Author name: Wong Shen Ming

We provide Singaporean business owners and decision makers with a clearer picture of how to manage workforce changes in Malaysia responsibly.

We define revenue-sharing between companies, how it can be structured from a legal perspective; and common pitfalls to watch out for.

The smart way for SMEs in Malaysia to hire talent, expand markets, and develop new products without heavy upfront costs.

Unlike referral fees or revenue-sharing, a true 50/50 profit-sharing arrangement is a collaboration where both parties share ownership and profits on the same terms.  While appealing in theory, this approach is generally only sustainable in a narrow set of circumstances. Below we explore when 50/50 profit-sharing makes sense and how SMEs in Malaysia can structure a Profit-Sharing Agreement that avoid disputes.  When 50/50 profit-sharing make sense It works best when both parties contribute equally critical inputs that make the business or project possible, including:   To state the obvious, equal doesn’t have to mean the same type of input, as partners can each contribute a different but equally valuable asset.   Some typical scenarios include:  Scenarios   Why 50/50?   A training centre signs a collaboration contract with a co-working space to offer bundled membership + training packages.   Both parties rely equally on each other’s existing customer base and assets to generate sales, so the revenue split is balanced.   Two software firms enter into a Partnership Agreement to co-develop a new AI tool.    IP created jointly is usually shared equally. As profits are derived from using or licensing the IP, the profit split reflects the 50/50 ownership.   Two brands jointly open a café under a co-investment arrangement, each putting in equal funds.   Both sides take on the same financial and operational risks. Since the exposure is equal, it is fair for the profits to be equally shared.   What matters is without one party, the project fails, which justifies an equal share of profits.  Key clauses  Disputes happen when terms are vague or when partners have different expectations.   Here are the clauses that matter:  1. Clear definition of “Profit”  Usually, parties define profit as net profit after deducting expenses, but which expenses are deductible, and to what extent?  It’s also crucial to clarify if the profit is from a specific project, product line, or the overall business?  2. Profit Distribution Mechanism  Some businesses prefer quicker distributions to maintain steady returns; others favour less frequent payouts to ease accounting and preserve working capital.   The key is to agree on a schedule that matches the business model and cashflow cycle with:  3. Contributions and Roles  Be specific about what each side is bringing in, and, more importantly, set out ongoing roles and responsibilities. As the project grows, build in a mechanism to review and update these roles so the arrangement stays fair and practical.    The goal is to avoid one side later feeling they do more work and questioning if a 50/50 split is fair.  4. Intellectual Property (IP) Ownership  In collaborations that create new products, equal ownership of IP is common.  However, another option is for one party to hold ownership while granting the other a licence.   Decide upfront if IP will be jointly owned or owned by one party with licence rights for the other, bearing in mind that IP may be far more valuable than immediate profits.  5. Exit & Termination  Always plan so that if one party wants to exit early, the agreement clearly covers:  6. Non-Solicitation & Non-Circumvention In profit-sharing arrangements, partners often gain access to each other’s internal resources.  Non-solicitation (no poaching of staff or clients) and non-circumvention (no bypassing to deal directly with the other’s contacts) clauses prohibit parties from bypassing the other and behaving unethically.  With these protections in place, parties are also much more open to share resources.  7. Dispute Resolution   Disagreements may arise over profit calculations or distribution timelines. To prevent delays and ensure continuity, the agreement should clearly set out a dispute resolution mechanism.  This may include:  With a structured resolution pathway, parties can address conflicts efficiently without stalling business operations.  5 practical tips for SMEs  If you are considering a 50/50 profit-sharing arrangement, be very clear about the fundamentals:  It’s the same with any contract: Disputes happen due to ill-defined terms or misaligned expectations, so communicate transparently and make sure everything is in writing, and you have done the most to prevent problems down the road.  Let ELP draft your 50/50 Profit-Sharing Agreement  If you are considering a 50/50 profit-sharing arrangement, get in touch today and we would love to help you draft a clear and practical Profit-Sharing Agreement that protects your business and prevent future disputes.  

Why an Anti-Bribery & Corruption Policy helps shield your business from corporate liability under Section 17A of the MACC Act.

Though Malaysia’s Whistleblower Protection Act 2010 (with amendments in 2025) provides whistleblowers with certain safeguards, these protections only apply when disclosures are made to enforcement agencies and does not extend to internal company disclosures.    As a result, fraud, harassment, bribery, or abuse of power can run rampant in organisations as employees, driven by fear and a lack of confidence in the system, refuse to report offences.  A well-designed Whistleblower Policy changes that, empowering everyone from team members to contractors and suppliers to report wrongdoing safely and confidentially.   Protections under the Whistleblower Protection Act 2010   When a whistleblower makes a disclosure of improper conduct to an enforcement agency, they may receive protection under the Whistleblower Protection Act 2010, which include:  For more details, you can refer to an FAQ by the Legal Affairs Division of the Prime Minister’s Department.  Drafting effective whistleblower policies  An effective policy will specify the following parts:  How it protects your business  A well-implemented whistleblower policy protects your business in more ways than one:  From policy to culture of integrity  A whistleblower policy is only useful if people know it exists, understand it, and feel confident using it.   That means companies must go beyond just drafting a document, they also need to embed the policy into everyday awareness, and here’s how you can put it into practice:  Convenience  To ensure the policy is easily accessible to all stakeholders, it can be: circulated internally via email included in the employee handbook code of conduct on company website (especially for external vendors or partners) Repeated  Don’t rely on a one-time announcement. Keep the policy visible and fresh in employees’ minds through regular internal communications such as: email reminders team briefings onboarding kits Train Employees  Hold regular briefings or refreshers and make sure employees know: what types of concerns should be reported how the reporting process works what protections they will receive Ready to strengthen your governance?  There’s a reason a whistleblowing is on our shortlist of most important SME governance policies: it helps build workplaces where people feel safe speaking up, and where integrity is more than just a value.  If you would like guidance on drafting or enhancing your Whistleblower Policy, our team is here to support you. Let’s work together to build a workplace where people feel safe speaking up, and where integrity is more than just a value, it’s part of how you operate. 

Good governance starts with the right policies, and so below are six core corporate governance policies that form a strong foundation for legally compliant and morally ethical operations.   While not mandatory in every case, they are strongly encouraged as best practices and should be tailored to suit your company’s size, industry, and operational needs.  Policy #1: Conflict of Interest Conflicts of interest often arise when personal and business interests overlap. For example:   A Conflict of Interest Policy ensures that decisions are made in the company’s best interest by clearly setting expectations for employees, managers, and directors to disclose potential conflicts.   What it typically covers:  Policy #2: Code of Conduct  A Code of Conduct defines what constitutes acceptable and expected behaviour in the workplace. It also provides guidance on issues like workplace harassment, discrimination, use of company resources, and respectful treatment of colleagues and customers.  What it typically covers:  Policy #3: Anti-Bribery & Corruption Section 17A of the MACC Act specifically holds companies liable if anyone associated with them engages in bribery, even if the company’s directors or management were unaware of it.   An Anti-Bribery & Corruption Policy provides a framework for employees and associated parties to identify and avoid unethical conduct. Beyond internal controls, a well-documented and implemented policy may be one of the key elements of your company’s legal defence under Section 17A.    What it typically covers:  Policy #4: Personal Data Protection Mishandling or failing to safeguard personal data from customers, employees, or other stakeholders can lead to regulatory penalties, lawsuits, loss of customer trust, and reputational damage.   A Personal Data Protection Policy sets out clear rules and procedures for collecting, storing, using, and disclosing personal data and helps your company demonstrate accountability and compliance with privacy laws such as the Malaysia’s Personal Data Protection Act (PDPA).   What it typically covers:  Policy #5: Confidentiality Employees, directors, and contractors often have access to sensitive company information that, without clear rules, could be inadvertently or intentionally disclosed, potentially harming your company’s competitive position or breaching contracts.  A Confidentiality Policy clearly defines what information is considered confidential, who is responsible for safeguarding it, and how it must be handled in daily operations. It may also outline the consequences of breaches and reminds employees of their ongoing obligation to maintain confidentiality even after leaving the company.   What it typically covers:  Policy #6: Whistleblowing A Whistleblower Policy provides a safe, confidential, and protected channel to report suspected wrongdoing such as fraud, bribery, harassment, or other unethical or illegal activities without fear of retaliation.   Encouraging early reporting allows the company to address issues before they escalate and demonstrates its commitment to integrity and accountability.  What it typically covers:  Strengthen your business with good governance   Good governance starts with clear, well-implemented policies and these six core policies form the foundation of a strong governance framework and fostering an ethical, accountable culture across your organisation.   If you would like guidance on drafting or reviewing these policies for your organisation, we are here to help. 

Many SMEs in Malaysia mistakenly view corporate governance as something only large, public-listed companies need to worry about. This often leads to governance being overlooked, exposing businesses to unnecessary risks and costly, avoidable mistakes.  In this article, we highlight some of the most common corporate governance mistakes SMEs make, and how you can address them to build a stronger, more resilient business.  Mistake #1: Treating governance as a compliance burden  In simple terms, corporate governance refers to the framework of policies, processes, and practices that guide how a business is directed and controlled.   Beyond mere compliance, good governance means implementing practical measures like:   Mistake #2: No clearly defined roles and responsibilities  Many SMEs operate with directors, managers, and employees wearing multiple hats, which is normal in a lean business. But without clearly defined roles and accountability, decisions get delayed, tasks are overlooked, and risks go unchecked.  How to address it:  Mistake #3: Overlooking conflicts of interest  In many SMEs, it’s common for directors, managers, and employees to have overlapping personal and business relationships. Failing to disclose and manage these conflicts can damage a company’s credibility, create the perception of bribery or corruption, and even expose you to legal risks.  How to address it:  Mistake #4: Missing or outdated key policies Many SMEs operate without any formal governance policies, relying instead on informal practices and assumptions. This leaves the business exposed to risks and makes it harder to enforce standards when issues arise.  How to address it:  Mistake #5: Ignoring legal compliance risks  Some SMEs overlook the fact that poor governance can lead to serious legal consequences, including hefty fines, lawsuits, and even imprisonment of company directors or management.   This risk isn’t just theoretical. Malaysian laws are increasingly strict on corporate accountability, and areas where SMEs often fall short include:  Area  SME Shortcomings  Anti-Bribery & Corruption  Lack of internal controls, anti-bribery policies, staff training, or monitoring mechanisms, leaving the company vulnerable to liability under the MACC Act (Section 17A) Personal Data Protection  Collect and store personal data without adequate procedures or safeguards. This mishandling risks data breaches, customer complaints, and non-compliance with the PDPA Workplace Safety  Overlook safety assessments, proper equipment, or written procedures, creating unsafe conditions and leaving the company exposed to OSHA inspections and fines Audited Financial Statements  Delay or fail to engage auditors or maintain proper records for audit purposes, resulting in late or incomplete financial statements, contravening the Companies Act 2016 How to address it:  Strengthen your business with good governance   Good governance is more than a compliance exercise, it’s a strategic advantage. By avoiding these common mistakes and putting the right policies and practices in place, you can build a more resilient, ethical, and trustworthy business that inspires confidence among stakeholders.  If you are ready to strengthen your governance framework, our team is here to help.   We can work with you to draft, review, and implement practical, tailored policies that fit your organisation’s unique needs and protect your business long-term success.