A Share Sale Agreement is a legally binding contract that governs the sale and purchase of shares in a company. Such agreements are commonly used for ownership transfers of private limited companies, especially when a business owner exits or a new investor comes in. A properly structured Share Sale Agreement helps protect both parties’ interests, manage legal risks, and ensure a smooth transaction.
As a business lawyer in Malaysia, we assist clients in preparing Share Sale Agreements that reflect their commercial arrangements and align with sound practices of corporate law in Malaysia.
Key Clauses in a Share Sale Agreement
Some of the key clauses commonly found in a share sale agreement are as follows:
- Purchase Price and Payment Terms
How the purchase price will be paid — lump sum, instalments, or conditional on milestones.
- Conditions Precedent
Conditions that must be satisfied before the sale can proceed, such as board or shareholder approval, regulatory clearance, and completion of due diligence (whichever is required).
- Warranties and Representations
Sellers provide assurances on matters like the company’s financials, ownership of shares, and absence of undisclosed liabilities.
- Indemnities
The seller may indemnify the buyer for losses arising from breaches of warranty or specific known risks.
- Completion and Share Transfer
The steps to complete the sale, including delivery of share certificates, board resolutions, and execution of the transfer forms.
Stamp Duty Requirements
In Malaysia, stamp duty applies to both the Share Sale Agreement and the instrument of transfer (i.e., the Form of Transfer of Securities under Section 105 of the Companies Act 2016). The Share Sale Agreement is subject to a nominal stamp duty of RM10, with an additional RM10 for each duplicate. The share transfer form attracts ad valorem duty at 0.3% of the purchase price or market value, whichever is higher. The share transfer form must be duly stamped before the company can register the transfer and issue a new share certificate.
Why Legal Support Matters
Whether you’re acquiring shares, selling shares or onboarding new shareholders, working with a qualified business lawyer in Malaysia ensures that your transaction is smooth and legally sound. Our team advises on, reviews and drafts Share Sale Agreements tailored to your commercial needs, in line with the requirements of corporate law in Malaysia.
Need Help?
Contact us to speak with a trusted business lawyer in Malaysia for your share sale, investment, or corporate transaction.
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