Choosing the right business structure from the outset is crucial for the business. The major division between business structures available in Malaysia is whether the business structure is incorporated or unincorporated. The most common incorporated structures are private limited company (Sdn Bhd) and limited liability partnership (LLP) whilst the most common unincorporated structures are sole proprietorship and partnership. For more information on choosing the most suitable structure for your business, you may download our Guide to Starting and Managing a Business in Malaysia on this website.

A Founders' Agreement is an agreement entered into between founders of a company in which it regulates the business relationships between the founders. It usually lays out the terms such as roles and responsibilities of the founders, capital contribution, ownership structure, equity transfer and restrictions, decision-making, resignation and removal of founders, confidentiality and dispute resolution.

A Shareholders' Agreement is an agreement between shareholders of a company in which it outlines the agreement between the shareholders on how to regulate the affairs of the company and their respective rights and obligations with respect to the management, operations and affairs of the company. A Shareholders' Agreement typically also consists of provisions on privileges and protection of shareholders.

An Employment Agreement is an agreement signed between an employee and an employer. It outlines the rights and responsibilities of the two parties and typically includes terms relating to (a) salary; (b) allowances and benefits (if any); (c) hours and place of work; (d) leave entitlement (annual leave, sick leave, etc.); (e) general responsibilities; (f) confidentiality; (g) post-employment obligations; and etc.

Directors have significant powers and responsibilities in the management, operation and running of a company. Hence, it is fundamental to set out the rights and obligations of a director in a legally binding agreement which governs and underpins the relationship between the director and the company. While having such an agreement is not a legal requirement, it creates certainty for the director and the company, allow both parties to be protected in situations of disputes or disagreements.

A Company Constitution is a formal document that sets out the rules governing a company. It also defines the relationship between the company, shareholder(s), director(s) and other officers of the company. Pursuant to the Companies Act 2016, it is not compulsory for a company to have a constitution on the basis that all necessary guidelines for the administration of a company are addressed by the Companies Act 2016, which will in effect serve as the company's constitution. However, if you have a Shareholders' Agreement, or if you do not want certain provisions under the Companies Act 2016 to apply, then it is highly encouraged to customise and draft a stand alone company constitution.

A board resolution is a way of documenting a significant decision made by a company’s board of directors, usually at a board meeting, on behalf of the company. Unless otherwise specified in the Companies Act 2016, any decision made in a board resolution is legally binding, as the board of directors has the full and complete oversight into significant decisions of the company. However, do note that if the shareholders believe that a wrong decision has been made, they can potentially bring a legal suit against the directors for a failure of discharging their duties and obligations which shall be in the best interest of the company.

Shareholders’ resolution, also known as members’ resolution in Malaysia, is a formal document in which the company documents the decisions made by its shareholders at a shareholders' meeeting. Shareholders' resolution can be by way of an ordinary resolution (more than 50%) or special resolution (at least 75%) or any other resolution as permitted under the Companies Act 2016. Under the Companies Act 2016, for a private company, its shareholders may pass a resolution either by way of a written resolution or at a meeting of the shareholders. However, in respect of a public company, a shareholders’ resolution can only be passed at a meeting of the shareholders.

A board meeting is a formal meeting of the board of directors of a company which is held at regular intervals to discuss operational matters and policy issues within the company. The purpose of a board meeting is also to make significant decisions on strategic corporate matters that should not be delegated downward. Generally, a board meeting tends to apply its own rules relating to frequency, minimum quorum, agenda and how decisions in such meeting can be made. Very often, there will be a chairman to chair such meeting and a secretary to take down minutes and to ensure that all relevant decisions made during the meeting are properly documented.

A general meeting is a meeting of a company’s shareholders. As required by law, at least 14 days’ notice (in the case where only ordinary resolutions are to be passed) or at least 21 days’ notice (in the case where special resolutions are to be passed) must be given before a general meeting of the company may be convened. The purpose of a general meeting may include, among others, electing a board of directors, making important decisions in relation to the company and to keep the shareholders informed of previous and future activities of the company. Similar to a board meeting, a general meeting tends to apply its own rules relating to frequency, minimum quorum, agenda and how decisions in such meeting can be made. There will also be a chairman to chair such meeting and a secretary to take down minutes and to ensure that all relevant decisions made during the meeting are properly documented.

An Employee Share Option Scheme is a scheme used by a company to motivate its employees. The scheme sets out rules relating to the grant of option to eligible employees to subscribe for shares in the company. The share option gives the eligible employees the contractual right to acquire shares of the company in the future at a pre-determined price.

A Letter of Intent is a document that expresses the intention of a party to enter into a formal agreement with another party at a later date. A letter of intent is usually non-binding, however, the legal effect of a letter of intent would depend on the words used in the letter of intent and the relevant circumstances that exist between the parties. If private and confidential information is likely to be exchanged between the parties in preliminary discussions, then a non-disclosure agreement should be executed prior to such discussions.

A Term Sheet is a document which briefly outlines the basic terms and conditions of an investment. It lays a foundation for ensuring that the parties involved come to a consensus on the material aspects of the investment. Similar to a letter of intent, a term sheet is usually non-binding on the basis that it is not a final agreement signed by the parties. A term sheet is commonly used by professional advisors such as lawyers as guidance in the preparation of the final agreement of which after it has been negotiated and signed by the parties, it becomes an official binding document.

A Share Subscription Agreement is an agreement between a company and an investor that sets out clearly the terms and conditions concerning subscription of shares in the company. The agreement outlines an investor's agreement to make payment of funds to the company in consideration of the company agreeing to issue and allot a certain number of shares at a specific price to the investor. Such agreement includes the number of shares that will be issued and allotted to the investor, the subscription price of the shares and the prescribed date at which the subscription price of the shares must be paid by the investor to the company.

Where preference shares are offered by a company for subscription by an investor, a preference shares term sheet will set out the terms and conditions of investment by the investor on the preference shares. This includes the issue price per preference share issued, return on investment (i.e. dividend rate), payment of dividend, convertible options to ordinary shares, maturity date, redemption terms, etc.

As its name may suggest, the purpose of a Convertible Loan Agreement is to govern the terms and conditions of a convertible loan. A convertible loan could be structured as a loan that automatically converts into equity when a certain triggering event occurs or at maturity. The common terms of a convertible loan agreement are as follows:
• Maturity date
• Interest rate
• Terms of conversion
• Adjustment event
• Valuation cap

Where there are too many investors, a limited liability partnership (LLP) may be used as an investment vehicle for the investors to invest in a company. If such an arrangement is anticipated, the investors, who would be the members of the LLP would enter into an LLP agreement to safeguard their investment and regulate their relationship. The LLP agreement usually sets out the:
(a) rights and obligations of the investors;
(b) investors' capital contribution in the companny;
(c) how profits would be shared between the investors;
(d) how the LLP is going to be run; and
(e) how the important decisions in the LLP are to be decided.

Due diligence refers to a process carried out to assess the legal, financial, tax, etc. condition of a company prior to a sale or an acquisition. With regard to legal due diligence, the buyer will engage its lawyer to review the documents of the seller, including the seller's corporate documents and agreements, such as suppliers' agreements, customers' agreements, employment agreements, license agreements, loan agreements, etc. to evaluate, among other things, if the company has any potential liability, if there are any restriction on the sale of the company and to reveal any material facts relating to the company.

A Share Purchase Agreement sets out the terms and conditions in relation to the sale and puchase of shares in a company between a seller and a buyer. The agreement usually covers information in relation to the seller and the buyer, the number of shares that are being sold, selling price, timing for the transfer of the shares, covenants and undertakings of the seller, representations and warranties of the seller and provisions in relation to termination of the agreement.

A Business Sale Agreement is an agreement that documents the sale of a business as a whole from one party to another party. The agreement typically describes the business that is being transferred, the purchase price, the timing in which the purchase price will be paid and the business will be transferred, covenants and undertakings of the seller, representations and warranties of the seller and provisions in relation to termination of the agreement.

While a business sale agreement is used in the sale of a business as a whole, an Asset Sale Agreement is used when it involves the sale of a specific assets of a business. An asset sale agreement can be used whether it involves a sale of tangible assets such as equipment, property or inventory, or a sale of intangible assets such as business’ goodwill, intellectual property or contracts.

A Disclosure Letter is a document prepared by a seller that serves to limit the warranties that the seller is required to provide in a share sale or asset sale agreement. The letter sets out general and specific disclosures with regard to any exceptions to the warranties.

A Sale and Purchase Agreement is a written contract between a seller and a purchaser of a property which outlines all important details such as terms and conditions, agreed price, particulars of property, particulars of parties involved etc. Once both parties have signed the contract, it becomes a legally binding document. In other words, there shall be no negotiations and/or change of terms unless such change of terms is mutually agreed upon by the parties.

A Tenancy Agreement is a document between a landlord and a tenant for a short-term stay i.e. not more than 3 years. A tenancy agreement usually contains information such as tenancy duration, particulars of property, prohibitions and/or obligations of both parties. In order for a tenancy agreement to be admissible in court, it must be duly stamped at the Malaysian Inland Revenue Board.

A Lease Agreement is the letting of a property by the lessor to the lessee for a period of more than 3 years. Unlike the tenancy agreement, a lease must be registered with the Land Registry as provided under the National Land Code 1965. Upon registration of a lease, the lease will be reflected in the title of a property as well as a land title search - this will serve a public notice to any third party who wishes to deal with the property.

A Construction Agreement is necessary when a party would like to renovate an office space or a home. This would help to prevent unfortunate events like non-completion of work or non-payment of completed work. Typically the contractor will apply on behalf of the property owner the planning permission and building plan approval in relation to the renovation work.

An Employment Contract between an employer and an employee is to lay down all the duties, responsibilities, benefits and rights between the parties. It usually includes the employee's agreed salary or wages, the duration of employment, the terms and conditions on termination of the employment and so forth. In most cases, a probationary period is typically included in the employment contract for the employer to evaluate closely the progress and skills of the newly employed worker. On the side note, the Employment Law in Malaysia is generally governed by the Employment Act 1955 (""Act"") and it applies to a certain categories of employees as set out in First Schedule Section 2(1) of the Act. For those employees who are not covered under the Act, the terms of the employment contract are subject to any other applicable statutory requirements. Also, the employers usually apply the benefits of the Act as a guideline for drafting the employment contract.

An agreement where the consultant offers his services, guidance and professional advice to the client. Often, the consultant has specialised experience and skill sets to enchance and improve the areas which require assistance by the client. In most cases, the parties to this agreement will sign a Non-Disclosure Agreement to protect all confidential information from disclosure.

An agreement where the supplier agrees to provide services to the client in exchange for a service fee. A Service Agreement covers provisions regarding the delivery of services, inspection and testing, intellectual property, term of the agreement, indemnities, intellectual property, limitation of liability and so on.

A Freelancer Agreement, also known as independent contractor agreement or consulting agreement, is a contract made between an independent worker and his customers. It generally outlines the scheduled demands, parties' expectations and obligations expected from the freelancer during the specific timeframe in exchange for remuneration. Work produced and created during such agreement period will usually belong to the customers.

An Internship Agreement lays down the nature of the internship or placement. The difference between an Internship Agreement and Employment Contract is the objective of such contract. The Employment Contract consists of performing work in exchange for remuneration, whereas the Internship Agreement aims to expand the knowledge and skills of the Intern. Unlike an employment relationship, an allowance will only be paid to an intern. Internship Agreement does not offer or guarantee a permanent employment position.

A Secondment Agreement involves an employee being assigned to another department, business, or office temporarily to further develop their skillsets. The purpose of secondment is to help nurturing and widening the employee's exposure to the workplace in the early stages of their career. In that case, a Secondment Agreement usually outlines the legal relationship between the parties, the agreed options at the end of the secondment, the termination of the secondment agreement, the effect of termination and so forth.

Employee Handbook is a book given by the employer to the employee where the handbook outlines the company's mission, policies and expectations at workplace. The handbook is to give the employees an understanding of the company's employment policies, procedures, practices, rules and regulations. It is a good practice to have such handbook to set out the details of employment, as such details are usually not covered by a simple offer letter of employment.

Terms and Conditions/ Terms of Use/ Terms of Service are a set of rules and regulations which the website users (regardless whether you are a website end user or merchant) must agree to abide to in order to use the website and/ or the services or products offered on the website. The terms would create a legally binding agreement between the website owner and the website user, upon being accepted by the website user.

Every website should have a Privacy Policy to describe the collection, usage and sharing of website users’ personal data. It is legally required to comply with the Personal Data Protection Act 2010 in Malaysia or the data privacy laws in your country to protect the privacy of a website user. In Malaysia, such policy needs to be in dual language i.e. English and Malay.

Cookie is used to store information about a user’s interaction with the website, which the web server can use later when processing a user’s sessions. Cookie Policy is a declaration to the website users on the collection, usage and sharing of the website users’ data using cookies and how the website users can opt out of the cookies or change their settings in regard to the cookies on the website. Website owners may choose to incorporate the cookie policy as a section of their privacy policy or to leave the cookie policy as a stand-alone section.

These Terms and Conditions (Users) constitute a legally binding agreement between the website owner and the website end user who uses the services provided on the website and makes payments for the services used over the website. The terms normally include the services provided, the terms and limitations of using the services, the website end user’s obligations, the website’s obligations, the payment terms and refunds and other regulations between the website owner and the end user.

These Terms and Conditions (Merchants) constitute a legally binding agreement between the website owner and the merchant (which could be an entity or a natural person) that signs up to use the services tailored for the merchants and accept payments from the website end users that use the services provided by the merchant. The terms normally include the payment terms, refunds, the merchants’ obligations, the website’s obligations and other regulations between the website owner and the merchant.

A Software Development Agreement sets out the terms and conditions where a client contracts for a developer to create and deliver a specified piece of software and the developer will sell and transfer the customised software to the client, and incorporate the software into the client’s products, services or processes.

A Website / App Development Agreement sets out the terms and conditions where a client engages a web/mobile app developer to create, develop, test and host the client’s website / app.

An Online Advertising Agreement sets out the terms and conditions between a website owner and a business that wishes to advertise their services and/or products on the website owner’s website by purchasing an advertising space on the website to display text-based descriptions or banners / buttons of its advertised website.

A Software Reseller Agreement sets out the terms and conditions between a website owner and a software reseller (a business or a person) where the software reseller wishes to obtain the right from the website owner to sell or license the software owned by the website owner to third parties.

A Partnership Agreement is a formal agreement between two or more individuals with the purpose of setting up a for-profit business together. It contains important terms such as capital contributions, obligations of parties, profit sharing ratio, exit right, how disputes are to be resolved etc. The formation of a partnership agreement helps to avoid unnecessary disputes if the terms are clearly set out.

A joint venture occurs when two or more entities cooperate for a specific project or activity. These entities work together to create a separate legal entity or a non-incorporated collaboration relationship. It is important to note that there is no change in ownership as a joint venture is usually created for a short period of time for a particular project. Similarly, a joint venture agreement lays out the contributions and obligations of the parties.

Also known as a stock purchase agreement, it is executed when an individual or a business entity is interested to invest in a company or in a situation where a business owner is seeking for investors via sale of shares. Investors are encouraged to have an investment agreement to protect their rights as it may contain terms such as their rights as an investor and the amount invested in the company, their exit right, what happens if the investment scheme fails, whether they can transfer their shares in the agreement.

Where one party manufactures and supplies goods to another party, a Manufacturing Agreement is formed to specify the particulars of the goods and/or services supplied to the other party. Important clauses in a manufacturing agreement include indemnities, representations and warranties, quality and pricing of goods and/or services, delivery, return and exchange, etc.

There are 2 main types of distributions: exclusive and non-exclusive. A Distribution Agreement is essentially formed between a distributor and a supplier of goods and/or services. For example, where a distributor is given an exclusive right to distribute a specific product within a specific grographical region, this is embedded in the agreement as well as the restrictions and rights of both parties.

A Memorandum of Understanding (MOU) (sometimes known as a "gentlemen's agreement") sets out an agreement between two or more parties pursuant to a negotiation. It is simple and straight-forward as compared to a legally written agreement. However, do note that most MOUs have no force of law and you should not treat MOU like a proper legal agreement.

A Memorandum of Agreement (MOA) carries the same effect as a memorandum of understanding. Both terms are used interchangeably. However, depending on the circumstances and the contents, some MOAs may have the force of law.

An Agency Agreement is formed when an agency is authorised by another party, usually known as the principal, to conduct business on its behalf. It then creates a legal relationship between both parties. However, an agency agreement comes with a risk in that a principal may be held liable for a breach / wrongdoing committed by an agent.

A Referral/Introducer Agreement arises when a party refers clients to another party and earns a fee/commission from such referral.

A Service Level Agreement, usually contracted between a service provider and a client, defines the types and standards of services provided. It is legally binding and it holds the service provider accountable in the event the services provided fail to meet the standards set by its client. This is more commonly used in the IT industry.

Novation Agreement is executed in a situation where all of a contracting party's obligations are transferred to a third party ("New Party"), provided that there are mutual consent of all existing parties and the New Party. This will then lead to a formation of a new contract between the remaining parties and the New Party. In contrast, an Assignment Agreement does not involve a transfer of obligations. Instead, it has the effect of transferring the interests/benefits from an assignor to a third party, known as the assignee. The rights of the assignor in the original agreement shall however remain with the assignor.

When two or more contracting parties would like to terminate a contract, it can be done via a Mutual Termination Agreement, as long as there is a mutual consent. Apart from other important terms, a mutual termination agreement would typically set out the parties' reasons for an exit of a contract, the date of termination as well as the discharge of duty of the parties. It is encouraged to sign this agreement to properly close off all existing agreements.

A Franchise Agreement is established when a business consents to another to use its brand and operation model to set up a similar business. Such an agreement usually includes terms and conditions in relation to investment fees, royalty obligations, intellectual property, advertisements, rights and obligations and franchisor and franchisee, etc.

A Sponsorship Agreement, sometimes known as a sponsorship contract, governs a legal relationship between sponsors and the person entitled to enforce the sponsorship obligation. That person may be an individual who is being sponsored, a company that organises an event that is being sponsored, or the owner of a location that is being sponsored.

A Publicity and Promotion Agreement is often signed between the owner of an event or the owner of right to promote an event. Events may be a competition, a conference or a concert for example. The owner of the event signs this agreement with an expert in marketing, allowing the said marketing expert to take over publicity, promotional, and marketing efforts of that particular event.

It is a legally binding document between two parties with the purpose of ensuring that all confidential information and/or trade secrets are not disclosed / circumvented. The subject matter may relate to a business deal between companies or it may arise out of a contract between a company and its employee.

Intellectual Property Licensing Agreement sets out the terms and conditions between an intellectual property rights owner (licensor) and the party authorised to use such rights (licensee) in exchange for an agreed payment (subscription fee or royalty). Keep in mind that the licensor will retain ownership of its patent, copyright, or trademark (including goodwill), but only permission is given to the licensee to use some or all of the licensor’s intellectual property rights for a specific amount of time.

Non-Disclosure Agreement is used when an intellectual property rights owner needs to disclose the confidential information to another individual or organization. The purpose of a Non-Disclosure Agreement is to ensure that confidential information will be used only for the permitted purposes agreed between the signatories of the agreement and will not be used or disclosed to third parties without the owner's consent.

An Assignment Agreement sets out the transfer of ownership of certain intellectual property rights from the owner (assignor) to an assignee to own and use the intellectual property rights upon an agreed lump sum payment or royalty. It is different from Licensing Agreement as the assignor will not retain ownership in the intellectual property rights upon signing of the agreement.

A Trademark Certificate is an official document of registration by the Intellectual Property Corporation of Malaysia, issued pursuant to the Trademarks Act 2019 (previously known as Trade Marks Act 1976). It is used to demonstrate proof of ownership and registration. The period of protection is 10 years, renewable for a period of every 10 years thereafter. A trademark certificate contains a unique trademark number, the owner of the trademark, and the signature of the Registrar of Trade Marks Malaysia. It is recognised by the court as evidence of ownership.

A Patent Certificate is an approved patent application provided by MyIPO. Having patent protection allows you to legally prevent others from making, using, marketing, or selling your invention. If another person or entity infringes on your invention, you can seek damages in court. A patent provides protection for a period of 20 years from the date of filing. A patent certificate usually contains the title of the subject to be patented, name of the inventor (usually an individual), and the patent owner (usually a company). It is recognised by the court as evidence of ownership.

An Industrial Design Certificate is legally issued document to show that the owner has the exclusive right to make, import or sell or hire out any article to which the design has been applied. Other users should obtain the consent of the rightful owner before using the design. The owner of a registered design has the right to take legal action against an infringer within 5 years from the act of infringement. It is recognised by the court as evidence of ownership. A registered industrial design is given an initial protection period of 5 years from the date of filing and is extendable for a further four consecutive terms of 5 years each. The maximum protection period is 25 years.

A Copyright Notice is a short length of statements that notifies the public that your work, or any piece of work in relation to that notice, is protected by copyright law and is not to be copied. Copyright notices are often and widely used and can be found in all sorts of creative medias; from websites and blogs, to films, music and songs.

A Statutory Declaration made in accordance with the Statutory Declaration Act 1960 is a legal way to prove ownership of copyright. The court will take such declaration as prima facie ownership evidence, and it is the burden on the challenging party to prove that he is then actual rightful owner.