Stock Subscription Agreement for Malaysia

Stock Subscription Agreement Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that documents the terms and conditions under which an investor (subscriber) agrees to purchase newly issued shares in a company. The agreement complies with the Malaysian Companies Act 2016 and relevant securities regulations, detailing the number of shares, price per share, payment terms, warranties, and conditions precedent. It includes important provisions for regulatory compliance, subscriber rights, and company obligations, while incorporating necessary protections for both the issuing company and the subscriber.

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What is a Stock Subscription Agreement?

A Stock Subscription Agreement is a crucial document used in Malaysian corporate transactions when a company wishes to issue new shares to investors. It serves as the primary legal instrument for documenting share subscriptions, whether for startup funding, capital raising, or strategic investment purposes. The agreement must comply with Malaysian legal requirements, particularly the Companies Act 2016 and Capital Markets and Services Act 2007. It typically includes essential details such as share price, number of shares, payment terms, conditions precedent, warranties, and representations. This document is fundamental for both private and public companies in Malaysia seeking to expand their capital base, bring in new investors, or facilitate strategic partnerships through share issuance.

What sections should be included in a Stock Subscription Agreement?

1. Parties: Identification of the Company issuing shares and the Subscriber(s)

2. Background: Recitals explaining the context of the agreement and the company's authorization to issue shares

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

4. Subscription and Allotment: Core terms of the share subscription including number of shares, price per share, and payment terms

5. Conditions Precedent: Conditions that must be satisfied before the subscription becomes effective

6. Completion: Details of the completion process, timing, and actions required by each party

7. Company's Warranties and Representations: Warranties about the company's status, share capital, and authority to issue shares

8. Subscriber's Warranties and Representations: Warranties about the subscriber's capacity, authority, and funding sources

9. Covenants: Ongoing obligations of both parties

10. Confidentiality: Provisions regarding the confidential treatment of information

11. Notices: Process for formal communications between parties

12. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement

13. Execution: Signature blocks and execution formalities

What sections are optional to include in a Stock Subscription Agreement?

1. Tag-Along Rights: Include when minority shareholders need protection in case of majority share sales

2. Drag-Along Rights: Include when majority shareholders need the right to force minority shareholders to join in a sale

3. Anti-Dilution Protection: Include when subscribers need protection against future share issuances at lower valuations

4. Board Appointment Rights: Include when the subscription gives rights to appoint directors

5. Regulatory Compliance: Include specific section when dealing with regulated industries or when specific regulatory requirements apply

6. Foreign Investment Provisions: Include when subscribers are foreign entities requiring compliance with FIC guidelines

7. Share Transfer Restrictions: Include when there are specific restrictions on transfer of subscribed shares

8. Pre-emptive Rights: Include when existing shareholders should have first right to purchase future share issuances

What schedules should be included in a Stock Subscription Agreement?

1. Share Capital Structure: Details of the company's share capital before and after the subscription

2. Subscription Details: Detailed breakdown of shares being subscribed, including class, rights, and price

3. Conditions Precedent Checklist: List of all conditions to be satisfied before completion

4. Completion Checklist: List of all documents and actions required at completion

5. Form of Board Resolutions: Template board resolutions approving the share issuance

6. Warranties: Detailed list of warranties given by the company

7. Disclosure Letter: Company's disclosures against the warranties

8. Shareholders' Agreement Term Sheet: If applicable, key terms of the shareholders' agreement to be entered into

9. Required Regulatory Approvals: List of necessary regulatory approvals and their status

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

Financial Services

Manufacturing

Real Estate

Healthcare

E-commerce

Renewable Energy

Biotechnology

Infrastructure

Agriculture

Education

Telecommunications

Mining

Retail

Professional Services

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Corporate Development

Investment

Treasury

Risk Management

Executive Leadership

Board of Directors

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

General Counsel

Legal Counsel

Investment Manager

Corporate Finance Manager

Compliance Officer

Company Director

Finance Director

Investment Analyst

Due Diligence Officer

Corporate Development Manager

Venture Capital Associate

Private Equity Manager

Investment Banking Associate

Industries
Companies Act 2016: The primary legislation governing company formation, share issuance, corporate governance, and shareholders' rights in Malaysia. Particularly relevant for share allotment procedures and statutory requirements.
Capital Markets and Services Act 2007: Regulates securities offerings and trading in Malaysia. Important for ensuring compliance with securities laws, especially if the subscription involves public offerings or regulated activities.
Contracts Act 1950: Provides the legal framework for contract formation and enforcement in Malaysia, including essential elements like offer, acceptance, and consideration.
Securities Commission Act 1993: Establishes the regulatory framework for securities and provides powers to the Securities Commission to oversee share issuances and protect investors.
Income Tax Act 1967: Relevant for tax implications of share subscriptions, including stamp duty and potential tax liabilities for both issuer and subscriber.
Foreign Investment Committee Guidelines: Important if the subscription involves foreign investors, as it sets out rules and restrictions on foreign ownership in Malaysian companies.
Malaysian Code on Corporate Governance: While not legislation per se, these guidelines are important for listed companies and best practices in share issuance and corporate governance.
Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001: Relevant for due diligence requirements and verification of subscription funds' sources.
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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