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Preference Share Subscription Agreement for Malaysia

Preference Share Subscription Agreement Template for Malaysia

A legally binding agreement governed by Malaysian law that establishes the terms and conditions for the subscription of preference shares in a Malaysian company. The document details the rights and privileges attached to the preference shares, including dividend rights, voting rights, and capital rights, while ensuring compliance with the Companies Act 2016 and other relevant Malaysian regulations. It includes provisions for subscription price, completion mechanics, warranties, and various protective rights for the preference shareholders, making it a crucial document for corporate financing and investment transactions in Malaysia.

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What is a Preference Share Subscription Agreement?

The Preference Share Subscription Agreement is a key document used in Malaysian corporate financing transactions when a company wishes to issue preference shares to raise capital while offering investors certain preferential rights over ordinary shareholders. This document type is particularly relevant when companies need to structure investment terms that provide specific dividend rights, capital rights, or voting rights to investors, while maintaining existing control structures. The agreement must comply with Malaysian law, particularly the Companies Act 2016 and relevant Securities Commission guidelines. It typically includes detailed provisions regarding the nature of the preference shares, subscription terms, conditions precedent, completion mechanics, and various protective provisions for investors. The document is commonly used in private equity investments, venture capital transactions, and corporate restructuring scenarios where sophisticated investors require additional rights and protections beyond those available to ordinary shareholders.

What sections should be included in a Preference Share Subscription Agreement?

1. Parties: Identifies the company issuing the preference shares and the subscriber(s)

2. Background: Sets out the context of the transaction and the company's authorization to issue the preference shares

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles for the agreement

4. Subscription: Details the number, class, and price of preference shares being subscribed for

5. Preference Share Rights: Specifies the rights attached to the preference shares including dividend rights, voting rights, and capital rights

6. Conditions Precedent: Lists the conditions that must be satisfied before completion of the subscription

7. Completion: Sets out the completion mechanics, timing, and deliverables

8. Company's Warranties: Contains the company's representations and warranties

9. Subscriber's Warranties: Contains the subscriber's representations and warranties

10. Confidentiality: Governs the confidentiality obligations of the parties

11. Notices: Specifies how formal notices under the agreement should be given

12. General Provisions: Contains standard boilerplate provisions including governing law, jurisdiction, and entire agreement

What sections are optional to include in a Preference Share Subscription Agreement?

1. Anti-Dilution Rights: Protects the subscriber's shareholding percentage in case of future share issuances

2. Tag-Along Rights: Gives the preference shareholder the right to join in any sale of shares by major shareholders

3. Drag-Along Rights: Allows majority shareholders to force minority shareholders to join in a sale

4. Board Appointment Rights: Grants the subscriber rights to appoint directors to the company's board

5. Information Rights: Specifies additional information and inspection rights for the preference shareholder

6. Conversion Rights: Details the terms and process for converting preference shares to ordinary shares

7. Pre-emptive Rights: Gives preference shareholders priority rights in future share issuances

8. Redemption: Sets out terms and procedures for redemption of the preference shares if applicable

What schedules should be included in a Preference Share Subscription Agreement?

1. Details of the Company: Contains corporate information including share capital structure and existing shareholders

2. Preference Share Terms: Detailed terms and conditions attached to the preference shares

3. Conditions Precedent: Detailed list of conditions precedent and required documents

4. Completion Requirements: Detailed list of documents and actions required at completion

5. Form of Board Resolutions: Template board resolutions approving the preference share issuance

6. Warranties: Detailed warranties given by the company and/or subscriber

7. Deed of Adherence: Form of deed for new shareholders to adhere to the agreement

8. Constitution Amendments: Required amendments to the company's constitution to accommodate the preference shares

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Malaysia

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions


































Clauses

































Relevant Industries

Financial Services

Technology

Real Estate

Infrastructure

Manufacturing

Healthcare

Energy

Telecommunications

Private Equity

Venture Capital

Professional Services

Consumer Goods

Industrial

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Investment

Board of Directors

Executive Management

Corporate Development

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Corporate Secretary

Investment Director

Legal Counsel

Finance Director

Company Director

Investment Manager

Corporate Lawyer

Financial Controller

Compliance Officer

Board Member

Managing Director

Private Equity Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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