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Share Purchase Agreement
I need a share purchase agreement for the acquisition of 30% equity in a Malaysian private limited company, with provisions for a due diligence period, payment terms including an initial deposit and balance upon completion, and warranties from the seller regarding the company's financial health and legal compliance.
What is a Share Purchase Agreement?
A Share Purchase Agreement sets out the terms and conditions when someone buys shares in a Malaysian company. It's the key legal document that protects both the buyer and seller by clearly stating the price, payment terms, and what happens before and after the sale closes.
Under Malaysian company law, this agreement typically includes warranties about the company's financial health, any existing legal issues, and the seller's right to transfer the shares. It also covers important details like when ownership transfers, what happens if things go wrong, and how both parties will handle confidential information. Many Malaysian businesses use these agreements for both private deals and larger corporate acquisitions.
When should you use a Share Purchase Agreement?
Use a Share Purchase Agreement anytime you're buying or selling shares in a Malaysian company. This applies to both small private transactions and major corporate acquisitions. The agreement becomes essential when transferring ownership stakes between family members, bringing in new investors, or executing a business exit strategy.
The timing matters most during complex negotiations or high-value deals. Malaysian law requires clear documentation of share transfers, and having this agreement in place protects everyone involved. It's particularly important when dealing with multiple shareholders, cross-border transactions, or companies with significant assets or liabilities at stake.
What are the different types of Share Purchase Agreement?
- Share Purchase Agreement Between Two Individuals: Used for direct person-to-person share transfers, with simpler terms and fewer corporate complexities
- Share Purchase Agreement Of Private Limited Company: Designed for corporate-level transactions with comprehensive warranties and representations
- Share Block Sale Agreement: Specifically for large block transfers involving significant ownership stakes
- Stock Buy Back Agreement: For companies repurchasing their own shares from existing shareholders
- Share Sell Agreement: Focuses on seller obligations and guarantees in share disposals
Who should typically use a Share Purchase Agreement?
- Shareholders: Both buyers and sellers who want to transfer company shares, from individual investors to large corporate entities
- Company Directors: Often involved in approving share transfers and ensuring compliance with the company's constitution
- Corporate Lawyers: Draft and review Share Purchase Agreements to protect their clients' interests and ensure legal compliance
- Company Secretaries: Handle documentation, updating share registers, and filing necessary notices with SSM
- Financial Advisors: Help structure deals and determine fair share valuations
- Regulatory Bodies: Including Securities Commission Malaysia and Bursa Malaysia for listed company transactions
How do you write a Share Purchase Agreement?
- Company Details: Gather current company registration info, shareholding structure, and board resolutions approving the transfer
- Share Information: Document exact number of shares, class types, and current ownership details from share certificates
- Party Information: Collect full legal names, identification details, and contact information for all buyers and sellers
- Financial Terms: Define purchase price, payment method, and any installment arrangements
- Due Diligence: Review company financials, existing agreements, and any encumbrances on shares
- Compliance Check: Verify requirements under Companies Act 2016 and company constitution
- Documentation: Use our platform to generate a legally-sound agreement that includes all mandatory elements
What should be included in a Share Purchase Agreement?
- Parties and Recitals: Full legal names, addresses, and company registration details of all involved parties
- Share Details: Precise description of shares being transferred, including quantity, class, and identifying numbers
- Consideration: Clear statement of purchase price and payment terms
- Warranties: Seller's guarantees about share ownership, company status, and financial condition
- Conditions Precedent: Requirements to be met before completion
- Completion Mechanics: Specific steps for executing the transfer
- Governing Law: Malaysian law application and jurisdiction clause
- Execution Block: Proper signature sections with witness provisions
What's the difference between a Share Purchase Agreement and an Asset Purchase Agreement?
A Share Purchase Agreement differs significantly from a Asset Purchase Agreement in several key ways under Malaysian law. While both involve business transactions, they serve distinct purposes and have different implications for buyers and sellers.
- Transaction Object: Share Purchase Agreements transfer company ownership through shares, while Asset Purchase Agreements deal with specific business assets
- Liability Transfer: Share purchases automatically include all company liabilities, whereas asset purchases let buyers select specific assets without assuming all company debts
- Legal Complexity: Share transfers typically require simpler procedures under the Companies Act 2016, while asset transfers need individual documentation for each asset type
- Tax Implications: Share transfers attract stamp duty based on share value, while asset purchases may involve various taxes depending on asset types
- Regulatory Requirements: Share transfers need board approval and SSM updates, while asset transfers might require additional third-party consents
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