Share Transfer Stamp Duty For Private Company

Stamp Duty for Private Company Share Transfers in Malaysia: What Every CEO Needs to Know

Note on Scope: This Guide Focuses on Private Company (Non-Listed) Share Transfers

If you are handling the transfer of shares in a private company—meaning a company that is not listed on Bursa Malaysia—this article is written for you.
We cover how stamp duty works when buying, selling, or transferring shares in a private business in Malaysia. For these transactions, you do not need Securities Commission (SC) approval. Everything here applies to private share deals, as governed by the Companies Act 2016 and LHDN (Inland Revenue Board) guidelines.

If you are dealing with shares in a public-listed company, or anything involving capital markets and SC regulations, you will need to refer to a separate set of requirements.

Why Stamp Duty Matters in Private Share Transfers

When you transfer ownership of company shares—whether to a new partner, an investor, or as part of an exit—stamp duty is a legal obligation.
Understanding how this works matters because:

• You are not a legal shareholder until the share transfer instrument is stamped. Payment alone does not give you rights—your name must be recorded in the Register of Members, and this only happens after stamping, as required by Section 105 of the Companies Act 2016.

• Unstamped instruments cannot be used as evidence in court. This can destroy your position in any dispute, making compliance non-negotiable.

• Missing or delaying stamp duty can stall deals and trigger penalties. Every week lost on paperwork is a week of business risk.

Key Differences: Private vs. Public Company Share Transfers

• Private company share transfers do not require SC approval.

• Valuation and documentation are guided by LHDN and the Companies Act 2016, not securities law.

• For public-listed company shares, SC approval may be required for certain deals, and the calculation of share value may use different rules.

For the purposes of this article, we are only dealing with private (non-listed) companies.

How Stamp Duty Is Calculated for Private Company Shares

The stamp duty rate is straightforward:
RM 3.00 for every RM 1,000.00 (or part thereof) of the share value transferred.

The critical part is how to determine the “value” of the shares—LHDN requires you to use the highest value among several calculation methods. Here’s what every CEO needs to check:

The Main Valuation Methods for Private Companies

1. Par Value
   The face value of each share as stated in the company’s constitution.

2. Net Tangible Asset (NTA)
   The company’s physical assets minus intangible assets and liabilities (Shareholders’ Funds = Total Assets – Total Liabilities).

3. Price-Earnings Ratio (PER)
   Calculates value based on company profit, an industry-specific multiplier (PER), and issued shares.

4. Sale Consideration
   The actual price paid for the shares.

You must use the method that gives the highest value per share for stamp duty calculation.

Step-by-Step: Calculating Stamp Duty for Private Company Shares

1. Confirm the company is private and does not require SC approval.
No extra regulatory steps.

2. Calculate share value using all required methods:

• Par Value

• Net Tangible Asset

• Price-Earnings Ratio

• Sale Consideration

3. Identify the highest value per share from these calculations.

4. Apply the stamp duty rate:

• Multiply the number of shares to be transferred by the highest value per share

• Divide by RM 1,000.00, round up to the nearest whole number

• Multiply by RM 3.00 to get your total stamp duty

Example:
If you are transferring 10,000 shares at a highest-determined value of RM 3.50 per share:
10,000 x RM 3.50 = RM 35,000 (total consideration)
RM 35,000 / RM 1,000 = 35 (no rounding needed)
35 x RM 3.00 = RM 105 stamp duty payable

Frequently Asked Questions (FAQs)

Do I need SC approval to transfer private company shares?
No. For non-listed companies, SC approval is not required.

How soon must stamp duty be paid?
Stamp duty must be paid before the company can register you as a shareholder. Delays can affect your rights.

What if I pay the seller before stamping?
You are not legally recognised as a shareholder until stamping is complete.

Who pays the stamp duty?
Typically the buyer, but this should be agreed in your sale documentation.

What happens if the declared value is too low?
LHDN can audit and revise the value, imposing higher duty and possible penalties.

Key Mistakes to Avoid

• Relying on payment alone for shareholder rights—always complete stamping first.

• Assuming the process is automatic—make sure your lawyer or company secretary is handling the stamping.

• Under-declaring share value—LHDN audits aggressively.

• Missing company internal approval steps or board consents.

CEO Checklist for Smooth Share Transfers

• Confirm the company is private (not listed on Bursa Malaysia)

• Use all LHDN valuation methods and select the highest value

• Prepare and submit the correct documents for stamping

• Ensure all board approvals and internal requirements are satisfied

• Register the transfer only after stamping is done

Next Steps: Move Forward with Confidence

If you are planning a private share transfer—whether for a business sale, succession, or restructuring—clarity and speed will save you time, risk, and money.

Legal That Works is your Legal Growth Partner™. We streamline your transaction and keep you compliant, so you can focus on growth.

Book your Clarity Call to get your next share transfer right.