Mergers and Acquisitions in Malaysia

Updated on Friday 19th April 2019

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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 which slowed down the 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 the 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. 

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.


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. 

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.