A share sale transfers the company itself, so licences, contracts and employees stay in place and stamp duty is 0.3% of the price or value of the shares, whichever is greater. An asset sale transfers named assets to a different legal person, so real property attracts the 1% to 4% conveyance scale, and licences such as WRT, a manufacturing licence or a premise licence do not travel with the assets — the buyer must apply for its own.
- Share sale stamp duty is 0.3% under item 32(b), uncapped, on price or value whichever is greater
- Asset sale duty depends on the asset — real property runs the 1%, 2%, 3%, 4% ladder under item 32(a)
- Duty on a conveyance falls on the transferee under the Third Schedule, whatever the parties agree between themselves
- Licences are issued to a legal person, so an asset buyer needs its own WRT, manufacturing or premise licence
- A share sale keeps the licence, but a licence condition may still require regulator approval for the change in shareholding
- A company, LLP, trust body or co-operative selling unlisted shares is in the CGT net; an individual seller is not
- Section 15 and section 15A relief may reduce duty on reconstructions and intra-group transfers, on application to the State Director
Who this applies to: Owners of a Malaysian Sdn Bhd negotiating an exit, and buyers deciding whether to acquire the company or only its business.
On this page
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.
Is stamp duty cheaper on a share sale or an asset sale?
Usually the share sale, and often by a wide margin. Shares are stamped at RM3 per RM1,000 — 0.3% — under item 32(b) of the First Schedule, with no cap. Real property transferred in an asset sale runs the item 32(a) ladder: 1% on the first RM100,000, 2% to RM500,000, 3% to RM1,000,000 and 4% above that. On a business whose value sits mostly in land or buildings, the asset route can cost an order of magnitude more in duty alone.
Do licences transfer when I buy the assets of a business?
As a rule, no. A WRT licence, a manufacturing licence under the Industrial Co-ordination Act 1975, a local council premise licence and a signboard licence are all granted to a named legal person for named premises. An asset buyer is a different legal person, so it must apply in its own name and satisfy the conditions afresh — including any foreign equity threshold. Build the lead time for those applications into the completion timetable, not into the post-completion plan.
If I buy the shares, do I inherit the tax history?
Yes. That is the defining difference. A share sale leaves every asset, contract, employee, licence, claim and unassessed tax exposure inside the same legal entity — you simply own it now. An asset sale takes only what the agreement names and leaves the history behind in the seller's company. This is why buyers push for asset deals and sellers push for share deals, and why the price gap between the two structures is usually a risk allocation, not a valuation.
Who pays the stamp duty?
The transferee. Item 5 of the Third Schedule to the Stamp Act 1949 makes the grantee or transferee the person liable to pay duty on a conveyance under item 32, which covers both the share transfer at 32(b) and the property transfer at 32(a). Parties often agree commercially that the seller bears it, but that allocation is private and does not change who LHDN pursues.
Can we restructure into a holding company first to save duty?
Possibly, but not unilaterally. Section 15 of the Stamp Act 1949 gives relief on instruments in a reconstruction or amalgamation of companies, and section 15A gives relief on transfers of property between associated companies. LHDN treats both as applications, to be submitted to the nearest State Director's Office for consideration, with conditions attached. Assume nothing until the relief is granted, and note that a restructuring done shortly before a sale invites scrutiny.
The following are deliberately unstated or described only qualitatively until confirmed by a subject-matter expert:
- The detailed qualifying conditions and clawback periods for stamp duty relief under s.15 and s.15A of the Stamp Act 1949 were not read from a consolidated statutory text — there is no consolidated reprint incorporating the recent Finance Act amendments — and must be confirmed with the LHDN State Director's Office
- Whether the Industrial Co-ordination Act 1975 provides for transfer of a manufacturing licence, and MIDA's current post-licensing procedure for a change of shareholding in a licensed manufacturer, should be confirmed with MIDA before signing
- The change-of-ownership provisions in the Employment (Termination and Lay-Off Benefits) Regulations 1980 govern whether termination benefits fall due on an asset sale; the exact regulation and its conditions were not verified against the gazetted text
- Whether KPDN requires a fresh WRT application or permits variation on a change of the licensee's shareholding was not confirmed against a KPDN guideline
Sources
- Stamp Act 1949 (Act 378), First Schedule and Third Schedule, text as at 1 January 2024 — Attorney General's Chambers
- Stamp Duty Exemptions and Relief — relief under section 15 and section 15A — LHDN
- Companies Act 2016 (Act 777), s.105 and s.106 — transfer and registration of securities — SSM
- Guideline on Application for Manufacturing Licence (ML) — MIDA
Change history
| Version | Date | Change | By |
|---|---|---|---|
| 01.00 | 20 Jul 2026 | Approved and published. | — |