Acquisition of a company usually occurs by acquiring the entire business, or by acquiring shares from the company.
If we are talking about buying a ready-made business in Malaysia, this can be done quite quickly and without unnecessary cash and time losses. The main thing is to draw up all the necessary documents in a timely and professional manner. This is due to the fact that the smallest errors in the provided set of papers can cause trouble.
As a rule, the process of acquiring a business in Malaysia is designed by the following scheme:
- the parties draw up and sign a memorandum of understanding, a protocol of intent, a confidentiality agreement and other similar preliminary documents that clearly express the intention and understanding of the essence of the transaction by the parties;
- the buyer conducts a thorough legal, financial and tax examination of the company;
- final versions of agreements are agreed upon;
- final transaction documents are drawn up and signed;
- the deal is finalized.
The timing of the purchase of a ready-made company in Malaysia may vary depending on factors such as the size of the target company, the complexity of the transaction, and the approval of local regulatory authorities.
Buying company shares in Malaysia
If in many countries, when organizing business, the number of shares of a foreign investor and representative of a country should be distributed 50% to 50%, then in Malaysia it’s different. To attract its indigenous people to business, the government in many cases increases the interest rate of a foreign investor to 70%. Here the local word “bumiputra” should be explained. Bumiputra are people who have Malaysian citizenship and profess Islam. And if you take a person with the status of bumiputra into your business, then his share can be 30%, and the share of a foreign investor may be 70%.
An agreement to purchase an asset in Malaysia will include a clause on ownership in which it is considered that the legal and beneficial ownership of the business assets has been transferred to the buyer.
If the purchased assets include land, then confirmation of the name of the buyer in the register of title documents is necessary. Only in this way can you prove that the ownership of land in Malaysia belongs to the buyer as the owner.
Expatriates in Malaysia are allowed to possess 100% of company shares in the following areas:
- manufacturing industry,
- deliveries of products in regional distribution centers, headquarters and intercontinental centers,
- research and development projects.
Expatriates can buy a company’s shares in Malaysia only partially if the target company belongs to the following areas:
- oil and gas industry - at least 70% of the company's shares should remain in the possession of local shareholders;
- logistics - at least 51% of the shares;
- big retail networks - at least a 30% stake;
- insurance - at least a 30% stake;
- tourism - companies engaged in the foreign tourism business are required to maintain a 100% stake.
If you intend to buy a ready-made company in Malaysia or buy shares in a Malaysian company, do not hesitate to contact the profile specialists of IQ Decision UK for legal advice. To avoid mistakes in this process, you can order a one-on-one consultation on legal framework of buying a business in Malaysia.