Public mergers and acquisitions in Malaysia: overview

A Q&A guide to public mergers and acquisitions law in Malaysia.

The country-specific Q&A looks at current market activity; the regulation of recommended and hostile bids; pre-bid formalities, including due diligence, stakebuilding and agreements; procedures for announcing and making an offer (including documentation and mandatory offers); consideration; post-bid considerations (including squeeze-out and de-listing procedures); defending hostile bids; tax issues; other regulatory requirements and restrictions; as well as any proposals for reform.

To compare answers across multiple jurisdictions visit the Country Q&A tool. This Q&A is part of the Practical Law Multi-jurisdictional Guide to mergers and acquisitions law. For a full list of jurisdictional Q&As visit

Brian Chia, Wong & Partners, member firm of Baker & McKenzie International

M&A activity

1. What is the current status of the M&A market in your jurisdiction?

The current M&A market remains vibrant particularly in the financial services sector. The Financial Services Act (FSA), which came into effect in June 2013 together with the Islamic Financial Services Act (IFSA), is likely to drive M&A activity in the coming years, particularly within the insurance industry. Among the requirements of the FSA and IFSA is the separation of composite licences for general and life insurance businesses. This is expected to generate M&A activity through restructuring and consolidation efforts in the insurance and takaful sector. A case in point is the integration of AIA's takaful business through the transfer of assets from AIA AFG Takaful Berhad to AIA PUBLIC Takaful Berhad which was a landmark deal for the Malaysian insurance sector as it is the first business transfer under the IFSA.

It has also been an active year for M&As, involving, among others, the following:

  • AIA Group Limited (AIA) completed its US$1.8 billion (MYR5.78 billion) acquisition of ING Group N.V's (ING) Malaysian insurance and takaful business. The acquisition combined ING’s Malaysian operations and AIA’s existing Malaysian business, previously the third and the fourth largest in Malaysia respectively, to create the largest life insurance firm in the country.

  • The sale of Fraser & Neave Limited (F&N) resulted in one of the largest takeover battles in recent times. F&N was subject to competitive bids by Thai-owned TCC Assets Limited (TCC) and Singapore-based OUE Baytown Pte Ltd (OUE). In a protracted takeover battle, TCC and OUE repeatedly extended their offers for F&N without any revision to the offer price. An auction process broke the stalemate and, on 21 January 2013, OUE announced that it had decided not to revise its offer for F&N, leaving a revised SGD13.8 billion (MYR35.51 billion) offer from TCC.

In addition, the M&A market is also expected to benefit from growth initiatives by the Malaysian government, and the anticipated market liberalisation through the ASEAN Economic Community (AEC) 2015.

The country's national budget for 2014 sets in motion investment plans in key economic areas such as infrastructure and oil and gas sectors which will induce interest within upstream and downstream industry players seeking out opportunities in procurement, engineering, construction and installation services. The AEC will also create immense opportunities for businesses, and subsequently for M&As, as it aims to create a single market and production base within its group members comprising of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

2. What are the main means of obtaining control of a public company?

The main methods of acquiring control of a public company are:

  • Takeover offer. The shareholders of the target are asked to accept an offer that has been made by a bidder. This is the most common method of obtaining control. There are two types of offer:

    • Mandatory offer. This occurs when an acquirer is entitled to exercise control or meets certain takeover thresholds (see Question 16). Typically the bidder signs a share purchase agreement to purchase a block of shares which in turn triggers the general requirement for an announcement (see Question 12);

    • Voluntary offer. This is where an offer is made voluntarily and simultaneously to all the shareholders of the target to acquire its shares.

  • Scheme of arrangement. The company enters into collaboration with the bidder for the bidder to take over the target. The target's shareholders will then vote on a takeover proposal put to them by the collaborating parties. The target's assets and shares are transferred to the bidder under a statutory court process (section 176, Companies Act 1965) (Companies Act). This method is commonly used by financial institutions and insurance companies to transfer obligations owed to account and policyholders. The Malaysian Code on Take-Overs and Mergers 2010 (Code), effective as of 15 December 2010, replaces the Malaysian Code on Take-Overs and Mergers 1998. A scheme of arrangement is now included within the definition of a takeover under the Code.

  • Acquisition of assets and liabilities. The target sells its assets and liabilities to the bidder through an ordinary resolution of the target's shareholders (requiring an approval of over 50%, unless otherwise set out in the company's articles of association or it is a major disposal). This controversial method has led to certain public listed entities being taken over and privatised.


Hostile bids

3. Are hostile bids allowed? If so, are they common?

Hostile bids are permitted but are not common practice in Malaysia. This is because the target will not allow the bidder to conduct due diligence on the company. In a hostile bid, the bidder will only have access to information that is in the public domain (see Question 5).


Regulation and regulatory bodies

4. How are public takeovers and mergers regulated, and by whom?

Main regulatory bodies

The main regulatory bodies are:

  • Securities Commission. The Securities Commission has wide rule-making and enforcement powers, including:

    • regulating takeovers and mergers of companies; and

    • ensuring compliance with the provisions of securities laws.

  • Companies Commission of Malaysia (Companies Commission). The Companies Commission administers and enforces the Companies Act (see below, Main regulations).

  • Bursa Malaysia Securities Berhad (Bursa Malaysia). Bursa Malaysia is the Malaysian stock exchange and supervises listed companies.

  • Licensing authorities. Most industry sectors are regulated in Malaysia and require a licence to conduct business (see Question 25).

  • Malaysian Central Bank. Takeovers of companies in the financial sector will also involve applications to the Malaysian Central Bank (Bank Negara Malaysia).

See box, The regulatory authorities for further details.

Main regulations

The main regulations are:

  • Code. The Securities Commission administers the Code. It governs the conduct of all persons involved in takeover offers and mergers in Malaysia, and in connection with this, the Securities Commission has issued Practice Notes for the Code.

  • Capital Market and Services Act 2007 (CMSA). The CMSA contains provisions that regulate:

    • the activities of markets and intermediaries in the Malaysian capital markets;

    • substantial shareholding reporting requirements (see Question 8); and

    • insider trading (see Question 6).

  • Companies Act. This contains provisions that govern the conduct and affairs of companies, including:

    • directors' duties;

    • declarations on substantial shareholding and schemes of arrangements (see Question 5).

  • Bursa Malaysia Listing Requirements 2010 (Listing Requirements). A company must comply with the Listing Requirements if it is listed on the Bursa Malaysia stock exchange. The Listing Requirements contain rules governing the conduct of a public listed company, including:

    • disclosure requirements (see Question 5);

    • public spread requirements (a listed company must ensure at least 25% of its total listed shares are in the hands of public shareholders); and

    • certain other requirements during the takeover process (see Question 12 ).



Due diligence

5. What due diligence enquiries does a bidder generally make before making a recommended bid and a hostile bid? What information is in the public domain?

Due diligence in a takeover offer, whether hostile or recommended, is limited. This is due to a combination of insider trading laws (see Question 6) and the fact that a takeover offer cannot easily be withdrawn once announced. Due diligence is generally limited to information in the public domain (see below, Public domain).

Where a bidder plans to acquire a controlling block of shares in the target from a controlling shareholder, it can as part of that arrangement conduct due diligence enquiries on information on the target that is in the possession of that shareholder. In practice, the ability of the bidder to conduct due diligence on the target's records can be limited, as the other substantial shareholders of the target can resist. The target must give similar information to another bona fide potential bidder that makes a competing takeover offer, on that bidder's request (see Question 12).

The following information is in the public domain for a public listed company:

  • Information lodged at the Companies Commission, including:

    • the company's memorandum and articles of association; and

    • corporate forms, such as Form 24 (return of allotment of shares) and Form 49 (return giving particulars in register of directors, managers, secretaries and changes of particulars).

  • Information lodged pursuant to the Listing Requirements, including:

    • announcements;

    • annual audited accounts;

    • quarterly financial reports;

    • circulars to shareholders;

    • annual reports; and

    • prospectuses.

  • Analysts research reports, which may include information on the target's:

    • industry sector;

    • potential earnings;

    • future business prospects; and

    • expected price range for its shares.


6. Are there any rules on maintaining secrecy until the bid is made?

The following rules may apply before a formal bid has been made:

  • Insider trading provisions. These are contained in the CMSA and prohibit the misuse of any price-sensitive information that is not generally available to the public, such as knowledge of a contemplated bid. A person in possession of that information is prohibited from trading on it, or communicating it, if that person knows, or ought reasonably to know, that the recipient would trade on the information provided. Dealings in securities or the communication of information are exempted where they are carried out under any written law relating to schemes of arrangements, reconstructions and takeovers relating to companies.

  • Misuse of information. Directors or officers of a company cannot use their knowledge of a contemplated bid to directly or indirectly:

    • benefit themselves;

    • benefit another person; or

    • cause detriment to the company (Companies Act).

  • Listed companies. Directors and officers of a listed company who are in possession of price-sensitive information are prohibited from dealing in the securities of the company (Listing Requirements).

  • Confidentiality. Information relating to a takeover offer or contemplated takeover offer must be treated as confidential by all persons privy to it (such as directors, officers and advisers of both parties). Clients should be warned not to communicate or divulge confidential information.

Agreements with shareholders

7. Is it common to obtain a memorandum of understanding or undertaking from key shareholders to sell their shares? If so, are there any disclosure requirements or other restrictions on the nature or terms of the agreement?

If a voluntary offer is contemplated, a memorandum of understanding or undertaking should only be obtained, in limited circumstances, from key shareholders before making a takeover offer. This is because the mandatory general offer requirements are triggered by arrangements entered into by a bidder that would result in its holding more than 33% of the voting rights in a company. The Code provides that a voluntary offer becomes a mandatory offer if the bidder or persons acting in concert (PAC) acquire voting shares or voting rights (other than through acceptances) that trigger an obligation to make a mandatory offer (see Question 16).

Once a takeover offer has been announced, it is common for the bidder to seek undertakings from key shareholders to secure their acceptance of the offer. The requirement to make a public announcement is triggered in certain circumstances, including when a bidder intends to seek irrevocable commitments. In that case, the bidder must make the announcement. The offer document should disclose undertakings.

However, the bidder or PAC are not permitted to enter into any agreement, arrangement or understanding to deal in, or make purchases or sales of, the target's voting shares, if it would contain favourable conditions which are not being extended to all the target's shareholders either:

  • During a takeover offer.

  • When a takeover offer is reasonably in the bidder's contemplation. This is a question of fact to be determined by the Securities Commission.

Note also that where the takeover offer is successful, there are also restrictions on the ability of an offeror to acquire further securities on more favourable terms that the previous takeover offer.


8. If the bidder decides to build a stake in the target (either through a direct shareholding or by using derivatives), before announcing the bid, what disclosure requirements, restrictions or timetables apply?

The bidder can build a stake in the target before announcing a takeover bid, subject to the considerations set out below.

Disclosure requirements

If the bidder acquires 5% or more of the voting shares in the target, it must provide a written notification in the prescribed form, specifying the particulars of the shareholding to all of the following:

  • The target.

  • The Securities Commission.

This requirement will also apply when the bidder is deemed to have an interest in shares which are legally held by other persons. This includes situations where the:

  • Bidder has entered into a contract to purchase those shares.

  • Shares are held on trust for the bidder.

  • Bidder controls a company that in turn owns the shares.

Aggregated shareholdings

If the bidder acts in concert with another person for the purpose of obtaining or exercising control over the target, shares held in the target by the bidder and its PAC are aggregated. This is for the purposes of regulation under the Code.

Agreements in recommended bids

9. If the board of the target company recommends a bid, is it common to have a formal agreement between the bidder and target? If so, what are the main issues that are likely to be covered in the agreement? To what extent can a target board agree not to solicit or recommend other offers?

It is not common to have a formal agreement between the bidder and the target. Instead, the terms of the offer made by the bidder to the shareholders of the target are contained in the "offer document".

The offer document must provide the following extensive disclosure of information for the purpose of making an informed assessment (Code):

  • Information that the target's shareholders and their advisers would reasonably require and expect to find in an offer document.

  • The advantages of accepting or rejecting the offer.

  • The extent of the risks involved in accepting or rejecting the offer.

The Code does not specifically address the issue of the target's board agreeing not to solicit or recommend other offers; it does however require the target's board to indicate if it will be seeking an alternative offer. In any event, an agreement to not solicit or recommend other offers must comply with the fiduciary and other duties of the directors under the Companies Act.

Break fees

10. Is it common on a recommended bid for the target, or the bidder, to agree to pay a break fee if the bid is not successful?

It is not common to agree to a break fee in the event of an unsuccessful bid and there is no specific provision addressing break fees in the Code.

However, the Companies Act provides that a break fee cannot be paid by the target, as this would be providing financial assistance for the purpose of, or in connection with, the purchase of its own shares.

Committed funding

11. Is committed funding required before announcing an offer?

Mandatory offers must always include a cash element. If the consideration which triggered the mandatory offer does not consist solely of cash, a cash alternative must also be included.

The requirement to include a cash element for a voluntary offer is only triggered in certain circumstances (see Question 17).

Where an offer is made wholly or partly in cash, the bidder and its financial adviser must be reasonably satisfied that both:

  • The offer will not fail due to the bidder's insufficient financial capability.

  • Every target shareholder who wishes to accept the takeover offer will be paid in full.

Therefore, in most cases the bidder must have committed funding in place before the offer announcement (see also Question 18).


Announcing and making the offer

Making the bid public

12. How (and when) is a bid made public? Is the timetable altered if there is a competing bid?

Bidder's obligations

Announcement. A bidder who makes or proposes a possible takeover offer must immediately make an announcement by a press notice. The press notice must be published in at least three national daily newspapers. One public announcement must be published in Bahasa Malaysia (the national language of Malaysia) and another must be published in English.

The bidder must also send written notice of the same to the:

  • Target's board.

  • Securities Commission.

  • Bursa Malaysia (if the company is listed).

Triggering circumstances for an announcement. If, prior to the making of the announcement, there is an untoward movement or increase in the volume of share turnover of the target, the potential bidder must make a brief announcement as to whether there is a takeover offer or a possible takeover offer. Such announcements are typically necessitated due to:

  • Negotiations or discussions being extended to include more than a very restricted number of people (for example, when the bidder wishes to approach a wider group of people to arrange financing or to seek irrevocable commitments).

  • Negotiations between a controlling shareholder and the bidder and:

    • the bidder becomes the subject of rumours or speculations about a possible takeover offer before the bidder approaches the target's board;

    • there is an unusual movement in the price of the targets voting shares or voting rights;

    • there is a significant increase in the turnover volume of the voting shares or voting rights of the target; and

    • there are reasonable grounds to conclude that the actions of the controlling shareholder have contributed to the situation.

  • A sale and purchase agreement for the acquisition of voting shares or voting rights has been signed, and the bidder triggers a mandatory offer obligation.

Following the brief announcement, the bidder must:

  • Announce its firm intention to make a takeover offer (or confirm that it will not be making a takeover offer) within two months from its first preliminary announcement unless the Securities Commission has granted an extension of time under the Code. Once the bidder has made an announcement, the bidder must proceed with the offer and cannot withdraw unless permission is obtained from the Securities Commission.

  • Submit the offer document to the Securities Commission for its consent within four days of the date of announcement.

  • Post the offer document (as approved by the Securities Commission) within 21 days of the date of announcement to the target's board and shareholders.

Restrictions. After announcing that it does not intend to make a takeover offer, the bidder (or PAC) cannot do any of the following for six months:

  • Announce a takeover offer of the target.

  • Acquire voting shares or voting rights which would trigger a mandatory offer obligation.

  • Procure an irrevocable commitment to acquire more than 33% of the voting shares of the target.

  • Make any statement which raises or confirms the possibility that a takeover offer may be made for the target.

  • Take any steps in connection with a possible takeover offer for the target.

Target's obligations

Triggering circumstances for an announcement. After being approached by the bidder, the target's board must make an announcement as to whether there is an actual or possible takeover offer. The target's board should also keep a close watch on its share price and volume of share turnover.

The target must also make an announcement when:

  • The company is the subject of rumours and speculations, or is subject to unusual price movement or turnover volume of its voting shares or voting rights, and there are reasonable grounds for concluding that the company is a potential target.

  • The target's board approaches the bidder to acquire a controlling stake in the target and:

    • the target becomes the subject or rumours and speculations about a possible takeover offer before the bidder makes an approach to the target's board;

    • there is unusual movement in the price of the target's voting shares;

    • there is a significant increase in the turnover volume of the target's voting shares; and

    • the number of bidders to be approached is to be increased to include more than a very restricted number of people.

Announcement. The target's board must, within 24 hours of receiving notice from the bidder, make an announcement to the public through a press notice or to Bursa Malaysia (if the company is listed). The announcement must also be sent to all the target's shareholders within seven days of receiving the notice. Such announcement must contain all details contained in the notice received from the bidder as well as a statement as to whether or not the target's board will be seeking an alternative person to make a take-over offer of its shares.

Offer timetable

The offer timetable is set out below. There is no difference in terms of the timeline for a recommended bid and a hostile bid. In the case of a competing bid, both offers are subject to the timeline triggered by the posting of a competing offer document.

  • Announcement day (T). The bidder must immediately announce the proposed takeover offer by press notice. The bidder must also send written notice of the announcement (see above, Bidder's Obligations: Announcement). The offer period begins on the date of the press notice or notice of takeover offer (whichever is earlier) and expires on either:

    • the first closing date of the takeover offer; or

    • the date when the offer becomes or is declared unconditional as to acceptances, lapses or is withdrawn (if this is a later date).

  • T plus 1. If the target is listed, the target's board must inform the public (by way of press notice) or Bursa Malaysia within 24 hours of receiving the written notice (see above, Target's obligations: Announcement).

  • T plus 4. The bidder submits the draft offer document to the Securities Commission for consent.

  • T plus 7. The target's board notifies all of the target's shareholders that it has received notice of the takeover offer. The target's board appoints the independent adviser, subject to the Securities Commission's approval.

  • Before T plus 21. Prior to the dispatch of the offer document, the bidder should ensure that all necessary regulatory approvals of other relevant authorities (if applicable) have been obtained (see Question 25).

  • T plus 21. The bidder posts the offer document (as consented to by the Securities Commission) to the target's board and shareholders (D).

  • D plus 10. Within ten days of posting the offer document, the target's board issues a circular with comments, opinions and information on the takeover offer to the target's shareholders. The independent adviser posts its circular to the target's board and shareholders.

  • D plus 21. For at least 21 days from the posting of the offer document, the bidder must keep the takeover offer open. If the bidder revises his offer, the offer must be kept open for at least another 14 days from the date of the posting of the revised offer to the target's shareholders. The bidder must also make an announcement of the revised offer to the public by way of press notice and Bursa Malaysia (if the target is listed).

  • D plus 46. If a competing bid is made during the offer period, the posting of the offer document is deemed to be the day on which the competing takeover offer document was posted. The bidder cannot revise the offer after 46 days from the date of posting of the offer document. In the case of competing takeover offers, a bidder cannot revise his takeover offer after this date as well.

  • D plus 60. Within 60 days of posting of the offer document, the takeover offer lapses if the bidder has not acquired more than 50% of the voting shares (see Question 13). This is the last date to close the offer if the offer becomes (or is declared) unconditional due to acceptances (50% condition has been fulfilled) before D plus 46.

  • D plus 74. This is the last date to close the offer if the offer becomes or is declared unconditional as to acceptances after D plus 46.

Offer conditions

13. What conditions are usually attached to a takeover offer? Can an offer be made subject to the satisfaction of pre-conditions (and, if so, are there any restrictions on the content of these pre-conditions)?

Once a proposed takeover offer is announced, the bidder can only withdraw it with the Securities Commission's written approval (see Question 12).

Voluntary takeover offers

In a voluntary takeover, the offer document must include a condition that makes the takeover offer conditional on the bidder receiving acceptances that result in the bidder and PAC holding an aggregate of more than 50% of the target's voting shares.

The Securities Commission may allow a voluntary offer to be conditional on a higher level of acceptance, subject to the bidder having satisfied the Securities Commission that it is acting in good faith. This is especially significant when the bidder wants to compulsorily acquire the voting shares from minority shareholders during the compulsory acquisition process (see Question 20).

In addition, the bidder cannot impose a condition the fulfilment of which depends on either:

  • An event that is only within the control or is a direct result of the bidder's or PAC's action.

  • The subjective judgement of the bidder or its PAC.

Mandatory takeover offers

No condition can be attached to a mandatory offer other than the condition that the offer is subject to the bidder having received acceptances which would result in the bidder and its PAC holding in aggregate more than 50% of the target's voting shares (see above, Voluntary takeover offers). No other condition can be attached unless approved by the Securities Commission.

If the bidder has acquired, already holds or is entitled to acquire more than 50% of the target's voting shares when the offer is made, the offer shall be unconditional (unless approved by the Securities Commission).

Bid documents

14. What documents do the target's shareholders receive on a recommended and hostile bid?

The notices and documents which the target's shareholders usually receive on a recommended or hostile bid are the:

  • Notice of takeover offer, which must contain:

    • the identity of the bidder and PAC;

    • the basis of the offer price and terms and conditions of the offer;

    • the basis of consideration, if other than cash;

    • the type and total number of voting shares which have been acquired by the bidder and PAC;

    • the type and total number of voting shares in relation to which the bidder and PACs have received irrevocable undertakings from the target's shareholders to accept the takeover offer;

    • details of any existing or proposed agreement, arrangement or understanding relating to voting shares or voting rights between the bidder or PAC with the target's shareholders; and

    • any options which the bidder and PAC have over the acquisition of the target's voting shares.

  • Offer document. This must include the information set out in Schedule 1 of the Code and also other prescribed information in the guidelines issued by the Securities Commission, including:

    • the terms and conditions of the takeover offer;

    • the identity of the ultimate bidder and/or the name of ultimate beneficial shareholders;

    • identity of any PACs;

    • the bidder's intentions for the target's business;

    • whether the bidder will exercise the right of compulsory acquisition (see Question 20); and

    • confirmation that the bidder has sufficient financial resources to implement the takeover offer (see Question 11).

  • Offer acceptance form.

  • Target board's circular. This contains comments on the takeover offer and information that enable the shareholders and their advisers to make an informed assessment of the offer.

  • Independent advice circular. This includes information set out in Schedule 2 of the Code and is produced by an independent adviser appointed by the target's board. The adviser recommends either acceptance or rejection of the takeover offer and makes comments on the takeover offer, including the bidder's stated plans for the target's business.

Employee consultation

15. Are there any requirements for a target's board to inform or consult its employees about the offer?

Under the Code, the target's board is not required to inform or consult its employees. However, this is subject to any collective bargaining agreement the company may have entered into with a union, which may contain change of shareholding provisions.

Mandatory offers

16. Is there a requirement to make a mandatory offer?

The bidder must make a mandatory takeover offer for voting shares when the bidder (or PAC):

  • Acquires, holds or exercises control of more than 33% or more of the target's voting shares (or is entitled to do so).

  • Already holds between 33% and 50% of the target's voting shares and then acquires more than 2% of the target's voting shares in any six-month period.

  • Acquires between 20% and 33% of the target's voting shares and the Securities Commission exercises its discretion to trigger the mandatory general offer requirements. The mandatory general offer requirements are normally triggered in cases where the Securities Commission has established that the bidder or PAC has, in fact, obtained control of the target (more than 33% of the target's voting shares). The Securities Commission can apply certain qualitative and quantitative tests to determine whether control has been obtained. The Securities Commission can also require confirmation from the bidder and target, the bidder's and target's boards and their advisers.

An exemption from the mandatory general offer requirements can also be obtained from the Securities Commission, depending on the circumstances of the case.



17. What form of consideration is commonly offered on a public takeover?

The most common forms of consideration offered on a takeover offer are:

  • Cash.

  • Shares.

  • A combination of cash and shares.

While it is possible to offer other forms of consideration, such as debt instruments, this is not common.

If the bidder or its PAC have purchased 10% or more of the target's shares during the three months prior to the offer period, the bidder must provide a share component in the consideration. This applies to all takeover offers, whether mandatory or voluntary.

In a voluntary offer, the consideration must include a cash element when either the:

  • Bidder or PAC have purchased 10% or more of the target's shares for cash during the six months prior to the start of the offer period.

  • Bidder or PAC acquire voting shares of the target for cash during the offer period.

  • The Securities Commission determines that it is necessary to give effect to the requirements under section 8 of the Code (relating to the conduct of all parties involved in a takeover).

18. Are there any regulations that provide for a minimum level of consideration?

If the bidder has accumulated shares in the target before announcing the bid and the bidder subsequently triggers the mandatory offer obligation, the price of the mandatory offer will be affected. A mandatory offer must be made at a price not less than the highest price paid (or agreed to be paid) by the bidder and PAC for any voting shares in the target during the six months before the start of the offer period.

For both mandatory and voluntary offers, when the bidder or PAC pays or agrees a price for any voting shares during the offer period that is higher than the price stated in the offer document, the bidder must increase the consideration so that the offer price is no less than that higher price offered during the offer period. In such case, the bidder must immediately announce by press notice the revised offer price and the number of voting shares that the bidder has purchased or agreed to purchase.

19. Are there additional restrictions or requirements on the consideration that a foreign bidder can offer to shareholders?

There is no distinction in the treatment of a local and foreign bidder under the Code. Therefore, any restrictions on the form of consideration will apply to both local and foreign bidders.



Compulsory purchase of minority shareholdings

20. Can a bidder compulsorily purchase the shares of remaining minority shareholders?

Once a takeover offer has been made, the bidder can compulsorily purchase the shares from the remaining minority shareholders if the bidder acquires 90% of the nominal value of the shares of that class for which the offer has been made, within four months of making that offer. This excludes any shares already held by the bidder and its PAC at the date of the takeover offer.

A minority shareholder can require the bidder to acquire its shares on the terms of the takeover or other terms that may be agreed if both:

  • The bid has been accepted by the holders of at least 90% in value of all the shares.

  • The offer period has not expired.

Restrictions on new offers

21. If a bidder fails to obtain control of the target, are there any restrictions on it launching a new offer or buying shares in the target?

Where the offer has been withdrawn, lapsed or failed, a bidder or PAC cannot do any of the following within 12 months of the date of announcement:

  • Make a takeover offer for the voting shares or voting rights that had been the subject of the previous takeover offer.

  • Acquire any voting shares or voting rights if this would require the bidder to make a mandatory offer (see Question 16).

  • Acquire any of the target's voting shares or voting rights if the bidder holds voting shares or voting rights carrying over 48% but not more than 50% of the class of voting shares or voting rights that had been the subject of a previous takeover offer.

  • Acquire any interest in the voting shares or voting rights on more favourable terms than those made available under its lapsed offer until any competing offers have been declared unconditional or have lapsed.

In addition, there are several restrictions on a bidder or a PAC who has announced that it does not intend to make a takeover offer for the target (see Question 12, Bidder's obligations).


22. What action is required to de-list a company?

De-listing of a company can be effected by the stock exchange or voluntarily by the target. Bursa Malaysia will automatically suspend trading in the target's shares when less than 10% of the shares are held by shareholders other than the bidder.

Bursa Malaysia will also de-list the target in respect of the shares which have been the subject of a compulsory purchase resulting in the bidder emerging as the sole shareholder of the target company. However, in cases where the bidder has not managed to obtain acceptances amounting to 90% of the issued shares of the target held by others prior to the commencement of the takeover offer but has succeeded in making its offer unconditional, it will be necessary for the target to request de-listing from the stock exchange.

A listed company cannot request de-listing unless:

  • The company convenes a general meeting to obtain approval from its shareholders and sends a circular, in the prescribed form, to the shareholders. A separate meeting and circular may be necessary for holders of any other class of listed securities.

  • The resolution for withdrawal is approved by a 75% majority of the shareholders (or holders of any other class of listed securities) present and voting either in person or by proxy at the meeting. The proportion of shareholders or holders objecting to the withdrawal at that meeting must not be more than 10% in value.

  • The shareholders (or holders) are offered a reasonable cash alternative or other reasonable alternative for their shares (exit offer).

  • An independent adviser has advised and made recommendations to the shareholders in connection with the:

    • listing withdrawal; and

    • fairness and reasonableness of the exit offer.

If the bidder has achieved acceptances rendering the offer unconditional, but is unable to exercise a compulsory purchase, the bidder will have to launch a second takeover offer to satisfy the exit offer requirement.


Target's response

23. What actions can a target's board take to defend a hostile bid (pre- and post-bid)?

Without an ordinary resolution passed in a shareholder meeting, the target's board cannot take any action to frustrate an offer during the offer period or if it has reason to believe that a bona fide takeover offer is imminent. A shareholder meeting is required to:

  • Issue any authorised but unissued shares.

  • Issue or grant options in relation to any unissued shares.

  • Create, issue or permit the issue or subscription of any shares.

  • Sell, dispose of, agree to sell or acquire the target's assets in a material amount.

  • Enter into contracts for and on behalf of the target (or allow contracts to be entered into), otherwise than in the target's ordinary course of business.

  • Dispose of any asset or liability that is a condition of the takeover offer.

  • Sell treasury shares into the market.

  • Cause the target or any of the target's subsidiaries or associated companies to:

    • purchase or redeem shares in the target; or

    • provide financial assistance for any such purchase or redemption.

However, a shareholder meeting is not required if any of the proposed actions were done pursuant to:

  • A bona fide contract entered into before receipt of the takeover offer which was not designed to frustrate the target's takeover offer or change the target's activity.

  • An obligation or other special circumstance which the Securities Commission approves in writing.



24. Are any transfer duties payable on the sale of shares in a company that is incorporated and/or listed in the jurisdiction? Can payment of transfer duties be avoided?

Stamp duty is payable on a transfer of shares (Stamp Act 1949).

Private companies

For a transfer of shares in a private company, stamp duty is payable on the transfer at the rate of 0.3% on the highest of the:

  • Sale consideration.

  • Par value of the shares.

  • Value per share based on the net tangible assets of the company.

  • Value per share based on the price earning multiple/price earning ratio (that is, the market value per share divided by the earnings per share).

Public listed companies

For a transfer of shares in a public listed company, stamp duty is payable at 0.1% of the value of the shares subject to a cap of MYR200 for each contract note relating to the sale of shares in a public listed company.


An instrument of transfer can be exempted from stamp duty under specific provisions of the Stamp Act 1949 in relation to:

  • Schemes of reconstruction or amalgamation of companies (section 15, Stamp Act 1949).

  • Transfers of property between associated companies (section 15A, Stamp Act 1949).


Other regulatory restrictions

25. Are any other regulatory approvals required, such as merger control and banking? If so, what is the effect of obtaining these approvals on the public offer timetable?

Merger control

There are no merger control regulations in Malaysia. The Malaysian Competition Act (Competition Act) came into effect on 1 January 2012. While there is no merger control regime under the Competition Act, it prohibits anti-competitive practices and abuse of dominant market position.

Sectoral regulation

However, Malaysia has a number of sectoral regulators responsible for issuing operating licences across different industry sectors. Approval from such a regulator may be required in connection with a takeover offer. For example, the approval of Bank Negara Malaysia is required if a financial institution changes its shareholding by 5% or more.

If a mandatory offer requires the approval of a sectoral regulator, the bidder must ensure that all the necessary approvals are obtained as soon as practicable before dispatching the offer document. If the necessary approvals cannot be obtained in time, an application can be made to the Securities Commission for an extension of time to dispatch the offer document.

26. Are there restrictions on the foreign ownership of shares (generally and/or in specific sectors)? If so, what approvals are required for foreign ownership and from whom are they obtained?

There are no general restrictions on the foreign ownership of shares in Malaysian companies. This follows the Malaysian Government's abolition of the Guidelines on the Acquisition of Interests, Mergers and Take-overs by Local and Foreign Interests in June 2009.

However, as discussed above, a number of sectors are regulated. A sectoral regulator may impose certain conditions on a company's operating licence. The type of approvals required and the party from whom they are to be obtained depends on the laws, regulations and guidelines governing the particular sector (see Question 25).

27. Are there any restrictions on repatriation of profits or exchange control rules for foreign companies?

The Financial Services Act 2013, read together with the Foreign Exchange Administration Notices, empowers Bank Negara to safeguard the balance of payments position and the value of the Ringgit. These provisions do not restrict the repatriation of profits by a foreign shareholder, or prevent a foreign company from disposing its investments in Malaysian companies and thereafter remitting the proceeds (in a foreign currency) from the disposal out of Malaysia.

28. Following the announcement of the offer, are there any restrictions or disclosure requirements imposed on persons (whether or not parties to the bid or their associates) who deal in securities of the parties to the bid?

Disclosure of dealings during offer period

The following persons must disclose all voting shares, voting rights, non-voting shares or convertible securities of the target which are dealt with using its own account:

  • The bidder or the target and their respective PACs.

  • Any substantial shareholders of the bidder or target.

  • Any chief executive officer or director of the bidder or target.

  • Any officer occupying or acting a senior managerial position in the bidder or target, whatever his title and whether or not he is a director.

  • Any person who is connected to any of the above persons.

  • Any person in accordance with whose directions and instructions the above persons are accustomed to act.

Disclosure is made to the Securities Commission and must also be announced, no later than noon on the market day following the relevant dealing in shares, to either:

  • The public in a press notice, if the shares of the bidder or target are not listed.

  • Bursa Malaysia, if the shares of the bidder or target are listed.

False markets

A person involved in a takeover offer is prohibited from creating false markets in the securities of the target, the bidder or any other company concerned in the takeover offer. A false market is created where the price of securities becomes artificial and the normal functioning of the market is distorted.



29. Are there any proposals for the reform of takeover regulation in your jurisdiction?

The Code is the most significant reform to the rules governing takeover offers since the Malaysian Code on Take-Overs and Mergers 1998.

It is broadly similar to the previous legislation, but introduces:

  • Improved protection for investors.

  • Enhanced transparency of information through greater disclosure requirements.

  • More extensive responsibilities for the directors of the target company.

There are no other proposals for reform as the Code was only released on 15 December 2010.


The regulatory authorities

Securities Commission


Main area of responsibility. Regulating takeovers and mergers (among other things).

Companies Commission of Malaysia (Companies Commission)


Main area of responsibility. Ensuring compliance with company law.

Bursa Malaysia Securities Berhad


Main area of responsibility. The principal Malaysian stock exchange and supervises listed companies.

Online resources

Capital Markets and Services Act 2007 (CMSA)


Description. The website is maintained by the Securities Commission and the information contained on the website is up-to-date.

Malaysian Code on Take-Overs and Mergers 2010 (Code) and accompanying Practice Notes


Description. The website is maintained by the Securities Commission and the information contained on the website is up-to-date..

]Bursa Malaysia Listing Requirements 2010 (Listing Requirements)


Description. The website is maintained by the Bursa Malaysia Securities Berhad and the information contained on the website is up-to-date.

Contributor details

Brian Chia

Wong & Partners, member firm of Baker & McKenzie International

T +603 2298 7999
F +603 2282 2669

Qualified. England and Wales, 1990; Singapore, 1997; Malaysia, 1991

Areas of practice. M&A; venture capital; private equity; general corporate and commercial; employment; IT; corporate securities; corporate reorganisations.

Recent transactions

  • Advised a Malaysian sovereign wealth fund on its MYR1.225 billion acquisition of a 75% stake in the of an independent power producer, and 100% of the company providing operation and maintenance services to the power plant. The coal-fired power plant is owned by a joint venture company that includes Tenaga Nasional Berhad and the Negeri Sembilan state government.
  • Advised Manulife Holdings Berhad in connection with the acquisition of the entire issued share capital in MAAKL Mutual Berhad for a total purchase consideration of MYR96.48mn. The acquisition will elevate Manulife Holding Berhad's unit trust business to become one of the top ten largest in Malaysia in terms of unit trust assets.
  • Advised AIA Group Limited in relation to the US$1.8bn acquisition of ING Groep NV's Malaysian insurance and takaful business and on the merger between AIA Malaysia’s and ING Malaysia’s life insurance and takaful businesses under Part XI of the Insurance Act. The acquisition will combine ING’s Malaysian operations and AIA’s existing Malaysian business, currently the third and the fourth largest in Malaysia respectively, to create the largest life insurance firm in the country. This transaction was recently awarded "SE Asia M&A Deal of the Year 2013" by ALB in May 2013.
  • Advised Sime Darby Berhad in respect of its subsidiary's participation in a joint venture with the subsidiaries of SP Setia Berhad and the Employees' Provident Fund Board. The joint venture vehicle was incorporated in Jersey, Channel Islands. The subsidiary of the joint venture vehicle, in turn, was utilised as the vehicle to acquire the Battersea Power Station in the United Kingdom. This transaction was recently recognised as "Deals of the Year 2012" by Asian-MENA Counsel in April 2013, and “Best Cross-Border Investment by an Asian Investor” by REIW Asia Awards for Excellence 2013.

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