Depending on what a buyer is purchasing, business takeovers in Malaysia are usually structured as:
- a share sale to take over the company itself, or
- an asset sale to take over a business operated by the company
As the choice has a direct effect on risk, cost, and how smoothly the takeover proceeds, our guide covers essentials of both to help buyers decide which is best for their situation.
Share sale
In a share sale, the buyer acquires equity in the entity that runs the business.
This means stepping into the shoes of the existing shareholders and taking over the business as it stands.
It is commonly used when the buyer wants to take over the existing business brand and goodwill, licences, historical liabilities or market position without disrupting operations.
Asset sale
In an asset sale, the buyer acquires the assets in the business, but not the legal entity that owns them.
The parties decide what is transferred and what is left behind, which in practice allows the buyer to take over the business while leaving historical liabilities behind.
For this reason, it is often preferred by buyers in the same industry looking to expand their market share without unnecessary liabilities and risks.
Quick comparison
The table below highlights how the two structures may differ in practice.
| Share Sale | Asset Sale | |
|---|---|---|
| What is Acquired | The company entity itself, including all assets and liabilities | Selected business assets (tangible and intangible) |
| Timeline & Due Diligence |
|
|
| Liabilities | All existing liabilities are taken over by the buyer | Buyer may choose to exclude liabilities |
| Licenses & Contracts | Usually remain with the company, subject to existing terms | Often requires transfer, novation, or fresh application |
| Employees | Generally unaffected as the employer remains the same | Buyer can offer fresh employment or exclude employees |
| Flexibility | Lower flexibility as the buyer takes over the company as a whole | Higher flexibility as the buyer can define which assets are acquired |
| Continuity | Business can usually continue without interruption | Depends heavily on asset transfers and licences |
| Common use case | When operational continuity is critical or where licences and contracts must remain intact | When the buyer wants to cherry-pick assets or run the business through its own legal entity |
Of course, every sale differs by industry, nature of business, and transaction structure, leading to certain factors being more complex in one deal than another.
For example, a share sale involving a regulated or group company may take significantly longer to complete than a business asset sale.
Cost expectations
Choosing between a share sale and an asset sale affects not only the transaction structure, but also the types of documents involved and the overall costs.
Share sale
Costs are generally tied to the transfer of shares and the takeover of the existing company and commonly include:
- stamp duty on share transfer calculated based on 0.3% of share sale value or market value whichever is higher (borne by buyer)
- capital gains tax from disposal of shares (borne by corporate seller)
- company secretarial costs such as resolution preparations
- due diligence costs which may be higher for larger operations
- legal fees such as a letter of intent, NDA, share sale agreement, and Shareholders’ Agreement
Asset sale
Costs are often more fragmented as individual assets are transferred rather than the company itself, but commonly include:
- stamp duty on asset transfers depending on the type of assets involved
- asset transfer documentation, required for certain assets
- assignment or novation documents for contracts being taken over
- licence transfers / re-application for ones that cannot be transferred
- incorporation costs if the buyer needs to set up a new company
- IP assignment costs for any trademarks, patents or other intellectual property
- legal fees which may cover a letter of intent, NDA, business asset sale agreement, employment documentation and IP assignment agreement
Of course, the above reflects common cost buckets, and not every item will apply to every transaction.
Final thoughts
In practice, there is no single “right” structure for every business acquisition. The choice between a share sale and an asset sale depends on what the parties are trying to achieve and the realities of the business involved.
If you are considering acquiring a business in Malaysia and are unsure which structure suits you best, we would love to guide you through the process.
