MALAYSIA Law and Practice Contributed by: Munir Abdul Aziz, Ee Von Teo and Addy Herg, Wong & Partners
2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions Higher Labour Standards Private equity firms looking to acquire interests in Malaysian companies should be mindful of the fol - lowing significant changes in labour laws. • The national minimum wage was increased by 13% from MYR1,500 to MYR1,700 per month following the Minimum Wages Order 2024, effective from 1 August 2025 for all employees. • Under the Employment (Amendment) Act 2022, which came into effect on 1 January 2023, statu - tory protection is granted to all individuals entering into contracts of service, irrespective of wages. Examples of enhanced statutory rights of employ - ees include the reduction of maximum working hours to 45 hours per week, increased paid mater - nity leave to 98 days and the introduction of seven days of paid paternity leave. • However, employees earning more than MYR4,000 a month are exempted from certain protections, including entitlement to overtime pay, termination benefits and retirement benefits. Developments in Regulations Affecting Transactions Reforms in listing rules will be made to improve the efficiency and speed of execution of the initial public offering (IPO) process. This will help facilitate exits by private equity firms from their investee companies. A reduction of stamp duty rates from 0.15% to 0.1% of contract value, subject to a maximum cap of MYR1,000 per contract, for listed shares traded on Bursa Malaysia Securities took effect in July 2023. This helps reduce transaction costs and is of benefit to private equity firms with significant investments in companies that seek to list, which are often required to hold a proportion of their shares in the listed com - pany for a certain period under contractual lock-ups required by underwriters. Further, a new capital gains tax (CGT) regime was introduced with effect from 1 January 2024. The CGT is imposed on gains or profits from the disposal
of capital assets. The ambit of the disposal is wide ranging, and captures a variety of transactions involv - ing the disposal of capital assets (including unlisted shares). The CGT rate applicable (i) for capital assets acquired before 1 January 2024, and disposed of on or after 1 January is 10% on the chargeable income or 2% of gross on the disposal price; and (ii) for capi - tal assets acquired on or after 1 January 2024 and disposed of thereafter, is 10% on the chargeable income. However, there are exemptions for the dis - posal of shares of private companies as part of an internal group restructuring of companies, approved IPOs on Bursa Malaysia and transactions involving venture capital companies. ESG Disclosures The Enhanced Sustainability Reporting Framework (ESRF) came into force after 31 December 2023 through the Main Market Listing Requirements issued by Bursa Malaysia. The ESRF requires specific disclo - sure on sustainability matters, including areas such as total energy consumption and emissions manage - ment. Of potentially greater interest to private equity firms is the recent publication of the Simplified ESG Disclo - sure Guide for small and medium-scale enterprises, covering 15 topics across ESG matters. This may help facilitate investments in private Malaysian companies by private equity firms with an ESG focus. The government has said that it intends to promulgate a national carbon policy, which will provide guidance on carbon trading at the state level. Enabling Economic Policies by the Government The government has released a wide-ranging eco - nomic policy document with multiple aims, including to: • undertake structural reform of the Malaysian economy; • transform the Malaysian economy by facilitating higher-value and more complex economic activi - ties; • lift labour’s share of GDP; • enhance foreign direct investment; and
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