Shareholder Agreement Template Malaysia

Free Shareholder Agreement Template Malaysia

1. Document Preamble & Recitals

THIS SHAREHOLDER AGREEMENT (the "Agreement") is entered into and made effective as of this [Day] day of [Month], [Year] (the "Effective Date"), by and among:

1. [Company Name], a private company limited by shares incorporated under the laws of Malaysia, with its registered office at [Registered Address] (Company Registration No. [Registration Number]) (hereinafter referred to as the "Company");
2. [Shareholder 1 Legal Name] (NRIC/Passport No. [ID Number]), residing at [Residential Address] (hereinafter referred to as "Shareholder A"); and
3. [Shareholder 2 Legal Name] (NRIC/Passport No. [ID Number]), residing at [Residential Address] (hereinafter referred to as "Shareholder B").

(Shareholder A and Shareholder B are hereinafter collectively referred to as the "Shareholders" and individually as a "Shareholder".)

RECITALS:

WHEREAS: A. The Company was duly incorporated under the Companies Act 2016 of Malaysia on [Date of Incorporation] with an authorized and issued share capital of [Total Issued Share Capital] divided into [Number] ordinary shares. B. The Shareholders are the legal and beneficial owners of the issued and paid-up ordinary shares of the Company in the proportions set forth in Schedule A of this Agreement. C. The Parties wish to define their respective rights, duties, and obligations as shareholders of the Company, to regulate the management, operation, and control of the Company, and to provide for the orderly governance of corporate affairs and the transfer of shares, all in accordance with the laws of Malaysia.

NOW, THEREFORE, IT IS HEREBY AGREED as follows:

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2. Operational Definitions

For the purposes of this Agreement, except where the context otherwise requires, the following terms shall have the respective meanings ascribed to them below:

1. "Act" means the Companies Act 2016 (Act 777) of Malaysia, including any statutory modifications or re-enactments thereof for the time being in force.
2. "Board" means the Board of Directors of the Company for the time being.
3. "Business Day" means a day (excluding Saturdays, Sundays, and public holidays) on which commercial banks are open for general business in Kuala Lumpur, Malaysia.
4. "Confidential Information" means all information relating to the business, finances, technology, trade secrets, clients, operations, or affairs of the Company disclosed to or acquired by any Shareholder, whether orally, electronically, or in writing.
5. "Defaulting Shareholder" has the meaning ascribed to it in Clause 4.1.
6. "Director" means a director of the Company duly appointed from time to time pursuant to the Act and the Constitution.
7. "Fair Value" means the fair market value of the Shares as determined jointly by the Shareholders, or in the absence of agreement within fourteen (14) Business Days, by an independent firm of chartered accountants appointed by the President of the Malaysian Institute of Accountants (MIA).
8. "Force Majeure" means any event beyond the reasonable control of the affected Party, including acts of God, war, terrorism, civil commotion, pandemics, natural disasters, or statutory changes in Malaysian law.
9. "Malaysian Ringgit" or "RM" means the lawful currency of Malaysia.
10. "Shares" means the ordinary shares in the capital of the Company and any other securities convertible into or carrying rights to subscribe for ordinary shares.
11. "Transfer" means any sale, assignment, pledge, mortgage, encumbrance, gift, declaration of trust, or other disposition of any Share, whether voluntary or involuntary, by operation of law or otherwise.

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3. Substantive Terms & Obligations

3.1 Capital Contributions and Financing

1. Each Shareholder shall subscribe for and pay up the Shares in the amounts and proportions set forth in Schedule A in accordance with the calls made by the Board.
2. If the Company requires additional working capital, the Board may recommend a pro-rata call for shareholder advances or equity financing. No Shareholder shall be compelled to inject equity beyond their initial subscription unless unanimously agreed in writing.

3.2 Board Composition and Corporate Governance

1. The Board shall consist of up to [Number] Directors. Shareholder A shall be entitled to nominate [Number] Director(s), and Shareholder B shall be entitled to nominate [Number] Director(s).
2. A quorum for meetings of the Board shall consist of at least one (1) Director nominated by each Shareholder.
3. The quorum for any general meeting of the Shareholders shall be two (2) members present in person or by proxy, representing at least [Percentage]% of the voting shares.

3.3 Reserved Matters

Notwithstanding any provision of the Constitution to the contrary, the Company shall not take, execute, or commit to any of the actions listed in Schedule B without the prior unanimous written consent of all Shareholders.

3.4 Share Transfer Restrictions & Right of First Refusal

1. No Shareholder shall Transfer any Shares to any third party except in strict compliance with this Clause 3.4 and the Constitution of the Company.
2. If a Shareholder (the "Selling Shareholder") wishes to Transfer all or any part of their Shares, they shall first offer such Shares in writing (the "Offer Notice") to the non-selling Shareholders at the same price and on the same terms offered by the bona fide third-party purchaser.
3. Non-selling Shareholders shall have thirty (30) Business Days from receipt of the Offer Notice to elect to purchase all (but not less than all) of the offered Shares pro-rata to their existing shareholdings.

3.5 Representations and Warranties

Each Shareholder and the Company severally and jointly represents and warrants to the other Parties that:

1. They possess full legal capacity, power, and authority to enter into and perform their obligations under this Agreement;
2. The execution and performance of this Agreement do not violate any law, regulation, order, or contractual obligation to which they are bound; and
3. All Shares held by them are free and clear of any liens, encumbrances, equities, or third-party rights.

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4. Default, Termination, and Remedies

4.1 Events of Default

A Shareholder shall be deemed to be a "Defaulting Shareholder" if:

1. They commit a material breach of any term, covenant, or condition of this Agreement or the Constitution and fail to remedy such breach within thirty (30) Business Days of receiving written notice from a non-defaulting Shareholder specifying the breach and demanding its remedy;
2. An order is made, or an effective resolution is passed, for the winding up, liquidation, or judicial management of the Shareholder (other than for a solvent internal restructuring); or
3. They commit an act of bankruptcy, become insolvent, or make any composition or arrangement with their creditors.

4.2 Consequences of Default

Upon the occurrence of an Event of Default and the expiry of the thirty (30) Business Day cure period, the non-defaulting Shareholders may, by written notice to the Defaulting Shareholder, elect to:

1. Purchase all of the Defaulting Shareholder's Shares at a discount of twenty percent (20%) of the Fair Value, or the nominal value of the Shares, whichever is lower; and/or
2. Exercise all available legal remedies under Malaysian law to recover damages for losses sustained as a direct result of the breach.

4.3 Termination

This Agreement shall terminate automatically and immediately upon the occurrence of any of the following events:

1. The formal winding up, liquidation, or dissolution of the Company pursuant to the Act;
2. The acquisition of all issued Shares of the Company by a single entity or person; or
3. The written agreement of all Shareholders to terminate this Agreement.

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5. Boilerplate Legal Provisions

5.1 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable by any court of competent jurisdiction, such provision shall be severed to the extent of its invalidity, and the remaining provisions of this Agreement shall remain in full force and effect, provided that the fundamental basis of this Agreement is not altered.

5.2 Entire Agreement

This Agreement, together with its Schedules, constitutes the entire understanding and agreement between the Parties with respect to the subject matter hereof and supersedes all prior discussions, negotiations, representations, warranties, and agreements, whether oral or written.

5.3 Force Majeure

No Party shall be liable for any failure or delay in performing its obligations under this Agreement if such failure or delay arises from a Force Majeure event, provided that the affected Party gives prompt written notice to the other Parties and uses all commercially reasonable efforts to mitigate the effects thereof.

5.4 Governing Law and Jurisdiction

This Agreement shall be governed by, construed, and enforced in accordance with the laws of Malaysia. The Parties hereby irrevocably submit to the exclusive jurisdiction of the courts of Malaysia.

5.5 Dispute Resolution

Any dispute, controversy, or claim arising out of or relating to this Agreement, including its formation, breach, termination, or invalidity, shall first be settled through good-faith amicable negotiations between the Shareholders. If the dispute remains unresolved within thirty (30) Business Days, it shall be referred to arbitration in Kuala Lumpur, Malaysia, administered by the Asian International Arbitration Centre (AIAC) in accordance with the AIAC Arbitration Rules for the time being in force.

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6. Formal Execution Block

IN WITNESS WHEREOF, the Parties hereto have caused this Shareholder Agreement to be duly executed by their respective authorized signatories as of the Effective Date first written above.

THE COMPANY

[Company Name] (Company No. [Registration Number])

___________________________________________
Signature of Authorized Director
Name: `[Director Name]`
Title: `[Director Title]`
Date: `[Date]`

In the presence of:

Witness Signature: _______________________
Witness Name: `[Witness Name]`
Witness NRIC/Passport: `[Witness ID]`

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SHAREHOLDER A

[Shareholder 1 Legal Name]

___________________________________________
Signature of Shareholder A
NRIC/Passport No.: `[ID Number]`
Date: `[Date]`

In the presence of:

Witness Signature: _______________________
Witness Name: `[Witness Name]`
Witness NRIC/Passport: `[Witness ID]`

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SHAREHOLDER B

[Shareholder 2 Legal Name]

___________________________________________
Signature of Shareholder B
NRIC/Passport No.: `[ID Number]`
Date: `[Date]`

In the presence of:

Witness Signature: _______________________
Witness Name: `[Witness Name]`
Witness NRIC/Passport: `[Witness ID]`

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SCHEDULE A: Shareholding Structure

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SCHEDULE B: Reserved Matters Requiring Unanimous Board/Shareholder Consent

1. Altering, amending, or adding to the Constitution of the Company.
2. Increasing, reducing, sub-dividing, or consolidating the share capital of the Company, or issuing any new shares, options, warrants, or convertible securities.
3. Declaring or paying any dividend or making any distribution of profits.
4. Winding up, liquidating, placing into judicial management, or petitioning for the bankruptcy or insolvency of the Company.
5. Selling, leasing, licensing, or otherwise disposing of the whole or a substantial part of the undertaking, property, or assets of the Company.
6. Incurring any capital expenditure, borrowing, or financial indebtedness exceeding the sum of RM [Threshold Amount] outside the ordinary course of business.
7. Entering into any transaction, contract, or arrangement with any Shareholder, Director, or connected person on terms less favorable than arm's length.
8. Changing the core business scope, nature, or geographic focus of the Company.