Articles

Government requirements for Data Protection Officers (DPO) in Malaysia including core competencies and training suggestions.

Depending on the business, you may not need to appoint a DPO at all, or be required to appoint several

The essentials of Malaysia’s beneficial ownership (BO) declaration requirements under the Companies Act 2016 and LLP Act 2012.

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

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  How to address it:  Mistake #4: Missing or outdated key policies Many SMEs operate without any formal governance policies, relying instead on informal practices and assumptions.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. 

If you’re new to preparing for an investment round or bringing on new shareholders, chances are you’ll come across the term Share Subscription Agreement (“SSA”) for the first time.  This document sets out the terms on which an investor agrees to subscribe to new shares and forms the legal backbone of the deal.  Most SSAs are built on top of common clauses you should familiarise yourself with, and below, we explain 13 key SSA clauses in what many lawyers are allergic to: Plain English!  Let’s begin.  Key SSA terms  Closing Conditions  Sets out what needs to happen before closing (i.e. issuance of shares).  Includes delivery of share certificates, payment confirmation, and board resolutions.  Confidentiality  Prevents either party from disclosing deal terms or sensitive business information.  Especially important if commercial or Intellectual Property disclosures were made during negotiation.  Conditions Precedent  Conditions that must be fulfilled before the subscription completes.  Examples: Shareholder or board approval, execution of related agreements (like a Shareholders’ Agreement), due diligence clearance.  Covenants  Ongoing promises made by the company (or founders) after the agreement is signed.  Example: Not issuing further shares without investor consent, maintaining insurance coverage, etc.  Governing Law  Specifies which country’s laws apply to the agreement.  Most Malaysian SSAs are governed by Malaysian law under the Contracts Act 1950.  Indemnities  Protects the investor from specific losses.  Example: If a warranty turns out to be false and causes financial harm, the company must compensate the investor.  Non-Compete / Restraint Clauses  Protects the investor’s interest by preventing founders from starting or joining a competing business.  Common in early-stage deals, usually limited to 1–2 years post-exit.  Purchase Price & Payment Terms  Outlines the amount payable and how payment will be made.  Can be a single payment or split into tranches tied to milestones.  Subscription Details  Specifies the number, class, and price of the shares being subscribed for.  Often includes whether the shares are ordinary or preference shares.  Termination Clause  Defines when and how either party can walk away before closing.  Example: If Conditions Precedent are not fulfilled within 60 days, the SSA automatically terminates or either party has the right to terminate.  Tranches  Used when the investor is injecting funds in stages.  Example: RM500,000 now, another RM500,000 after certain KPIs are met.  Warranties and Representations  Statements made by the company to reassure the investor.  Common warranties: company is duly incorporated, no undisclosed liabilities, all tax filings up to date.  Why these clauses matter  Each clause in an SSA serves a commercial or legal purpose, and collectively, these terms:  At ELP, we have seen how overlooking even a “boilerplate” clause creates problems down the line when unclear share rights, timelines, or warranties cause misunderstandings.  Final thoughts  If you’re signing or negotiating an SSA, understanding these clauses is essential – remember it’s the legal backbone of a deal, which means neglecting it can cause legal back pain!  If you need help, ELP routinely drafts, reviews, and negotiates Share Subscription Agreements for fundraising rounds, capital restructurings, and joint ventures.   We make sure terms are not just legally sound, but commercially fair to our clients.