[Last updated: 1 January 2025, unless otherwise noted]

2.1 Main legal framework

Malaysia's public takeover rules are modelled after those of the United Kingdom, Australia and Hong Kong, where the primary rules governing public takeover bids are found in a non-statutory code of conduct.

The main rules and principles of Malaysia law relating to public takeover bids can be found in:

1. Malaysian Code on Take-Overs and Mergers 2016 ("Code") and the Rules on Take-Overs, Mergers and Compulsory Acquisitions 2016 ("Rules");
2. Bursa Malaysia Securities Berhad ("Bursa Malaysia") Main Market Listing Requirements ("Listing Requirements");
3. The Malaysian Companies Act 2016 (the "Companies Act"); and
4. The Capital Market and Services Act 2007 (the "CMSA").

The Code and Rules apply to takeovers and mergers of:

1. corporations, real estate investment trusts and business trusts with a primary listing of their equity securities and units on Bursa Malaysia; and
2. Malaysian unlisted public companies with more than 50 shareholders and net assets of RM15 million or more.

The Code and Rules apply whether the bidders are natural persons, corporations or unincorporated bodies, and whether resident in Malaysia or not.

2.2 Other rules and principles

While the aforementioned legislation contains the main legal framework for public takeover bids in Malaysia, there are a number of additional rules and principles that are to be taken into account when preparing or conducting a public takeover bid, such as:

1. The rules relating to the disclosure of significant shareholdings in listed companies – These rules are based on the Companies Act and CMSA. For further information, see also 3.4 below.
2. The rules relating to insider dealing – These rules are found in the Listing Requirements and the CMSA. For further information, see also 3.3 below.
3. The rules relating to the public offer of securities and the admission to trading of these securities on a regulated market – These rules could be relevant to the extent the consideration that is offered in the public takeover bid consists of securities. These rules are found in the Listing Requirements and CMSA.
4. Foreign investments regulation – There is no overriding legislation, policy or regulatory body imposing restrictions on foreign investment in Malaysia. However, foreign equity restrictions are imposed on a sectoral basis, in particular, strategic industries such as banking, insurance, aviation, energy and infrastructure, by the relevant industry regulator through the grant of and administration of operating licenses. Approval from such a regulator may be required in connection with a takeover offer. For example, the approval of Bank Negara Malaysia is required if a financial institution changes its shareholding by 5% or more. If a mandatory offer requires the approval of a sectoral regulator, the bidder must ensure that all the necessary approvals are obtained as soon as practicable before dispatching the offer document. If the necessary approvals cannot be obtained in time, an application can be made to the Securities Commission for an extension of time to dispatch the offer document.

2.3 Supervision and enforcement by regulatory bodies

Public takeover bids are subject to the supervision and control of the following regulatory authorities:

1. Securities Commission – The Securities Commission administers and enforces the Code and the Rules. It has wide rule-making and enforcement powers, including regulating takeovers and mergers of companies; and ensuring compliance with the provisions of securities laws.
2. Companies Commission of Malaysia ("Companies Commission") – The Companies Commission administers and enforces the Companies Act.
3. Bursa Malaysia – Bursa Malaysia is the Malaysian stock exchange and supervises listed companies.
4. Licensing authorities – Most industry sectors are regulated in Malaysia and require a license to conduct business.

2.4 General principles

The following general principles apply to public takeovers in Malaysia. These rules are based on the Code:

1. all holders of the securities of an offeree company of the same class must be afforded equivalent treatment; moreover, if a person acquires control of a company, the other holders of securities must be protected;
2. the holders of the securities of an offeree company must have sufficient time and information to enable them to reach a properly informed decision on the bid;
3. the board of an offeree company must act in the interests of the company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the bid;
4. false markets must not be created in the securities of the offeree company, the offeror company or any other company concerned by the bid in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted;
5. an offeror must announce a bid only after ensuring that they can fulfil in full any cash consideration, if such is offered, and after taking all reasonable measures to secure the implementation of any other type of consideration; and
6. an offeree company must not be hindered in the conduct of its affairs for longer than is reasonable by a bid for its securities.