8. Appendix 4 - Compliance Certificate: Form certifying compliance with closing conditions

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 | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Genie AI

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Technology

Biotechnology

Financial Services

E-commerce

Healthcare

Manufacturing

Renewable Energy

Real Estate

Consumer Products

Software and IT

Telecommunications

Education Technology

Digital Infrastructure

Retail

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Executive Leadership

Investment

Corporate Secretarial

Risk Management

Corporate Strategy

Treasury

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

General Counsel

Corporate Secretary

Investment Director

Venture Capital Partner

Private Equity Manager

Corporate Lawyer

Investment Banker

Financial Controller

Compliance Officer

Board Director

Investment Manager

Corporate Development Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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