Tips for buying a business in Malaysia

Amayra hudson
Nov 18, 2019 · 3 min read

The process of buying a company or a small business in Malaysia can be both exciting and frightening, especially for those people who are buying it for the very first time whether as a foreigner or as a local.

It is true, that after identifying the type of business you want to purchase the question that arises is “Should I buy the seller’s existing business?” Or “Should I form my own new company in order to purchase the ongoing businesses?” will perpetually be considered.

If you are a potential buyer to buy business in Malaysia, then here are some points that you should consider at length and addressed as part of the ongoing negotiations with the seller.

Evidence of ownership of Assets:

One of the most important elements of receiving would be the assets of the target business.
Therefore, it is very important for the buyer to make sure that the assets actually belong to the vendors and alternatively to the third party such as equipment leasing companies, banks or even the individual holders of the business.

The efforts must be put in to trace and the confirmation of the owner through the diligence, for example, by reviewing the evidence of the ownership. As for the tangible assets it would definitely be looking at the title, invoices, and receipts just for the proof of purchase and the payment, leasing agreement.

For intangible assets, like the technology and intellectual property, this would definitely involve reviewing the development agreement, the proof of registration, changing the ownership of the registered trademark, changing the accounts passwords, etc.

The Human Aspect:

The sale of the business will certainly affect the employees and the sale of the business do not exempt from the vendor’s responsibilities towards the employees.

At the time of purchasing the shares, the buyer will take over the entity that employs the employees. As such the employers will remail exactly the same and any signed employment agreements and employment relationships remain intact.

At the time of buying the assets, it is the duty for the buyer to decide whether they should recruit the existing employees under its own company and on what terms they are no less favorable than their existing terms.

And if the buyer does not wish to recruit the existing employees, or on the other hand, if the existing employees do not accept the offer from the buyer, the seller is compelled to save the employees in accordance with Malaysian employment laws.

Individual data:

The dealers keep the record of all the personal data, whether that is from its employees, its vendors or from its providers or customers.

Receiving the business in certain industries such as education, healthcare or fin-tech just to name a few it will include taking over the sensitive personal data.

The dealers will inevitably be requested to reveal the personal data to the buyer whether at the diligence stage or at the time of the completion of the stage.

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