# Selling Your Business — Share Sale or Asset Sale

> How a share sale and an asset sale differ in Malaysia — the sharply different stamp duty exposure, which tax regime catches the seller, and why licences such as WRT and a manufacturing licence usually do not travel with the assets.

- Category: business
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/business/sell-business-malaysia

---

Two buyers offer the same RM5 million for the same business. One wants the
shares, the other wants the assets. They are not the same deal, they do not carry
the same tax, and in one of them the buyer cannot legally trade on day one
because the licence stayed behind. Choosing the structure is the single biggest
value decision in a Malaysian SME exit, and it usually gets made by whoever
drafts first.

## The two structures, side by side

| | Share sale | Asset sale |
| --- | --- | --- |
| What moves | The company itself, with everything in it | Only the assets named in the agreement |
| Who the buyer becomes | Owner of the same legal person | A different legal person holding the assets |
| Liabilities and tax history | Stay with the business — the buyer inherits them | Stay behind with the seller's company |
| Contracts and leases | Continue, subject to change-of-control clauses | Must be assigned or novated, one by one |
| Employees | Continue, unaffected | Employment does not transfer automatically |
| Licences and permits | Stay with the company | Do **not** travel with the assets |
| Stamp duty | 0.3% on the shares | By asset class — real property runs 1% to 4% |
| Who the seller is, for tax | The shareholders | The company |
| Getting the money out | Directly to shareholders | Into the company, then a second step |

## Stamp duty: where the numbers diverge sharply

**Share sale.** A transfer of unlisted shares is stamped under **item 32(b)** of
the First Schedule at **RM3 for every RM1,000 or part** — 0.3% — on the price or
the value of the shares, **whichever is greater**, with no monetary cap. Value is
determined by LHDN's share valuation guideline, normally the higher of net
tangible assets per share or the consideration. The instrument is the Form of
Transfer of Securities under **s.105 of the Companies Act 2016** — not the old
Form 32A, which died with the Companies Act 1965 — and s.105(1) requires the
instrument to be duly executed **and stamped** before the company registers the
transfer.

That last point sets the sequence: stamp first, then lodge, then the company has
30 days under s.106(1) to enter the transferee in the register of members.

**Asset sale.** There is no single rate, because there is no single instrument.
Duty attaches per instrument, and the heavy one is real property under **item
32(a)**: 1% on the first RM100,000, 2% to RM500,000, 3% to RM1,000,000 and 4%
above that. Where a business's value is concentrated in land, factory or shoplot,
the arithmetic runs strongly against the asset route. On property worth RM5
million the ad valorem conveyance duty is a six-figure sum; 0.3% on shares
carrying the same underlying property is not.

Other components — assignments of contracts, transfers of intellectual property,
the business transfer agreement itself — each need to be assessed on their own
terms, and a minimum RM10 applies to almost every instrument under s.36CB.

**Who pays.** Item 5 of the Third Schedule puts the duty on the **grantee or
transferee** for conveyances under item 32, in both structures. A contractual
allocation to the seller is enforceable between the parties and irrelevant to
LHDN.

**Relief.** Sections 15 and 15A of the Stamp Act 1949 provide relief for
reconstructions or amalgamations of companies and for transfers of property
between associated companies. LHDN treats both as applications to the nearest
State Director's Office. Relief is not automatic, the conditions are not on the
face of the rate table, and a group reorganisation inserted immediately before a
third-party sale is exactly the fact pattern that draws attention.

## Which tax catches the seller

**In a share sale, the seller is the shareholder.** If that shareholder is a
company, LLP, trust body or co-operative society, the disposal of unlisted shares
in a Malaysian company falls under **capital gains tax** — 10% of the chargeable
gain, or an election of 2% of gross disposal price for assets acquired before 1
January 2024 — with the return and payment due within **60 days** of disposal. If
the shareholder is an **individual**, they are outside the CGT charge entirely,
though a share in a real property company can still fall under RPGT, and a person
genuinely dealing in shares is taxed on business income instead.

**In an asset sale, the seller is the company.** The gain sits inside the
company, which brings its own consequences: real property attracts RPGT,
disposals of plant and machinery trigger balancing charges or allowances against
capital allowances previously claimed, and trading stock comes in at market
value. Then the proceeds are inside a company that the shareholders still have to
extract value from — a second step the share sale does not need.

This asymmetry, not the stamp duty, is usually what drives the seller's
preference.

## The part that breaks deals: licences do not travel with assets

A licence is granted to a **named legal person**, usually for named premises and
on stated conditions. An asset buyer is a different legal person. It therefore
needs its own licence, granted on its own merits, before it can lawfully carry on
the licensed activity.

That applies across the stack:

- **WRT licence.** Required of a company with foreign equity carrying on
  distributive trade. It is issued to the company that meets the equity and paid-up
  capital conditions. A new buyer entity starts a new application, and an
  employment pass pipeline that depended on the licence stalls with it.
- **Manufacturing licence.** Granted under the Industrial Co-ordination Act 1975
  to the licensed manufacturer, with conditions attached to that licensee. A buyer
  acquiring the plant and equipment does not acquire the licence with the machines.
- **Premise licence and signboard licence.** Issued by the local council to the
  occupier of specific premises for a specific business. A change of operator is a
  new application at council level, and councils differ in how quickly they process
  one.
- **Sector approvals.** Anything issued by KPDN, KKM, DOSH, CIDB, JAKIM, MOTAC or
  a similar regulator follows the same logic.

**A share sale sidesteps all of this — but not entirely.** The company keeps its
licences because the company has not changed. What can change is a licence
*condition*. MIDA's manufacturing licence conditions contemplate a transfer of
shares as a post-licensing application, requiring a copy of the licence with its
conditions and a justification for the transfer. Equity-linked licences behave the
same way in principle: a change of shareholding that alters the foreign equity
percentage can put the licence itself in question. Check the conditions endorsed
on each licence before assuming a share sale is regulator-neutral.

## Employees

In a share sale nothing happens to employment. The employer is the same company;
service is continuous; nothing needs to be signed.

In an asset sale the employer changes, and employment contracts do not transfer
by operation of the sale agreement. The practical route is termination by the
seller and fresh offers by the buyer, or an agreed transfer with continuity of
service preserved by contract. Statutory termination benefits under the
Employment (Termination and Lay-Off Benefits) Regulations 1980 are the exposure to
model here, and the regulations contain change-of-ownership provisions that need
to be applied to the specific facts. Price the exposure before agreeing the
structure; it frequently exceeds the stamp duty saving that motivated the asset
route in the first place.

## Common mistakes

- **Comparing headline prices across structures.** RM5 million for the shares and
  RM5 million for the assets are different economics once duty, RPGT or CGT, the
  extraction step and the licence lead time are priced in.
- **Assuming the licence follows the machines.** It follows the licensee. This is
  the failure that leaves a buyer holding a factory it cannot lawfully operate.
- **Registering a share transfer before stamping.** Section 105(1) requires the
  instrument to be duly stamped; the 30-day registration clock in s.106(1) does not
  excuse an unstamped instrument.
- **Valuing shares at the price paid.** Item 32(b) charges on price **or value,
  whichever is greater**, on the net tangible assets basis in LHDN's guideline. A
  nominal price on an asset-rich company does not produce nominal duty.
- **Treating s.15 or s.15A relief as available.** Both are applications with
  conditions, decided by the State Director's Office.
- **Forgetting the seller still owns a company after an asset sale.** It holds
  cash, a tax exposure and continuing filing obligations, and closing it is a
  separate exercise with its own rules.

## What's next

Decide the structure before the price, not after — the structure determines what
the price means. Model three numbers side by side: stamp duty on each route, the
seller's tax on each route, and the elapsed time to obtain the licences a buyer
entity would need. If the answer is a share sale, work through the stamp duty and
valuation mechanics on the share transfer page. If it is an asset sale, start the
licence applications early and read the closing pages, because the seller is left
holding a company that still has to be wound down.

## Sources

- Stamp Act 1949 (Act 378), First Schedule and Third Schedule, text as at 1 January 2024 — https://lom.agc.gov.my/act-detail.php?act=378 (Attorney General's Chambers)
- Stamp Duty Exemptions and Relief — relief under section 15 and section 15A — https://www.hasil.gov.my/en/duti-setem/pengecualian-dan-relief/ (LHDN)
- Companies Act 2016 (Act 777), s.105 and s.106 — transfer and registration of securities — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)
- Guideline on Application for Manufacturing Licence (ML) — https://www.mida.gov.my/wp-content/uploads/2022/11/GD_ML_03112022.pdf (MIDA)

---
Source of truth: https://github.com/negaraku-md/NegaraKu.md
License: CC BY-SA 4.0