Shareholder Contract Template for Malaysia

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Key Requirements PROMPT example:

Shareholder Contract

"I need a Shareholder Contract for a Malaysian technology startup with three equal shareholders, including tag-along rights and specific provisions for future funding rounds, to be implemented by March 2025."

What is a Shareholder Contract?

The Shareholder Contract serves as a fundamental governance document for companies registered in Malaysia, establishing the legal framework for shareholder relationships and corporate governance. This agreement is essential when two or more parties hold shares in a Malaysian company, whether in a start-up, family business, or established corporation. It addresses key aspects regulated by the Companies Act 2016 and other Malaysian legislation, including share transfers, management rights, dividend policies, and dispute resolution. The document is particularly crucial during company formation, new shareholder entry, or when formalizing existing shareholder arrangements. It provides clarity on voting rights, share transfer restrictions, pre-emptive rights, and protection mechanisms for both majority and minority shareholders, while ensuring compliance with Malaysian corporate law requirements.

What sections should be included in a Shareholder Contract?

1. Parties: Identification of all shareholders and the company entering into the agreement

2. Background: Context of the agreement, including company details and purpose of the arrangement

3. Definitions and Interpretation: Key terms used throughout the agreement and rules for interpretation

4. Share Capital and Shareholders: Details of share capital structure, shareholding percentages, and classes of shares

5. Management and Control: Board composition, appointment rights, and decision-making processes

6. Shareholders' Meetings: Procedures for calling and conducting shareholders' meetings, voting rights

7. Reserved Matters: Decisions requiring special majority or unanimous shareholder approval

8. Transfer of Shares: Restrictions on share transfers and process for permitted transfers

9. Pre-emptive Rights: Right of first refusal for existing shareholders on share transfers

10. Tag-Along and Drag-Along Rights: Rights of shareholders to join in or be forced to join in share sales

11. Dividend Policy: Framework for declaration and distribution of dividends

12. Confidentiality: Obligations to maintain confidentiality of company information

13. Dispute Resolution: Process for resolving disputes between shareholders

14. Governing Law and Jurisdiction: Specification of Malaysian law as governing law and jurisdiction

What sections are optional to include in a Shareholder Contract?

1. Anti-Dilution Rights: Protection for shareholders against dilution in future funding rounds, relevant for companies planning future capital raises

2. Share Valuation: Methods for valuing shares in various circumstances, important for companies without readily marketable shares

3. Non-Compete and Non-Solicitation: Restrictions on shareholders competing with the company, relevant when shareholders are also involved in management

4. Intellectual Property Rights: Provisions dealing with IP ownership and development, crucial for technology or innovation-focused companies

5. Exit Mechanisms: Procedures for IPO, trade sale, or other exit events, important for companies with planned exit strategies

6. Dead-Lock Resolution: Specific procedures for resolving management dead-locks, crucial for 50-50 joint ventures

7. Put and Call Options: Rights to force sale or purchase of shares in specific circumstances

8. Additional Funding Obligations: Requirements for shareholders to provide additional funding, relevant for growing companies

What schedules should be included in a Shareholder Contract?

1. Schedule 1: Details of the Company: Company registration details, share capital structure, and current shareholdings

2. Schedule 2: Deed of Adherence: Template for new shareholders to agree to be bound by the agreement

3. Schedule 3: Reserved Matters List: Detailed list of matters requiring special approval

4. Schedule 4: Share Valuation Methodology: Detailed methods and procedures for share valuation

5. Schedule 5: Business Plan: Initial business plan and strategy of the company

6. Schedule 6: Key Performance Indicators: Metrics for measuring company and management performance

7. Appendix A: Board Regulations: Detailed procedures for board meetings and decision-making

8. Appendix B: Share Transfer Procedures: Detailed procedures and forms for share transfers

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

Clauses
Relevant Industries

Technology and Start-ups

Manufacturing

Financial Services

Real Estate

Healthcare

Retail and Consumer

Professional Services

Energy and Resources

Agriculture

Education

Construction

Transportation and Logistics

Media and Entertainment

Telecommunications

Relevant Teams

Legal

Corporate Secretarial

Finance

Compliance

Risk Management

Corporate Development

Investment Relations

Board Secretariat

Corporate Strategy

Corporate Communications

Executive Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Investment Manager

Board Director

Compliance Officer

Corporate Governance Officer

Business Development Director

Risk Manager

Managing Director

Finance Director

Shareholder Relations Manager

Investment Analyst

Corporate Advisory 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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