Software Licence Agreement (Malaysia)
SOFTWARE LICENCE AGREEMENT
Copyright Act 1987 (Act 332) | Contracts Act 1950 (Act 136) | Personal Data Protection Act 2010 (Act 709)
THIS SOFTWARE LICENCE AGREEMENT is entered into on [Effective Date]
BETWEEN:
(1) [Licensor Name] (SSM No. [Licensor SSM]) of [Licensor Address] (hereinafter referred to as the "Licensor"); AND
(2) [Licensee Name] (SSM No. [Licensee SSM]) of [Licensee Address] (hereinafter referred to as the "Licensee").
The Licensor and the Licensee are hereinafter collectively referred to as the "Parties".
RECITALS
A. The Licensor owns and has developed the software known as [Software Name] ([Software Version]), described as [Software Description] (the "Software"), which is protected as a literary work under the Copyright Act 1987 (Act 332).
B. The Licensee desires to obtain a licence to use the Software, and the Licensor is willing to grant such a licence, on the terms and conditions set out in this Agreement.
1. DEFINITIONS
1.1 "Software" means [Software Name] ([Software Version]), [Software Description], delivered by [Delivery Method], including any updates, patches, or new versions provided by the Licensor under this Agreement.
1.2 "Permitted Users" means [Permitted Users].
1.3 "Licence Fee" means [Licence Fee].
1.4 "Territory" means [Licence Territory].
2. LICENCE GRANT
2.1 Subject to the terms of this Agreement and payment of the Licence Fee, the Licensor hereby grants to the Licensee a [Licence Type] licence to use the Software within the Territory for [Licence Term], for the Licensee's internal business purposes only.
2.2 The licence is limited to the Permitted Users ([Permitted Users]). The Licensee shall not permit persons other than the Permitted Users to access or use the Software.
2.3 Sub-licensing: [Sub-licence Permission].
3. RESTRICTIONS ON USE
3.1 The Licensee shall not, without the prior written consent of the Licensor: (a) copy, reproduce, or duplicate the Software except as permitted by this Agreement; (b) modify, adapt, translate, or create derivative works based on the Software; (c) reverse engineer, decompile, disassemble, or otherwise attempt to derive the source code of the Software, except as permitted under Section 13(2) of the Copyright Act 1987; (d) circumvent any technological protection measure applied to the Software, contrary to Section 36A of the Copyright Act 1987 (as amended by the Copyright (Amendment) Act 2012); (e) sublicense, sell, resell, transfer, assign, or otherwise deal in the Software except as expressly permitted herein.
3.2 The Licensee shall implement reasonable security measures to prevent unauthorised access to or use of the Software, and shall promptly notify the Licensor of any actual or suspected unauthorised access.
4. INTELLECTUAL PROPERTY OWNERSHIP
4.1 [IP Ownership Statement] Nothing in this Agreement transfers ownership of any intellectual property rights in the Software to the Licensee. The Licensee acquires only the right to use the Software as expressly set out in this Agreement.
4.2 Improvements and modifications: [Improvements Ownership].
4.3 The Licensee shall promptly notify the Licensor of any infringement or suspected infringement of the Licensor's intellectual property rights in the Software that comes to the Licensee's attention.
5. LICENCE FEES AND PAYMENT
5.1 The Licensee shall pay the Licensor the Licence Fee of [Licence Fee] in accordance with the following payment schedule: [Payment Schedule].
5.2 Service tax: [Service Tax Status]. All service tax under the Service Tax Act 2018 (Act 807) shall be borne by the Licensee.
5.3 If any payment remains unpaid after the due date, interest shall accrue at [Late Payment Interest] on the overdue amount from the due date until actual payment.
5.4 This Agreement is a chargeable instrument under the Stamp Act 1949 (Act 378). The cost of stamping, if applicable, shall be borne by the Licensee.
6. DATA PROTECTION
6.1 PDPA 2010 applicability: [PDPA Applicability].
6.2 Where the Software processes personal data of Malaysian data subjects, both Parties shall comply with the Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Regulations 2013. The data processing purpose is: [Data Processing Purpose]. The Licensor (as data processor where applicable) shall implement the security measures required under the Security Principle of the PDPA 2010 and shall not process personal data beyond the purposes stated herein.
6.3 Cross-border transfers of personal data shall comply with Section 129 of the PDPA 2010. The Licensee, as data user, is responsible for compliance with the data subject rights provisions of the PDPA 2010.
7. WARRANTY AND LIABILITY
7.1 The Licensor warrants that it has the right to grant the licence in the Software and that, to the best of its knowledge, the Software does not infringe the intellectual property rights of any third party.
7.2 To the maximum extent permitted by Malaysian law, the Licensor's total liability under this Agreement shall not exceed the total Licence Fees paid by the Licensee in the twelve months immediately preceding the event giving rise to the claim. Liability is assessed under Section 74 of the Contracts Act 1950.
7.3 Neither Party shall be liable to the other for loss of profits, indirect loss, or consequential loss, except in cases of fraud or wilful misconduct.
8. TERMINATION
8.1 Either Party may terminate this Agreement by giving [Termination Notice Period] written notice to the other Party.
8.2 Either Party may terminate this Agreement immediately upon written notice if the other Party commits a material breach and fails to remedy the breach within 14 days of receiving written notice specifying the breach. Refusal to perform constitutes repudiation under Section 40 of the Contracts Act 1950.
8.3 Upon termination, the Licensee shall immediately cease all use of the Software, delete all copies of the Software in its possession or control, and certify such deletion to the Licensor in writing within 7 days.
9. GOVERNING LAW AND DISPUTE RESOLUTION
9.1 This Agreement is governed by and construed in accordance with the laws of Malaysia, including the Contracts Act 1950 (Act 136), the Copyright Act 1987 (Act 332), and the Computer Crimes Act 1997 (Act 563).
9.2 Dispute resolution: [Dispute Resolution].
10. GENERAL
10.1 This Agreement constitutes the entire agreement between the Parties regarding the Software and supersedes all prior representations, negotiations, or understandings.
10.2 No amendment to this Agreement is binding unless made in writing and signed by authorised representatives of both Parties.
10.3 If any provision of this Agreement is held invalid or unenforceable under Malaysian law, the remaining provisions shall continue in full force.
Licensor
________________
Signature
Licensee
________________
Signature
What Is a Software Licence Agreement (Malaysia)?
A Software Licence Agreement in Malaysia grants defined rights to use the licensed subject matter on the terms it specifies.
The Computer Crimes Act 1997 (Act 563) further criminalises unauthorised access to computer programs and systems. A Software Licence Agreement defines the boundary between authorised and unauthorised use, specifying permitted installations, user counts, permitted territories, and acceptable use conditions. Without a written licence, the licensee risks prosecution under Section 3 and Section 5 of the Computer Crimes Act 1997 for unauthorised access and modification.
Software Licence Agreements in Malaysia may be classified as end-user licence agreements (EULAs), enterprise licences, SaaS subscription agreements, OEM licences, or open-source compatible licences. The Contracts Act 1950 requires that a valid contract possess offer, acceptance, consideration, free consent, capacity, and lawful object under Section 10. Courts such as the Kuala Lumpur High Court have held in cases including Digital Satellite Sdn Bhd v Satcom Solutions (2009) that a click-wrap EULA presented online satisfies offer and acceptance requirements under Section 7 of the Contracts Act 1950.
The Personal Data Protection Act 2010 (Act 709) applies where the software processes personal data of Malaysian data subjects. Licence agreements for such software must reference data processing obligations, particularly where the licensor acts as a data processor under the PDPA 2010. Failure to include PDPA 2010-compliant data processing terms exposes both parties to regulatory action by the Department of Personal Data Protection (JPDP).
Service tax under the Service Tax Act 2018 (Act 807) at 8% applies to digital services, including software subscriptions and SaaS licences provided by foreign service providers to Malaysian consumers, as administered by the Royal Malaysian Customs Department (RMCD). Licensors providing software services must register with the RMCD once the MYR 500,000 annual threshold is exceeded.
The legal framework governing the Software Licence Agreement (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Software Licence Agreement (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Act 2016 (Act 777) sets the foundational requirements.
When Do You Need a Software Licence Agreement (Malaysia)?
A Software Licence Agreement in Malaysia is required whenever a software developer, vendor, or copyright owner grants another party the right to use, deploy, or access software.
A Software Licence Agreement is needed when a Malaysian company deploys enterprise software across its workforce, whether installed on-premise or accessed via cloud. Without a written licence, the company cannot verify the scope of permitted use and risks breaching the vendor's intellectual property rights under the Copyright Act 1987, Section 36.
A Software Licence Agreement is required when a software-as-a-service (SaaS) provider based in Malaysia or serving Malaysian customers grants subscription access to its platform. The agreement must address service levels, data residency under the Personal Data Protection Act 2010, and service tax obligations under the Service Tax Act 2018.
A Software Licence Agreement is needed when a Malaysian technology company transfers a software product to an OEM partner for bundling with hardware. The OEM licence must define permitted territories, royalty calculations in Malaysian Ringgit (MYR), and sub-licensing restrictions.
A Software Licence Agreement is required when a foreign software vendor appoints a Malaysian distributor. The distributor agreement incorporating licence terms must comply with the Contracts Act 1950 and should address whether the distributor may grant sub-licences to end users and on what terms.
A Software Licence Agreement is needed when a government agency or statutory body procures software for public use. Malaysian government procurement is governed by the Ministry of Finance Treasury Instructions and the Financial Procedure Act 1957, which require written agreements setting out licence scope, IP ownership, and source code escrow arrangements.
Parties in Malaysia should prepare a Software Licence Agreement (Malaysia) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Software Licence Agreement (Malaysia)
A valid Software Licence Agreement in Malaysia must contain the following key elements.
Parties: Full legal names, company registration numbers under the Companies Act 2016 (Act 777) as registered with the Companies Commission of Malaysia (SSM), and registered addresses. If either party is a foreign company registered under Division 2 of the Companies Act 2016, its local representative and branch registration number must be stated.
Licence Grant: The precise scope of the licence, including whether it is exclusive or non-exclusive, the permitted number of installations or users, the licensed territory (e.g., Malaysia only, or ASEAN-wide), and whether sub-licensing is permitted. The grant clause must mirror the copyright rights under Section 13 of the Copyright Act 1987 to define what the licensee may and may not do.
Licence Fee and Payment: The licence fee in Malaysian Ringgit (MYR), payment schedule, and whether service tax at 8% under the Service Tax Act 2018 is included or added. Late payment interest rate and consequences of non-payment must be specified.
Intellectual Property Ownership: A clear statement that the licensor retains all copyright, patents, trade marks, and other intellectual property rights in the software. Any improvements or modifications made by the licensee should be addressed, including whether they vest in the licensor or remain with the licensee.
Restrictions on Use: Prohibited activities such as reverse engineering, decompilation, circumvention of technical protection measures, and redistribution. These restrictions align with Section 36A of the Copyright Act 1987 (as amended by the Copyright (Amendment) Act 2012) prohibiting circumvention of technological protection measures.
Warranty and Liability: The licensor's warranty regarding software fitness for purpose and any limitations on liability. Malaysian courts apply the Contracts Act 1950 Section 74 to assess damages for breach of contract. Limitation of liability clauses are enforceable in Malaysia but must not be unconscionable.
Termination: Grounds for termination including breach, insolvency, or change of control. Upon termination, the licensee's obligation to delete or return the software and certify compliance. The Contracts Act 1950 Section 40 treats refusal to perform as a repudiation entitling the innocent party to terminate.
Data Protection: Where the software processes personal data, the agreement must comply with the Personal Data Protection Act 2010 Schedule, addressing data processing purposes, security standards, and data subject rights.
Governing Law and Dispute Resolution: Malaysian law under the Contracts Act 1950 and applicable Kuala Lumpur courts, or arbitration under the Asian International Arbitration Centre (AIAC) Arbitration Rules.
Additional compliance elements for a Software Licence Agreement (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Software Licence Agreement (Malaysia) (Malaysia) [Legal document template]. Forms Legal. https://forms-legal.com/malaysia/business/intellectual-property/software-licence-agreement-malaysia
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author = {{Forms Legal}},
title = {Software Licence Agreement (Malaysia) (Malaysia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/malaysia/business/intellectual-property/software-licence-agreement-malaysia}},
note = {Free legal document template. Based on Companies Act 2016 (Act 777)}
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Frequently Asked Questions
A Software Licence Agreement is legally enforceable in Malaysia under the Contracts Act 1950 (Act 136) provided it satisfies the requirements of Section 10: offer, acceptance, consideration, free consent, capacity of parties, and a lawful object. Software is protected as a literary work under the Copyright Act 1987 (Act 332), and a licence agreement defines the boundary between authorised and infringing use. The Kuala Lumpur High Court has upheld software licence agreements including click-wrap EULAs where parties have clearly assented to terms. A licence agreement that excludes liability must not be unconscionable and should be clearly brought to the licensee's attention before acceptance, in line with Malaysian common law principles applied in cases such as Emjay Enterprises Sdn Bhd v Badrul Hisham bin Abdullah [2011] 8 MLJ 698.
A Software Licence Agreement is a chargeable instrument under the Stamp Act 1949 (Act 378) if it constitutes a service agreement or licence. Commercial agreements in Malaysia generally attract ad valorem stamp duty or a fixed duty depending on their classification. The Inland Revenue Board of Malaysia (LHDN) administers stamp duty. For software licence agreements with a defined annual licence fee, stamp duty is typically assessed on the contract value. Stamping must be completed within 30 days of execution for agreements signed in Malaysia, or within 30 days of receipt in Malaysia for agreements executed abroad. An unstamped agreement is inadmissible in evidence under Section 52 of the Stamp Act 1949, which is a practical enforcement risk in the event of a dispute. Under Malaysia law, Companies Act 2016 (Act 777), parties should seek independent legal advice from a qualified lawyer to confirm compliance with all applicable requirements. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
A Software Licence Agreement in Malaysia grants the licensee a right to use the software while the licensor retains ownership of the copyright and all intellectual property rights under the Copyright Act 1987. An assignment, by contrast, transfers ownership of the copyright itself from the assignor to the assignee under Section 26(3) of the Copyright Act 1987, which requires the assignment to be in writing and signed by the copyright owner to be effective. After a valid assignment, the assignee becomes the new copyright owner and can exploit the work without restriction, whereas a licensee is bound by the terms of the licence. Assignments in Malaysia must be clearly worded to transfer title, as Malaysian courts construe ambiguous transfer clauses as licences rather than assignments, consistent with the principle that intellectual property rights are not lightly relinquished.
A Software Licence Agreement in Malaysia can contractually prohibit reverse engineering, decompilation, and disassembly of software. The Copyright Act 1987, Section 36A (inserted by the Copyright (Amendment) Act 2012) also prohibits the circumvention of technological protection measures applied to copyright works. A contractual restriction on reverse engineering is enforceable under the Contracts Act 1950 provided it is reasonable and not contrary to public policy under Section 24. However, Malaysian courts may not enforce a blanket prohibition if the licensee seeks to decompile solely for interoperability purposes, as permitted under certain fair dealing exceptions in Section 13(2)(a) of the Copyright Act 1987. Licence agreements should therefore clearly state the permitted scope of interoperability research while maintaining the general prohibition on reverse engineering.
Breach of a Software Licence Agreement in Malaysia triggers multiple remedies. Under the Contracts Act 1950, Section 74, the innocent party is entitled to compensation for any loss or damage that naturally arose from the breach or was within the parties' reasonable contemplation at the time of contracting. The licensor may also seek an injunction under Order 29 of the Rules of Court 2012 to restrain continued unauthorised use, which is particularly effective where the breach involves copying or redistribution of software. Additionally, copyright infringement is actionable under Section 37 of the Copyright Act 1987, which provides for damages, account of profits, and delivery up of infringing copies. Criminal liability under Section 41 of the Copyright Act 1987 may also arise where infringement is wilful and for commercial advantage, carrying fines of up to MYR 20,000 per infringing copy and imprisonment of up to five years.
A Software Licence Agreement in Malaysia must address the Personal Data Protection Act 2010 (Act 709) where the software processes personal data of Malaysian data subjects. The PDPA 2010 applies to commercial data processors in Malaysia and regulates the collection, processing, storage, and disclosure of personal data under seven Data Protection Principles including the Security Principle and Retention Principle. Where the licensor acts as a data processor on behalf of the licensee, the agreement must specify the purposes of processing, security measures, data retention periods, and the licensee's obligations as data user under Section 5 of the PDPA 2010. The Department of Personal Data Protection (JPDP) enforces the PDPA 2010, and non-compliance can result in fines of up to MYR 300,000 and imprisonment under Section 5(2). Foreign licensors providing cloud-based software to Malaysian businesses should also ensure cross-border data transfer compliance under Section 129 of the PDPA 2010.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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