Buying 100%, a Majority Stake or a Minority Stake: What Changes in the SPA and When Do You Also Need a Shareholders Agreement?

Buying 100% of a Malaysian company, buying 60%, and buying 20% are not the same transaction with different numbers.

The percentage changes what the buyer controls after completion, what protections it needs before completion, and whether the SPA is enough on its own.

A 100% buyer can usually focus the SPA on acquisition risk and handover. A majority buyer also needs to manage the continuing minority relationship. A minority buyer may be paying substantial money without obtaining practical control unless governance rights are separately negotiated.

That is why the stake size should be decided together with the document architecture: what belongs in the SPA, and what needs to live in a shareholders agreement after completion?

The SPA and the shareholders agreement solve different problems

The share purchase agreement governs the acquisition: what shares are sold, price, conditions precedent, warranties, indemnities, disclosure, completion and pre-completion risk.

A shareholders agreement governs the ongoing relationship between shareholders after the buyer becomes a member: board control, reserved matters, information rights, future funding, share transfers, dilution, deadlock and exit.

If you want the document-level distinction first, see our guide to share sale agreements, share purchase agreements and shareholders agreements.

Buying 100%: the buyer is acquiring control and eliminating the shareholder relationship

Where the buyer acquires all issued shares, there is usually no continuing external shareholder relationship to govern after completion.

The SPA therefore carries most of the transaction architecture.

The buyer should focus on:

• confirming that all shares and rights are included;

• eliminating options, nominee interests or convertible rights that could undermine 100% ownership;

• price and adjustment mechanics;

• warranties, indemnities and disclosure;

• release or treatment of shareholder loans;

• director resignations and new appointments;

• bank mandates, statutory records and corporate control handover;

• seller guarantees, security and related-party arrangements; and

• transition support or restrictive covenants where appropriate.

The buyer does not normally need a shareholders agreement with the seller merely because the seller used to own the company. But continuing arrangements — such as an earn-out, retained management role or deferred consideration — may still require detailed post-completion obligations in the SPA or separate documents.

If you are the seller weighing up whether to sell all or only part of the company, see our guide to selling all or part of a company in Malaysia.

Buying a majority stake: control is substantial but not unlimited

A buyer acquiring more than 50% will usually have strong voting power, but it should not assume it can unilaterally decide every corporate matter.

The Companies Act 2016 distinguishes ordinary resolutions, which generally require more than half of votes cast by members entitled to vote, from special resolutions, which generally require at least 75% of votes cast. The company’s constitution, class rights and transaction-specific arrangements can create further constraints.

So a 60% buyer may be able to pass many ordinary resolutions while still needing minority support for matters requiring a special resolution or for rights that the shareholders have contractually reserved.

The acquisition analysis should therefore include the governance position after completion, not just the headline shareholding.

Majority buyers should negotiate the minority relationship before completion

If existing shareholders remain, the buyer should decide whether their rights are merely statutory or whether a shareholders agreement will give them additional protection.

Key questions include:

• Who appoints directors?

• What constitutes board quorum?

• Which decisions require unanimous or supermajority approval?

• Can the majority issue new shares and dilute the minority?

• What financial and operational information must be supplied?

• Can the majority force an exit?

• Can the minority tag along if the majority sells?

• Are related-party transactions restricted?

These points should not be left to a shareholders agreement negotiated after the buyer has already paid.

Buying a minority stake: economic ownership does not automatically create practical control

A minority buyer can acquire a valuable percentage and still have very limited ability to influence the company.

The SPA transfers the shares, but the buyer may need a shareholders agreement to obtain rights such as:

• a board seat or observer right;

• vetoes over defined reserved matters;

• information and inspection rights;

• pre-emption on new shares;

• anti-dilution or participation rights;

• consent over related-party dealings;

• tag-along rights;

• exit rights; and

• protection against changes that undermine the investment thesis.

Without those rights, the buyer may own part of the economics without having the governance protection it assumed the investment would provide.

Statutory minority remedies are not a substitute for negotiated governance

Malaysian company law provides remedies in appropriate cases, including the oppression remedy under section 346 of the Companies Act 2016.

But litigation is not a governance plan.

A buyer should negotiate the rights it expects to use in normal business — board access, reserved matters, information, transfer rights and exit mechanics — rather than relying on a later court remedy if the relationship deteriorates.

What belongs in the SPA?

The SPA should generally focus on the acquisition itself.

For any stake size, that can include:

• the exact shares being transferred;

• price and payment mechanics;

• conditions precedent;

• pre-completion conduct;

• warranties and disclosure;

• specific indemnities;

• completion deliverables;

• termination rights; and

• any seller obligations directly connected to the sale.

For a deeper buyer-side negotiation map, see our guide to share purchase agreements in Malaysia.

What belongs in the shareholders agreement?

If two or more shareholders will continue after completion, the shareholders agreement should address how they will live together.

Typical subjects include:

• board composition and appointment rights;

• quorum;

• reserved matters;

• business plan and budget approval;

• information rights;

• future capital calls and shareholder funding;

• new issues of shares;

• restrictions on transfers;

• pre-emption;

• tag-along and drag-along;

• deadlock;

• default and compulsory transfer; and

• exit strategy.

The constitution should also be reviewed so the contractual governance package and the company’s constitutional rules do not pull in different directions.

Future funding can change the percentage you thought you bought

A buyer should model what happens if the company needs more capital six months after completion.

If a minority investor cannot or does not participate in a new issue, its percentage may dilute unless the agreed governance documents provide participation or other protection.

If a majority shareholder is expected to fund future growth, the parties should decide whether that funding is equity, shareholder debt or external financing and whether non-participating shareholders are diluted.

Those are economic terms, not housekeeping.

Transfer rights determine how you eventually get out

A buyer taking less than 100% should think about the next transfer at the same time as the first one.

Questions include:

• Can any shareholder sell freely to a third party?

• Do the other shareholders have first refusal or pre-emption rights?

• Can the majority drag the minority into a full sale?

• Can the minority tag along on a majority sale?

• Are transfers to competitors restricted?

• What happens if a shareholder defaults or becomes insolvent?

A minority stake with no credible exit route can be worth materially less than the same percentage with well-designed transfer rights.

Completion conditions change with the stake

A 100% buyer may require a full change of directors, bank mandates, corporate records and operational access at completion.

A majority buyer may need completion to include adoption of a new shareholders agreement, amended constitution, board appointments and reserved-matter framework.

A minority investor may make completion conditional on receiving the agreed board seat, information rights and constitutional changes at the same time as the share transfer.

The buyer should not pay first and negotiate governance later.

Three worked structures

100% acquisition: buyer purchases all shares from the founder. The SPA is the main acquisition document. Completion includes transfer instruments, director changes, corporate records, release of founder-related security and handover. No continuing founder shareholder agreement is needed unless the founder retains an equity interest.

60% acquisition: buyer takes control but founder retains 40%. The SPA handles acquisition risk; a shareholders agreement governs board composition, reserved matters, future funding and exit. The buyer should know which matters it can decide alone and which require founder participation.

20% strategic investment: investor has no ordinary voting control. The investment only works commercially if the governance package gives the investor agreed information, board and reserved-matter rights and a credible exit mechanism.

Buyer decision checklist

• What percentage will the buyer own immediately after completion?

• What percentage of voting rights will that actually represent?

• Are there different share classes or special rights?

• Will any existing shareholder remain?

• What decisions can the buyer pass alone under the Act and constitution?

• Which decisions need additional contractual consent?

• Does the buyer require board representation?

• How will future funding work?

• What protects against dilution?

• What transfer and exit rights are needed?

• Must the shareholders agreement and constitution be completed simultaneously with the SPA?

Frequently asked questions

If I buy 51%, do I control the company?

You will usually have significant ordinary voting power, but not necessarily unilateral control over every decision. Special resolutions, the constitution, class rights and any shareholders agreement must also be considered.

If I buy 25%, can I block every special resolution?

Do not rely on a percentage shortcut without reviewing the actual voting rights, attendance/votes cast, constitution and class structure. If a veto matters commercially, negotiate it expressly.

Do I need a shareholders agreement if I buy 100%?

Usually not for an ongoing shareholder relationship, because there is no other shareholder. Separate post-completion arrangements may still be needed for management, earn-outs, financing or transition.

Can the shareholders agreement be signed after completion?

It can, but a buyer taking less than 100% generally has more leverage and certainty if the agreed governance documents are completion deliverables rather than future promises.

This article is for general information only and does not constitute legal advice. Every transaction and every set of facts is different. Obtain specific advice from a qualified adviser before acting on any part of it.

Legal That Works advises acquirers on the acquisition structure, SPA protections and the governance documents needed when less than 100% is being acquired through our Share Sale and Purchase Agreement service.