Frequently Asked Question
Why do I need to remove a shareholder?
There are a few reasons why you might need to remove a shareholder from your company:
- If the shareholder is unable to pay their debts, or is involved in fraudulent activities, or is otherwise acting against the best interests of the company.
- If they have breached their shareholders’ agreement.
- If the shareholder has acted in a way that is prejudicial to the company, its members or its creditors. This could include something like trying to asset-strip the company or transferring assets out of the company without proper regard for its financial health.
- If they are no longer actively involved in the business and you want to buy them out, or perhaps they’re causing problems within the company and you need to get rid of them.
- Of course, there are many other reasons why removing a shareholder might be necessary or preferable. It all depends on particular circumstances and situation. Whatever the reason, under Malaysian law, there are a few different ways to go about removing a shareholder.
How do I appoint a new shareholder?
According to the Malaysian Company Act 2016, a shareholder in a company can be appointed through one of three methods:
- By executing a resolution appointing the shareholder
- By entering into an agreement with the shareholder appointing the shareholder;
- By issuing shares to the shareholder.
Who is eligible to be a shareholder in a company?
Pursuant to the Malaysian Company Act 2016, a person is eligible to be a shareholder in a company in Malaysia if he or she is a citizen of Malaysia or lawfully resides in Malaysia.
In addition, the following persons are also eligible to be shareholders in a company in Malaysia:
- a body corporate incorporated outside Malaysia;
- a partnership formed outside Malaysia by two or more individuals who are not citizens of Malaysia and do not reside in Malaysia; or
- an unincorporated association formed outside Malaysia by two or more individuals who are not citizens of Malaysia and do not reside in Malaysia.
What are the procedures to add a new shareholder in a company?
Adding a new shareholder to a company requires compliance with the Malaysian Company Act 2016. The first step is to have the Board of Directors pass a resolution authorizing the issuance of new shares. Once that is done, the company must then file an application with the Registrar of Companies along with the necessary documents.
These include a copy of the board resolution, a list of current shareholders, and information on the new shareholder(s). After reviewing and approving the application, the Registrar will issue a certificate of incorporation which will officially add the new shareholder (or shareholders) to the company.
How to remove a shareholder?
According to the Malaysian Company Act 2016, a shareholder may be removed from a company in one of two ways:
1) By share transfer – if the shareholder transfers their shares to another person, they will no longer be a shareholder of the company.
2) By shareholders’ resolution – this requires at least 50% of the shareholders (by value or number, whichever is lower) to vote in favor of removing the shareholder in question. Once this resolution is passed, the company must give written notice to the shareholder informing them of their removal.
Moreover, a shareholder may be removed by order of the court if that shareholder has contravened any provision of the Act or authorized representatives have been guilty of misconduct in relation to their office. A shareholder may also be removed if he is bankrupt or if insane. If there is no shareholders’ agreement, then the company’s articles of association would usually provide for how a shareholder may be removed.
How long does it take to change a shareholder?
According to the Malaysian Company Act 2016, it takes a minimum of 2 weeks to change a shareholder in a company. This process can be initiated by the company’s board of directors or by the shareholders themselves. To change a shareholder, the following steps must be taken:
- A notice must be given to all shareholders informing them of the proposed change.
- A special resolution must be passed by the shareholders, approving the change; and
- The new shareholder must then be registered with the Companies Commission of Malaysia (CCM)
Once these steps have been completed, the new shareholder will be officially registered as part of the company. If you have any further questions about this process, we suggest you speak to our company secretary.
How much do I need to pay to remove a shareholder?
The cost of changing a shareholder will depend on the provisions of your company’s articles of association, and also on the Malaysian Company Act 2016. In general, however, you can expect to pay a fee to the company secretary, the Registrar of Companies, and legal fees.
What are the steps to remove a shareholder?
There are a few steps that must be followed in order to remove a shareholder from a Malaysian company, as outlined in the Malaysian Companies Act 2016. First, a shareholders’ meeting must be convened and a resolution passed by at least two-thirds of the total shares represented at the meeting. This resolution must then be registered with the Companies Commission of Malaysia within 30 days. After this, the company will be required to give written notice to the shareholder specifying the date on which their shares will be forfeited. If payment is not received by this date, then the company may proceed to sell or otherwise dispose of the shares in accordance with pertinent laws and regulations.