Mergers and Acquisitions in Malaysia

Updated on Thursday 24th November 2022

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Mergers and acquisition (M&A) in Malaysia consist of several types of transactions and strategies employed by corporations for the purpose of integrating, acquiring and controlling other businesses. The process is a regulated one and foreign investors interested in this practice should be well aware of the market particularities, the challenges, and the business valuation.
The M&A market in Malaysia is driven by private equity houses, as well as by the insurance industry. At the moment, Malaysian authorities conduct policies which allow foreign investors to have larger equity shares, as there is an interest to further develop the M&A industry, which is showing positive prospects. Investors who are interested in a merger or an acquisition can receive legal assistance from our lawyers in Malaysia, who can offer you consultations on matters such as due diligence, taxation, intellectual property and other issues related to an M&A transaction

Our team of attorneys answers some of the most commonly asked questions regarding the M&A process and can help you with further detailed answers, as needed in your case.

What are some of the first aspects to consider about the M&A market in Malaysia?

The Malaysian government is imposing less and less strict rules and regulations for foreign investors interested in the M&A market in Malaysia. At the moment, the mergers and acquisitions are no longer regulated by provisions that slowed down foreign investments; instead, the local authorities have decided to eliminate the equity conditions, which are still in force for M&A happening in strategic sectors. 

M&A with a value above 20 million MYR, which affects the ownership interests of the indigenous population in Malaysia (Bumiputera), will require the approval of the Economic Planning Unit

Are there any special considerations for foreign investors interested in M&A in Malaysia?

Another important aspect for foreign businessmen is that the local legislation in the field of M&A stipulates that foreign interest can acquire property only if the total value of the M&A is higher than 1 million MYR; our lawyers in Malaysia can offer you further details on this provision. We can also help you if you are interested in M&A in other countries, such as Vietnam, through our local partners. 

Our lawyers invite you to watch a short video about mergers and acquisitions in Malaysia

What are the main laws governing M&A activities?

The Companies Act, the Capital Markets, and Services Act and the Contracts Act are examples of the most important laws governing the process of mergers and acquisitions. One of our attorneys in Malaysia can give you detailed information about these laws and the other ones that may apply in particular cases. For public acquisitions and in certain other cases, the Code on Take-Overs and Mergers is of importance.

How are M&A contracts concluded?

The transactions agreements for the transfer of shares, the acquisition of shares in a company or the acquisition of business assets by one company from another, are governed by the Contracts Act.

If you need legal services in China we can put you in touch with our local partners.

How are M&A transactions taxed?  

The transactions in the mergers and acquisitions field are regulated by the Income Tax Act (ITA) 1967, which specifies the taxes applicable to M&A deals occurring in Malaysia

As a general rule, the purchase price in an M&A is not deductible; still, ITA provides that companies in the field of information and communication technology will receive a capital allowance for equipment having a lifespan of a maximum of 2 years. 

Immigration to Malaysia can be a simple and fast process if you collaborate with our local lawyers. A visa can be obtained in approximately 7 days if all the formalities are fulfilled. In terms of permanent residence, this document can be issued between 3 and 12 months, depending on the requests. Foreigners interested in doing business in Malaysia can apply for an investor visa or start-up visa, according to their plans. And here you can get legal advice.

Successfully completed M&A transactions can be essential to businesses. If you need further information on the M&A in Malaysia, please contact our law office for assistance. If you need legal services in other countries, we can put you in touch with our local partners, such those from Lithuania.