A shareholders` pact is an agreement between the shareholders of a company that contains information about the rights, obligations and privileges granted to the shareholders of the company. It also explains how the company will be created and managed. Shareholder agreements often minimize the impact of problems that can affect businesses, specifying how certain issues are handled and providing a way to resolve future disputes. Shareholder agreements in Malaysia are generally adapted to situations where a company`s shareholders are separated from the board of directors and whose shares are generally not dictated by a single shareholder or group of shareholders. In such cases, directors with the required expertise must be consulted by shareholders to manage the business of the company on their behalf. Therefore, even if the directors have shares in the corporation, it is very likely that they will act in such a way that they benefit the company and not a single shareholder. Under current Malaysian corporate laws, a shareholder contract is not a mandatory component of a company. As a result, business owners are not required to create and submit one during the creation process. PandaTip: This section ensures that shareholders have the same expectations about when they can withdraw money from the company and ensure that distributions do not compromise the company`s financial needs. In Malaysia, corporate law and company statutes contain strict compliance rules that must be respected by shareholders.

Some of these rules relate to shareholder agreements. Under current Malaysian rules, shareholder agreements should contain information, including the rights and obligations of the company`s shareholders, the terms of the company`s management, the terms of staff appointment and entry into important financial agreements, dispute resolution methods and conflicts of interest. , procedures for selling existing shares and issuing new shares, as well as how to protect the rights of minority shareholders.