Do You Need a Shareholders' Agreement If It's Just You and One Business Partner?
Yes, and arguably more than with three or more shareholders. With exactly two shareholders, any disagreement is automatically a deadlock. There is no third vote to break the tie. Without a Shareholders' Agreement, Malaysia's Companies Act 2016 default rules apply, and they say almost nothing about what happens when one partner wants out, disagrees with a decision, or starts a competing business. Most shareholder disputes we see, typically costing RM50,000 to RM200,000 to resolve, involve exactly this setup. Two founders, no agreement, and an assumption that things were understood between them.
Five mistakes we see most often
- 1.Assuming a 50/50 shareholding means every decision needs both people to agree, with no process for what happens when you do not.
- 2.Having no agreed method for valuing shares if one partner wants to buy the other out.
- 3.No restriction stopping a shareholder from selling their shares to someone you would not want as a business partner.
- 4.No non-compete or non-solicit clause protecting the company if a shareholder leaves and starts a competing business.
- 5.Treating a verbal agreement or a WhatsApp conversation as if it were a binding legal document.
Check your own position
Quick answers
What happens if we never sign a Shareholders' Agreement and later disagree?
Malaysia's Companies Act 2016 and the company's constitution apply by default. These are general rules not written for your specific business, and they rarely resolve a genuine deadlock between two equal shareholders cleanly or quickly.
Can we add a Shareholders' Agreement after the company is already running?
Yes. Most of our clients come to us after the company already exists, sometimes years in. It is better done before a disagreement starts, but it is never too late until one has already started.
Does a Shareholders' Agreement replace the company constitution?
No. It works alongside it, and generally takes priority between the shareholders on the matters it covers.
Not sure where your own shareholder risk sits?
Start with a free 2-minute risk check to see your overall exposure, or WhatsApp CF Lee directly to talk through your specific shareholder structure.