Corporate and commercial law in Malaysia for business owners

Read your constitution first: articles based on the old Table A give the chair of a shareholders' meeting a casting vote, and many older companies still run on them (section 619). At board level, a chairperson the board elected has a casting vote unless the constitution says otherwise (section 212; Third Schedule).

On an oppression application the court can order one owner to buy the other's shares, but a tied vote alone is not oppression: the court looks at conduct (section 346). Either owner can also petition for a just and equitable winding up (section 465(1)(h)). Deadlock between equal owners is the classic case for that petition, but the court decides, and it treats closing a trading company as a drastic step.

The buyer is another shareholder or an outsider the constitution allows. The Act sets no price formula: the price is agreed, or an independent valuer fixes it under a signed clause. A request for "my capital back" (退股) needs a formal capital reduction, the redemption of redeemable preference shares, or a court order (sections 72, 115 to 119 and 346).

After a death, the executor, administrator or person named in a distribution order gives the company written notice, and it has 60 days to register them (section 109). Before a grant or distribution order exists, no family member can sign for shares the deceased held alone. No law makes the surviving owners buy the shares; without a death clause, the heirs may become co-owners.

The company must send every shareholder the financial statements within six months of its year end (sections 257 and 258); the accounting records are for the directors and the auditor (sections 245 and 266). Put each request in writing; a court can order a company that still refuses to comply (section 351).

Oppression, often called 大欺小, is more than being outvoted. Section 346 reaches conduct that is oppressive to a shareholder, disregards their interests or unfairly discriminates against them. The court may then make any order it thinks fit, such as cancelling a transaction, a buy-out of the applicant's shares or winding up (section 346(2)). A claim for money taken from the company is usually the company's, brought in its name with the court's permission (sections 347 and 348).

A nominee director (挂名董事) must act in good faith in the company's best interest and with reasonable care, and must not put their appointer first; a breach is an offence (sections 213 and 217).

An arrangement to evade a law or to hide assets from creditors is void, and a court may refuse to help either side (Contracts Act 1950, section 24). A real owner whose shares sit in another name must prove a trust, since the register names the nominee (挂名股东) as owner (section 101). If the nominee refuses to sign a transfer back, the owner can sue for a declaration of trust and correction of the register (section 103). Delay can lead a court to treat the shares as a gift.

An Enterprise is a sole proprietorship or partnership registered with SSM, open only to a Malaysian citizen or permanent resident; a Sdn Bhd (sendirian berhad) is a private company limited by shares. SSM's yearly charge for an Enterprise is RM30 or RM60. For a Sdn Bhd it is RM150 for the annual return plus RM20 or RM50 when the financial statements are lodged, and the company also pays for a secretary, accounts, a tax return and, unless exempt, an audit (SSM fee tables, read 20 October 2026).

In a partnership with nothing agreed, the Partnership Act 1961 shares profits and losses equally, pays nobody for working, lets any partner end a partnership with no fixed term by notice, and dissolves it when a partner dies (sections 26, 28 and 35).

More than half of the votes cast passes an ordinary resolution; at least 75% passes a special resolution, so a holder of more than 25% can block one (sections 291 and 292).

Shares for work (sweat equity, 人力股) are lawful: the Act allows shares paid up otherwise than in cash, with the work contract lodged with the return of allotment (section 78). Once issued as fully paid, they stay with a partner who stops work unless a signed leaver clause, the constitution or a court order says otherwise (sections 70 and 105). While the company runs, share capital comes back only by a capital reduction, redeemable preference shares or a court order; a loan is repaid on its terms (sections 72, 115 to 119 and 346).

The agreement is the owners' private contract on running the company and on what follows when one leaves, dies or disagrees. Its usual subjects: board seats, decisions needing every owner's consent, share transfers, a tie, an exit or a death, the accounts owners see, dividends, new money and disputes. A right that must bind the company, such as a right to name a director, belongs in the constitution too: an ordinary resolution can remove a director unless the constitution says otherwise (Companies Act 2016, sections 33 and 206).

A promise not to compete after leaving is generally void in Malaysia (Contracts Act 1950, section 28). Confidentiality and a narrow, short non-solicitation clause protect the company; a wide one may be void.

Above 50% foreign voting rights, a wholesale, retail or e-commerce business is expected to get KPDN approval (Ministry of Domestic Trade and Cost of Living). For an Employment Pass, the usual work pass, Immigration's Expatriate Services Division (ESD) sets a paid-up capital floor: RM500,000 if 100% foreign-owned; RM1,000,000 where foreigners hold 51% or more in wholesale, retail and trade or a service on KPDN's unregulated-services list (ESD Online Guidebook V6, 14 April 2025).

Company law sets no minimum share capital (sections 9 and 74). Putting the company in a Malaysian's name to get round a licence, equity or immigration rule is the kind of arrangement a court treats as void (Contracts Act 1950, section 24), and the real owner must be declared (sections 60A to 60D).