Shareholders’ Reserved Matters are a special category of decisions that cannot be pushed through by majority shareholders alone. They require unanimous approval from all shareholders — including minorities — before the company is allowed to proceed.
What Do Reserved Matters Typically Cover?
Below are common areas where unanimous consent is required — and why they matter:
- Any change in the nature and/or scope of the business of the Company
To ensure the company does not pivot into new industries or business lines without unanimous shareholder approval. - The exercise of the borrowing powers of the Company, other than borrowings approved in the Company’s annual budget
To avoid the company taking on substantial debts or financial liabilities that may jeopardise its financial stability. - The creation of any mortgage, charge or other encumbrance over the Company’s property
To protect company assets from being pledged, charged, or used as collateral without full shareholders’ approval. - Any acquisition, disposal, transfer or change of any undertaking, property and/or assets of the Company other than in the ordinary course of business of the Company
To control major business decisions involving large assets or key parts of the business. - Declaration of dividends
Dividend decisions affect every shareholder. By treating dividends as a Reserved Matter, the company cannot distribute or withhold profits without everyone’s agreement, ensuring fairness.
Conclusion
Shareholders’ Reserved Matters act as an important protection for all shareholders, especially minorities. They ensure that major decisions about the company’s business, assets, structure, or finances cannot be made by one party alone. By requiring unanimous approval, Shareholders’ Reserved Matters promote fairness and ensure that every shareholder has a say in the decisions that truly matter.
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Author(s):
Ashley Yeo, Founder
E: ashley@yeoashley.com.my
Nicole Goh, Associate
E: nicole.goh@yeoashley.com.my
Tan Nian Tze, Pupil
E: niantze.tan@yeoashley.com.my
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Hello! This is Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia. We provide comprehensive services tailored to growing businesses to meet your complex needs.
Our experiences include structuring of company shares for purposes of fundraising and incentivising employees, capital markets, mergers and acquisitions, regulatory compliance, and other shares-related matters, ensuring efficient and compliant processes. Our dedicated team is committed to empowering companies with the tools and guidance needed to navigate these critical areas, enabling them to focus on growth and success with confidence.
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This article is intended to provide general information and does not constitute and/or should be relied on as any legal opinion or professional advice. For more information, you may reach out to Yeo Ashley & Partners, a law firm based in Kuala Lumpur, Malaysia.
