Equity Crowdfunding Agreement (Malaysia) (Agreements)

An Equity Crowdfunding Agreement (Agreements) in Malaysia records the terms the parties accept and the commitments each makes to the other.

The Securities Commission Malaysia issued its first Equity Crowdfunding Guidelines in 2015 and has updated the regulatory framework progressively — most recently through the Guidelines on Recognised Markets (ECF and P2P) revised in 2021. Under these Guidelines, issuers (the fundraising companies) must be Malaysian-incorporated companies registered with SSM under the Companies Act 2016, incorporated for less than 5 years, and not listed on Bursa Malaysia or any other securities exchange. The maximum fundraising limit under the SC's ECF Guidelines is RM 10 million per issuer across all ECF platforms.

Investors in Malaysian ECF campaigns are classified as retail investors, angel investors, and sophisticated investors under the SC's Guidelines. Retail investors — individuals investing from personal funds with no accreditation requirement — may invest up to RM 5,000 per issuer and RM 50,000 in aggregate across all ECF platforms per year. Angel investors (with net personal assets exceeding RM 3 million or gross annual income exceeding RM 300,000) and sophisticated investors under Schedule 6 and Schedule 7 of the CMSA 2007 are not subject to the retail investment cap.

An ECF Agreement documents the key terms of the investment: the issuer's details, the investor's details, the type and number of shares subscribed, the issue price, the pre-money valuation, investor rights (including information rights, anti-dilution protections, and tag-along rights), and representations and warranties by the issuer. The agreement is subject to the ECF platform's hosting terms and the SC's Guidelines, which require disclosure of all material information through the platform's Information Memorandum.

Malaysian ECF platforms registered with the SC include pitchIN, CrowdPlus.asia, and Ata Plus — each operating under the SC's oversight as Recognised Market Operators (RMOs) under Section 34A of the CMSA 2007. All investment agreements concluded through these platforms are subject to the platform's standard terms and the applicable provisions of the Companies Act 2016 governing share issuance.

The legal framework governing the Equity Crowdfunding 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 Equity Crowdfunding Agreement (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Financial Services Act 2013 (Act 758) sets the foundational requirements.

An Equity Crowdfunding Agreement in Malaysia is needed whenever a company raises funds through an SC-registered ECF platform and investors subscribe for shares or convertible instruments.

An ECF Agreement is required when a Malaysian startup — registered with SSM under the Companies Act 2016 and incorporated for less than 5 years — lists on an SC-registered ECF platform such as pitchIN or CrowdPlus.asia and issues new shares to investors. The agreement documents each investor's subscription, price, and share class.

An ECF Agreement is needed when an SME raises growth capital through an ECF campaign and issues convertible notes — instruments that convert to equity upon a future priced financing round — to investors. The convertible note terms (conversion price, discount rate, valuation cap) must be clearly documented in the agreement.

An ECF Agreement is required when a company raises from both retail and sophisticated investors through the same ECF campaign. The agreement must reflect the applicable investment limits — RM 5,000 per issuer and RM 50,000 aggregate for retail investors — consistent with the SC's ECF Guidelines revised in 2021.

An ECF Agreement is needed when an ECF issuer offers preference shares with specific rights — such as a liquidation preference, dividend preference, or anti-dilution protection — to investors. These rights must be documented in the agreement and reflected in the company's constitution filed with SSM under the Companies Act 2016.

An ECF Agreement is required when a company conducts a follow-on ECF campaign to existing investors. The agreement for the new round must address the impact on existing shareholders, including any pre-emption rights under the Companies Act 2016, Section 85.

Parties in Malaysia should prepare a Equity Crowdfunding 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.

A valid Equity Crowdfunding Agreement in Malaysia under the SC's ECF Guidelines and the CMSA 2007 must contain the following essential elements.

Issuer Details: Full legal name, SSM registration number under the Companies Act 2016, registered address, date of incorporation, nature of business, and authorised and paid-up share capital. The issuer must be a Malaysian-incorporated company not listed on Bursa Malaysia, incorporated for less than 5 years, and compliant with the SC's ECF eligibility criteria.

ECF Platform Reference: Name of the SC-registered ECF platform hosting the campaign, the SC's registration number for the platform as a Recognised Market Operator (RMO) under CMSA 2007, and the campaign reference number on the platform.

Investor Details: Full name, NRIC/passport number, investor classification (retail, angel, or sophisticated investor under Schedule 6/7 of CMSA 2007), and — for retail investors — confirmation that the investment does not exceed the RM 5,000 per issuer and RM 50,000 aggregate limits under the SC's ECF Guidelines.

Subscription Terms: Type of instrument subscribed (ordinary shares, preference shares, convertible note), number of shares or face value of convertible instrument, subscription price per share in RM, total investment amount in RM, pre-money valuation of the issuer, and post-money shareholding percentage.

Investor Rights: Information rights (entitlement to annual financial statements), anti-dilution provisions, tag-along rights (right to sell shares alongside founders in a trade sale), pro-rata rights for future funding rounds, and drag-along rights binding minority shareholders on a majority-approved sale.

Representations and Warranties: Issuer's representations that the shares are validly issued, free from encumbrances, that the Information Memorandum disclosed on the ECF platform is accurate and complete, and that the issuer holds all licences necessary to operate its business.

Governing Law and Dispute Resolution: Malaysian law as governing law, with disputes referred to the High Court of Malaya or the Asian International Arbitration Centre (AIAC) under the Arbitration Act 2005. SC's jurisdiction for regulatory complaints relating to the ECF platform under CMSA 2007.

Additional compliance elements for a Equity Crowdfunding 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.