A Business Guide To Mergers & Acquisitions In Malaysia

For a foreign investor, buying into an existing Malaysian business is often faster than starting from scratch. You skip the years of finding a premises, hiring a team, applying for licences, and building a customer base. On day one, you already have a working business. 

That said, a typical M&A deal in Malaysia involves several key steps, including:  

• choosing the right deal structure 
• checking if your sector restricts foreign ownership 
• planning for regulatory approvals, and finally 
• signing relevant agreement 

To help foreign investors avoid missteps that can cause delays and wasted resources, our guide covers how M&A works in Malaysia from start to finish and the points that matter most. 

Defining “M&A” in Malaysia

“Mergers and acquisitions” is just a broad term for any deal where ownership or control of a business changes hands. In Malaysia, this usually takes one of three forms: 

• share acquisition – you buy the shares of the company 
• asset acquisition – you buy specific assets or an entire business, but not the company itself 
• joint venture (JV) – you partner with someone (often a Malaysian) by setting up or buying into a shared company 

For more on how JVs compare to Partnership in Malaysia, see our joint venture vs partnership agreement guide. 

Relevant laws

A few key laws shape how M&A deals work here: 

• Companies Act 2016 – the main rulebook for how shares are issued, sold, and how companies combine
• sector-specific laws – banking, telecoms, oil and gas, healthcare, education and others each come with their own foreign ownership limits and approval rules

For most private deals between a foreign buyer and a Malaysian Sdn Bhd, the Companies Act 2016 and any relevant sector regulator will drive the process. 

Common ways to structure an M&A deal 

1. Buying shares 

You buy shares from the existing owners. The company keeps running as it is, same contracts, same licences, same employees, just under your name now. 

This is the most common choice when: 

• the target’s licences would be hard to re-apply for (e.g. manufacturing licence), and 
• you are comfortable taking on the company’s history (including its tax, employment, and any past disputes). 

The key document is the Share Sale & Purchase Agreement (SPA), often paired with a Shareholders’ Agreement (SHA) if the existing shareholders are staying on. 

2. Buying assets (or the business itself) 

Instead of buying the whole company, you cherry-pick which assets, contracts, and employees you want and formalised through an Asset Sale Agreement. 

This makes sense when: 

• you want a clean break from the company’s history, 
• you only want part of the business, or 
• the shares are difficult to transfer. 

The downside is that contracts, licences, and employees usually need to be transferred or re-signed one by one. That takes time, and some licences cannot be transferred at all. 

3. Joint venture (JV)

You and a partner each take shares in a company that runs the JV business, a popular option when: 

• you want local know-how, distribution, or licensing relationships; or 
• both sides want to combine without one swallowing the other. 

JVs come with their own tax considerations and should be planned with a qualified tax adviser. Our cosec partner MISHU has a helpful primer on the tax treatment of foreign joint ventures in Malaysia. 

The JV terms, who gets how many shares, who controls the board, how deadlocks are resolved, who can exit and how are set out in a JV Agreement.  

How a typical M&A deal unfolds 

Most private deals roughly follow this path: 

1. Find a target. You shortlist companies that fit what you are looking for. 
2. First conversation and NDA. Once you approach a target, both sides usually sign a non-disclosure agreement (NDA) before sensitive information is shared. 
3. Term sheet. A short document setting out the headline terms, price, structure, exclusivity, timeline. Most of it is non-binding, but confidentiality and exclusivity are. Founders may also see term sheets in fundraising. 
4. Due diligence. You (with your lawyers, accountants, and tax advisers) take a hard look under the bonnet, legal, financial, tax, and commercial. Legal due diligence typically covers corporate housekeeping, contracts, employees, IP, licences, lawsuits, and any property. 
5. Definitive agreements. Once due diligence is well underway, the binding agreements are negotiated, the SPA and, if relevant, a SHA, Investment Agreement, or other supporting documents. 
6. Conditions to be met before closing. Things that have to happen before money changes hands, third-party consents, regulatory approvals, lender approvals, internal restructuring. 
7. Regulatory approvals. Depending on the sector and deal size, you may need approvals from MITI (manufacturing), Bank Negara Malaysia (financial services), MCMC (communications), the Securities Commission (capital markets), and others. 
8. Closing. Payment is made, shares or assets transfer, board and shareholder resolutions are signed, statutory registers are updated, and the filings are made with the Companies Commission of Malaysia (SSM). The cosec usually handles those filings. 
9. After the deal. Handover, employee onboarding, system migrations, and (where relevant) name changes and licence updates. 

Sector-specific foreign ownership limits 

Malaysia is generally open to foreign investment, but some sectors still cap foreign shareholding or attach conditions, examples may include: 

• financial services (banking, insurance, capital markets)
• telecommunications
• shipping and freight forwarding
• wholesale and retail trade (WRT licence conditions)
• legal, accounting, engineering and other professional services
• education and healthcare

Some sectors also require a minimum Bumiputera (ethnic Malay or indigenous Malaysian) shareholding for licensing. 

Before you sign anything, confirm two things: is the target’s business in a restricted sector, and is 100% foreign ownership allowed there? 

Subsidiary vs branch vs JV 

The difference between a “foreign company” and a “foreign-owned company” in Malaysia is significant and the similar naming convention often causes confusion. Ultimately, foreign investors usually enter Malaysia through one of three business vehicles: 

• Malaysian subsidiary (Sdn Bhd) – a Malaysian company that can be 100% foreign-owned in most sectors 
• foreign branch – the foreign parent registers a branch in Malaysia. Useful in narrow cases but generally not the best fit for acquisitions 
• joint venture with a local partner – used where licensing or commercial reasons make it the right call 

Those seeking more detail can read this subsidiary vs branch comparison, but as a general rule, most acquirers opt for a Sdn Bhd due to the limited liability protection of a separate legal entity. 

5 common pitfalls for foreign investors

1. Treating the term sheet as “just a formality.” Term sheet positions are very hard to back out of later. Get legal eyes on it before signing.
2. Doing light due diligence. Hidden tax exposures, undocumented IP, related-party contracts, and lawsuits can surface late in deals where due diligence was rushed. 
3. Underestimating timelines. Sector approvals and licence transfers can dominate the schedule. Map them out at the term sheet stage. 
4. Forgetting about life after closing. If you’ll be running the business alongside the existing owners (in a JV or roll-over), your Shareholders’ Agreement is what holds it together. It deserves as much care as the SPA. 
5. Mixing up the advisers. Lawyers do the legal work, Cosec firms do SSM filings, tax advisers handle tax, and visa consultants do work passes. Asking one professional to do all four tends to end badly. 

Who investors need on their side 

A typical foreign-investor M&A deal in Malaysia involves: 

• Corporate M&A lawyers for deal structuring, due diligence, drafting and negotiating the SPA, Shareholders’ Agreement, and supporting documents, 
• Company Secretaries to set up the acquisition vehicle and handle statutory filings, 
• tax advisers for tax structuring and stamp duty planning, 
• financial advisers or accountants for valuation and financial due diligence. 

Getting these people lined up early usually saves time and money later. 

How Edwin Lee & Partners helps 

We act for foreign and Malaysian buyers and sellers on private M&A deals across a range of sectors. We typically handle legal due diligence, deal structuring, drafting and negotiating share or asset SPAs, shareholders’ agreements, and JV documentation, and we manage the deal through to closing alongside your tax, financial, and cosec advisers. If you’re thinking about acquiring or partnering with a business in Malaysia and would like to map out the legal side, you can book a consultation with us.