Shareholder Agreement Sample Malaysia

SHAREHOLDER AGREEMENT SAMPLE MALAYSIA

1. DOCUMENT PREAMBLE & RECITALS

THIS SHAREHOLDER AGREEMENT (the "Agreement") is entered into and made effective as of this _____ day of _________, 20 (the "Effective Date"), by and among:

PARTIES:

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

(The Shareholders and the Company are hereinafter collectively referred to as the "Parties" and individually as a "Party").

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 [Total Number of Shares] ordinary shares. B. The legal and beneficial ownership of the existing issued shares of the Company as of the Effective Date is as set forth in Schedule A hereto. C. The Parties wish to define their respective rights, duties, and obligations as shareholders of the Company, to provide for the orderly management and control of the Company, and to regulate certain aspects of the relationship between the Shareholders and the governance of the Company pursuant to the terms and conditions set forth herein.

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 meanings ascribed to them below:

1. "Act" means the Companies Act 2016 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, intellectual property, customers, and operational strategies of the Company disclosed by one Party to another Party pursuant to this Agreement.
5. "Defaulting Shareholder" has the meaning ascribed thereto in Clause 4.1.
6. "Encumbrance" means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, encumbrance, security interest, option, right of pre-emption, or third-party right of any kind whatsoever.
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 certified public accountant or registered valuer appointed jointly by the disputing Parties, or failing such agreement, 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, pandemic, epidemic, government restrictions, or natural disasters, which renders performance commercially impracticable.
9. "Indebtedness" means all obligations of the Company for borrowed money, deferred purchase price of property, or financial liabilities secured by liens.
10. "Malaysian Ringgit" or "RM" means the lawful currency of Malaysia.
11. "Shares" means the ordinary shares in the capital of the Company and any other securities issued in substitution or exchange therefor.
12. "Shareholder" means any registered holder of Shares from time to time who is a party to this Agreement or has acceded hereto.
13. "Transfer" means any sale, assignment, transfer, conveyance, gift, pledge, encumbrance, or disposal of any legal or beneficial interest in any Share, whether voluntarily or by operation of law.

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3. SUBSTANTIVE TERMS & OBLIGATIONS

3.1 Governance and Board Composition

1. The management and control of the business and affairs of the Company shall be vested in the Board, which shall consist of up to [Number] directors.
2. Each Shareholder holding not less than [Percentage] percent (%) of the total issued Shares shall be entitled to nominate, appoint, remove, and replace [Number] director(s) to the Board by notice in writing delivered to the Company.
3. The quorum for meetings of the Board shall be [Number] directors present in person or via approved telecommunication conferencing facilities, including at least one (1) nominee of each major Shareholder.

3.2 Reserved Matters

1. Notwithstanding any provision of the Act or the Constitution of the Company, the Company shall not, and the Board shall not permit the Company to, undertake or commit to any of the matters set forth in Schedule B (the "Reserved Matters") without the prior affirmative written consent of Shareholders holding at least [Percentage] percent (%) of the total voting Shares.

3.3 Financial Commitments and Funding

1. The Shareholders shall provide financial support to the Company in proportion to their respective shareholding percentages in the form of equity or shareholder advances, as and when determined necessary by the Board to meet working capital requirements up to an aggregate ceiling of RM[Dollar Amount].
2. Any shareholder advance shall bear interest at the rate of [Interest Rate] per annum, unless otherwise agreed unanimously in writing by the Board.

3.4 Restrictions on Transfer of Shares

1. Except as expressly provided for under this Agreement, no Shareholder shall Transfer any Shares without the prior written consent of all other Shareholders.
2. Right of First Refusal (ROFR): If any Shareholder (the "Selling Shareholder") wishes to Transfer any Shares, they shall first offer such Shares (the "Offer Shares") to the non-selling Shareholders pro rata to their existing shareholdings, at the same price and upon the same terms and conditions as offered by a bona fide third-party purchaser.

3.5 Representations and Warranties

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

1. It has full corporate power and authority to enter into, execute, and perform its obligations under this Agreement.
2. The execution and delivery of this Agreement do not and will not violate any provision of its constituent documents, any law, regulation, or court order applicable to it.
3. This Agreement constitutes valid, legal, and binding obligations enforceable against it in accordance with its terms.

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4. DEFAULT, TERMINATION, AND REMEDIES

4.1 Events of Default

An event of default (an "Event of Default") shall occur with respect to any Shareholder (the "Defaulting Shareholder") if:

1. Such Shareholder commits a material breach of any term, covenant, or warranty of this Agreement and fails to remedy such breach within thirty (30) Business Days of receiving written notice from a non-defaulting Shareholder specifying the breach and requiring its remedy.
2. An order is made, or an effective resolution is passed, for the winding up, liquidation, or judicial management of such Shareholder (otherwise than for the purpose of a solvent reconstruction or amalgamation).
3. Such Shareholder commits an act of bankruptcy, becomes insolvent, compounds with its creditors, or has a receiver or manager appointed over the whole or any substantial part of its assets.

4.2 Remedies upon Default

Upon the occurrence of an Event of Default which remains uncured after the expiration of the thirty (30) Business Day notice period:

1. The non-defaulting Shareholders shall have the option, exercisable by written notice to the Defaulting Shareholder, to require the Defaulting Shareholder to sell all (but not part) of its Shares to the non-defaulting Shareholders at a purchase price equal to eighty percent (80%) of the Fair Value of the Shares, or the nominal value thereof, whichever is lower.
2. The Defaulting Shareholder shall forfeit all voting rights, information rights, and dividend entitlements under this Agreement and the Constitution of the Company until the Defaulting Shareholder's Shares are fully Transferred pursuant to this Clause 4.2.
3. The non-defaulting Shareholders reserve all legal and equitable remedies available under the laws of Malaysia, including specific performance and claims for damages.

4.3 Termination

This Agreement shall terminate automatically and be of no further force and effect upon the occurrence of any of the following events:

1. The winding up, liquidation, or dissolution of the Company pursuant to a special resolution of the Shareholders or an order of a court of competent jurisdiction in Malaysia.
2. The listing and quotation of all the Shares of the Company on Bursa Malaysia Securities Berhad or any other recognized stock exchange.
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 or tribunal of competent jurisdiction, such provision shall be severed to the extent of its invalidity or unenforceability, and the remaining provisions of this Agreement shall remain in full force and effect as if this Agreement had been executed without the invalid, illegal, or unenforceable provision.

5.2 Entire Agreement

This Agreement, together with the Schedules hereto, constitutes the entire agreement and understanding between the Parties concerning the subject matter hereof and supersedes all prior oral or written agreements, understandings, or representations relating thereto.

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. If a Force Majeure event continues for more than ninety (90) consecutive days, the Parties shall negotiate in good faith to resolve the operational impasse.

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

1. Any dispute, controversy, or claim arising out of or relating to this Agreement, including its formation, breach, termination, or invalidity, shall first be sought to be resolved amicably through good-faith negotiations between the senior representatives of the disputing Parties within thirty (30) days of written notice of the dispute.
2. If the dispute cannot be resolved amicably, it shall be referred to and finally resolved by arbitration administered by the Asian International Arbitration Centre (AIAC) in Kuala Lumpur, Malaysia, in accordance with the AIAC Arbitration Rules for the time being in force. The arbitral tribunal shall consist of one (1) arbitrator appointed in accordance with the said rules. The language of the arbitration shall be English.

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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.

For and on behalf of the Company:

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

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Signature of Authorized Signatory
Name: [Director/Signatory Name]
Title: [Director / Managing Director]

In the presence of:
Witness Signature: ______________________
Witness Name: [Witness Name]
Witness NRIC/Passport: [Witness ID]

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Shareholder 1:

[Shareholder 1 Name]

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Signature of Shareholder

In the presence of:
Witness Signature: ______________________
Witness Name: [Witness Name]
Witness NRIC/Passport: [Witness ID]

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Shareholder 2:

[Shareholder 2 Name]

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Signature of Shareholder

In the presence of:
Witness Signature: ______________________
Witness Name: [Witness Name]
Witness NRIC/Passport: [Witness ID]