# Takeovers, Mergers & Acquisitions and Due Diligence Lawyers

> M&A lawyers in Malaysia: the 33% mandatory offer and 90% compulsory acquisition thresholds, share vs asset structuring, and legal due diligence explained.

Canonical URL: https://www.cecolaw.com/due-diligence-lawyer-malaysia/
Published: 2020-03-31
Updated: 2026-07-27
Author: Ching, Elaine & Co — Advocates & Solicitors, Malaysia

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Ching, Elaine & Co advises on takeovers, mergers and acquisitions in Malaysia — for acquirers, sellers, boards and offerors. Our work covers mandatory and voluntary take-over offers under the Rules on Take-overs, Mergers and Compulsory Acquisitions, private company acquisitions and disposals, cross-border acquisitions of Malaysian businesses, and the legal due diligence that underpins them. The firm is a recommended firm for Corporate and M&A in Malaysia in The Legal 500 Asia Pacific.

## The take-over thresholds that matter

For a company subject to the Malaysian take-over framework, three numbers drive the analysis. Cross one without planning for it and the transaction changes shape.

| Threshold | What triggers it | Consequence |
| --- | --- | --- |
| 33% | An acquirer, together with persons acting in concert, acquires 33% or more of the voting shares or voting rights in the company | A mandatory take-over offer must be made for all remaining voting shares, unless an exemption applies |
| Creeping threshold | An acquirer already holding more than 33% but not more than 50% acquires more than 2% of the voting shares or voting rights in any six-month period | A mandatory offer obligation is triggered |
| 90% | An offeror who has made a take-over offer for all the shares receives acceptances of not less than 90% in nominal value of the offer shares | The offeror may compulsorily acquire the shares of dissenting shareholders, within the prescribed period |

Where an obligation would be triggered but the commercial deal does not warrant a general offer, an exemption or a waiver from the Securities Commission may be available — but it has to be planned for before the acquisition is made, not afterwards.

## Share sale or asset sale?

The first structuring question in most Malaysian acquisitions. The answer drives the due diligence scope, the documents, the tax and stamp duty position, and what the buyer inherits.

|   | Share acquisition | Business or asset acquisition |
| --- | --- | --- |
| What transfers | The company, with all of its assets, liabilities and history | Only the identified assets and assumed liabilities |
| Liabilities | Inherited, including unknown and contingent liabilities — hence the emphasis on warranties, indemnities and due diligence | Left behind, save for those expressly assumed and those that transfer by operation of law |
| Contracts and licences | Generally continue, subject to change-of-control provisions and any regulatory approvals | Require assignment or novation, and licences generally require fresh application |
| Employees | Remain employed by the company | Require a transfer arrangement; existing employment terminates unless agreed otherwise |
| Due diligence focus | Broad — the whole company and its history | Narrower — title to the assets being acquired |
| Typical seller preference | Clean exit from the business and its liabilities | Rarely preferred, as the company and its liabilities remain with the seller |

## Legal due diligence

Due diligence is not a box-ticking exercise; it is how the buyer learns what it is actually buying, and how the transaction documents come to be drafted properly. On a Malaysian target we review:

- **Corporate** — incorporation, constitution, share capital history, register of members, board and shareholder approvals, group structure and intra-group arrangements.

- **Licences and approvals** — the licences the business needs to operate, whether they are current, and whether they survive a change of control or a transfer.

- **Material contracts** — customer, supplier, distribution and financing agreements, with particular attention to change-of-control, assignment, exclusivity and termination provisions.

- **Real property** — title, encumbrances, category of land use, restrictions in interest, and the terms on which premises are occupied. See our [real estate practice](https://www.cecolaw.com/real-estate-property-lawyer-malaysia/).

- **Employment** — key employees and their terms, restrictive covenants, statutory contributions and any industrial relations history.

- **Litigation and disputes** — pending and threatened claims, and the exposure they represent.

- **Regulatory compliance** — including competition law and [personal data protection](https://www.cecolaw.com/data-privacy-law-in-malaysia/), which since the 2024 amendments carries direct obligations and increased penalties.

- **Intellectual property** — ownership and registration of the marks and rights the business depends on.

The findings feed directly into the transaction: conditions precedent for what must be fixed before completion, specific indemnities for identified exposures, warranties for what cannot be verified, and price adjustment where the diligence changes the value.

## Transaction documents

We draft and negotiate the documents an acquisition requires: share sale agreements and business transfer agreements, subscription agreements, [shareholders agreements](https://www.cecolaw.com/shareholders-agreement-in-malaysia-lawyers/) and joint venture agreements for the post-completion relationship, profit guarantee agreements, escrow and retention arrangements, and the disclosure letter — which does more work than most parties expect, and repays being taken seriously.

## Selected experience

- **Cross-border acquisition and group restructuring (2022).** Acted on the acquisition by a corporation listed on the Japan Stock Exchange of a 70% equity interest in Malaysia’s largest tyre distributor by market share, and the subsequent restructuring of the group’s businesses.

- **Take-over of a listed printing group (2022).** Advised on the take-over of a company listed on the Main Market of Bursa Malaysia Securities Berhad in the business forms and printing sector, and the ensuing mandatory take-over offer.

- **Take-over of a listed food and beverage group (2020).** Advised on the take-over of a restaurant and food-and-beverage group listed on the Main Market, and the ensuing mandatory take-over offer.

- **Cross-border acquisition (2020).** Advised on the acquisition by a group listed on the Shenzhen Stock Exchange of a 70% equity interest in a Malaysian manufacturer of LED lighting.

- **Land-bank acquisition (2021).** Acted for a group listed on the Main Market on its acquisition of majority equity interests in the property investment holding companies for several land banks.

- **Exit offer and delisting.** Advised on an exit offer by way of a voluntary take-over offer by the promoters of a leading pharmaceutical company, and the subsequent delisting from the Main Market.

- **Exemption from a mandatory general offer.** Advised a company listed on the Main Board of HKEX on its RM280 million investment into a Malaysian property development company listed on the Main Market, including the application to the Securities Commission for exemption from a mandatory general offer.

## Common questions

### When must a mandatory take-over offer be made in Malaysia?

When an acquirer, together with persons acting in concert, acquires 33% or more of the voting shares or voting rights in the company; or where an acquirer already holding more than 33% but not more than 50% acquires more than 2% of the voting shares or voting rights in any six-month period. An exemption or waiver may be available in defined circumstances, but it must be planned before the acquisition is completed.

### What is the 90% threshold for?

Where an offeror has made a take-over offer for all the shares and has received acceptances of not less than 90% in nominal value of the offer shares, it may compulsorily acquire the shares of the shareholders who did not accept, within the prescribed period. It is the route to full ownership where a small minority declines to sell.

### Should we buy the shares or the business?

A share acquisition brings the company with all its history; an asset acquisition takes only what is identified. The choice usually turns on the liabilities in the target, whether key contracts and licences can be transferred, the stamp duty and tax position, and the timetable. We advise on the structure before the term sheet is signed, because changing it afterwards is expensive.

### How long does due diligence take?

For a mid-sized Malaysian private company, typically four to eight weeks from access to a properly populated data room. The delay is almost always incomplete disclosure rather than the review itself, which is why a well-organised seller reaches completion faster and usually on better terms.

### What is a profit guarantee?

A mechanism common in Malaysian acquisitions under which the seller guarantees a specified level of post-completion profit, with a shortfall met by a payment or an adjustment to consideration, often supported by retained shares or an escrow. It bridges a valuation gap where the buyer is not prepared to pay for forecast performance in full.

## Speak with our M&A lawyers

If you are considering an acquisition or disposal, or you have been approached, we are happy to discuss the structure before terms are agreed. Related practices: [corporate finance and capital markets](https://www.cecolaw.com/ipo-lawyers-malaysia/) and [corporate commercial and advisory](https://www.cecolaw.com/corporate-commercial-lawyer-malaysia/).

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This commentary is general in nature and is not legal advice.
Ching, Elaine & Co, a boutique corporate law firm in Malaysia — https://www.cecolaw.com/ · info@cecolaw.com · +60 3-7664 2141