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Transferring the Shares of a Sdn Bhd Company in Malaysia

Transferring the Shares of a Sdn Bhd Company in MY

There are many different companies which exist in Malaysia today. Some are sole proprietorships, some are partnerships, some are representative offices, and some are either public or private limited companies. In Malaysia, private limited companies are also known as Sendirian Berhad (Sdn Bhd) companies. Sdn Bhd companies form an important part of the business scene of Malaysia through the large amounts of revenue which they cumulatively generate as well as the many opportunities for employment which they provide.

Many shares exist in a Sdn Bhd company; these shares are, of course, owned by the shareholders of the Sdn Bhd company. There will sometimes be occasions when the most advantageous course of action to be taken is that of transferring such shares to another person. This article will therefore provide information on transfers of the shares of a Sdn Bhd company in Malaysia for the benefit of those seeking to do so.

However, before the transfers of such shares can be discussed, the definition and characteristics of a Sdn Bhd company must be mentioned so as to provide a clearer picture of the details of such share transfers.

 

Definition of a Sdn Bhd Company

In Malaysia, a Sdn Bhd company is a variant of a Berhad (Bhd) company. Berhad (Bhd) is a suffix which in Malaysia is placed after the name of every public limited company. Thus, every company with either Berhad or Bhd after its name is a Malaysian public limited company. Similarly, companies which have Sendirian Berhad or its abbreviation, Sdn Bhd, placed after their names, are private limited companies. Sdn Bhd companies in Malaysia may be of any size, but the majority of them tend to be small and medium-sized enterprises unlike Bhd companies, which are typically some of the largest companies which are in operation in Malaysia today.

Should you be interested in starting a Sdn Bhd company or any other company of any sort in Malaysia, we at Paul Hype Page & Co are always willing to be of assistance to you. We will help you incorporate your company according to the company laws that exist in Malaysia today. We will even contact any government authorities on your behalf if you require us to do so.

 

Why Shares Need to Be Transferred

There are certain instances in which the optimal course of action to be taken with regard to a Sdn Bhd company’s shares is that of transferring them. The shares of a Sdn Bhd company tend to be transferred for either of two primary reasons. The first of these reasons manifests itself when the company owner sells shares to the public, then proceeds to invest the money earned from selling the shares. The second of these reasons concerns the company’s future net value. At some point in the future, the company will have become far more profitable and gained much net worth. Its total value and therefore the value per share will increase tremendously. At this point, many a shareholder will choose to transfer the shares owned so as to earn a profit. The shares are sold according to the new price of the shares.

Shares can be transferred from a shareholder to any person; this person may either be a new or an existing shareholder. The transfer of shares introduces a new shareholder. Shares are either transferred in the form of a gift or sale.  They may be transferred at any time after incorporation as long as the company has a sufficient amount of shares.

 

How Shares of a Sdn Bhd Company Are Transferred

Any shareholder who plans to transfer any shares of a Sdn Bhd company must first inform the directors of the company. After the company’s directors have been appropriately informed, the shareholder is required to complete Form 32A.

According to the Companies Act, all transfer instruments must be specified according to the directions provided in Form 32A. A completed Form 32A ought to contain information such as the company’s name, the personal details of existing shareholders, the personal details of new shareholders, the number of shares which have been transferred and the value of shares which have been transferred. Existing and new shareholders alike must sign Form 32A; these signatures have to be witnessed.

The first step in the process of transferring the shares of a Sdn Bhd company is performed by a company secretary. After receiving the directors’ request, the company secretary will prepare a board resolution which will allow directors to approve both the transfer of shares as well as a sign copy of Form 32A. Once the company secretary does so, the relevant shares may be transferred. At this point, the original share certificate is to be returned to the company secretary. If this is not done, the necessary process of cancellation cannot be completed.

As an aside, every Sdn Bhd company in Malaysia is required to have a company secretary. Any company which does not have one may not be incorporated. Therefore, we at Paul Hype Page & Co provide services which enable any company owner in Malaysia to hire a suitable company secretary. You can be assured that the person whom we select for the position is one who will carry out all of your company’s corporate secretarial tasks in an adequate and efficient manner.

The next step in the share transfer process is that of the stamping on Form 32A and the payment of stamp duty. After the transfer has been approved by the board of directors and Form 32A has been fully completed, the completed copy of Form 32A will be delivered to the Inland Revenue Board (IRB; Lembaga Hasil Dalam Negeri; LHDN) for further assessment. For the purposes of validation, stamp duty is to be paid to the IRB to validate the transfer. The share transfer process can then be completed through the issuance of a new share certificate; the new shareholder receives this certificate. The company secretary is to enter the new shareholder’s name into the Register Book; once this has been done, the new share certificate will be issued to the new shareholder.

 

Advantages Brought About Through the Transfer of a Sdn Bhd Company’s Shares

One of the most important benefits brought about through the transfer of a Sdn Bhd company’s shares lies in the fact that the new shareholder might be more capable than the previous one. Since shareholders are the owners of a Sdn Bhd company, if the new shareholder has more business knowledge and skill than the previous one, it is very likely that the new shareholder will be able to use the value of the newly-acquired shares to help the company turn a greater profit than ever before.

Transfers of shares also bring about an increase in public exposure for the Sdn Bhd company. This is because new shareholders will have a different circle of acquaintances to existing ones. The more new shareholders a company has, the more people are likely to learn about the company and what it does. Therefore, transfers of shares may indirectly serve as a way for Sdn Bhd companies to establish a better public reputation.

 

 

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Paul Hype Page

Website: www.paulhypepage.my

Posted on November 6, 2019 at 3:02 pm
Categories: Malaysia Incorporation and Company Registration

Transferring the Shares of a Sdn Bhd Company in Malaysia FAQs

Is there a limit to how many shares can be transferred at once?

A shareholder cannot transfer an unlimited number of shares. This is because there must be a limit to how many shares are available to be purchased. When any company in Malaysia first commences its business operations, it will issue a certain number of shares. Therefore, the number of shares transferred by the shareholder can exceed neither the number of shares held by the individual who is transferring the shares or the company.

What are the restrictions governing the identity of those to receive transferred shares?

In Malaysia, certain restrictions regarding who is allowed to receive Sdn Bhd company shares which have been transferred exist. The first of these is that the person who is to transfer any shares is to inform the company in writing. After the company has been informed of this matter, the company has two months to find a member who is willing to purchase the shares. If this member accepts the shares and purchases them, the transfer of the shares in question will proceed. However, if the company is not able to find a purchasing member within the aforementioned two-month period, the person who is transferring the shares will have the right to sell and transfer the shares in question to any person and for any price.

Can shares be transferred to a previous owner of those same shares?

There are no restrictions regarding the ownership of shares by someone who has previously owned the same shares of the same Sdn Bhd company. Therefore, shares of a Sdn Bhd company can be transferred to a previous owner of those same shares. Of course, the final outcome of such a share transfer, as is the case with any other share transfer, is dependent on the consent of the existing owner of the share.

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