Understanding Commission and Profit-Sharing Disputes in Malaysia
In Malaysia’s fast-moving commercial landscape, it is common for businesses, introducers, and consultants to earn fees or commissions when they successfully connect two parties for a deal. Similarly, many partnerships and joint ventures promise profit-sharing once a project becomes profitable.
However, when one party fails to honour these payments, a commission contract dispute or profit-sharing dispute arises — and these often lead to costly litigation.
At JY Ko Advocates & Solicitors, our litigation team in Kuala Lumpur and Selangor regularly represents clients in cases involving unpaid commissions, breach of partnership profit-sharing agreements, and business contract breaches.
A recent High Court case, RM Link Sdn Bhd & Anor v DK-MY Properties Sdn Bhd & Ors [2025] CLJU 932, provides valuable lessons on how Malaysian courts determine whether a commission or profit-sharing agreement is valid and enforceable — and when a party is entitled to claim what they have earned.
What Is a Commission or Profit-Sharing Agreement?
A commission agreement is typically an arrangement where one party (“the introducer” or “the agent”) helps secure a deal, and the other party agrees to pay a percentage or fixed fee once the deal materialises.
A profit-sharing agreement is a broader concept — often used among business partners, contractors, or investors — where parties agree to divide profits generated from a business project, venture, or sale.
Both are legally binding contracts under the Contracts Act 1950, provided they meet the essential elements of offer, acceptance, consideration, and intention to create legal relations.
Unfortunately, disputes often arise because these arrangements are made informally or with ambiguous terms, leaving parties uncertain about what they are truly entitled to.
The RM Link Case: Background and Key Facts
In the 2025 High Court decision of RM Link Sdn Bhd & Anor v DK-MY Properties Sdn Bhd & Ors, the plaintiffs claimed a commission fee based on an Introduction/Commission Agreement.
- The plaintiffs introduced a buyer for a property-holding company’s shares worth RM176 million.
- The defendants later refused to pay the agreed 1 % introduction fee (RM1.763 million).
- The main defence was that the commission agreement was illegal under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981 (VAEAPM Act) because the introducer was not a licensed estate agent.
The Court had to decide whether this commission agreement was void, whether the plaintiffs were entitled to payment, and whether company directors could be personally liable.
The Court’s Findings and Legal Principles
1. Commission Agreements Are Valid if Not Part of a Regulated Estate Agency Practice
The High Court held that the VAEAPM Act only applies to persons carrying on the business of estate agency, meaning a system or course of conduct involving property transactions for a fee.
In this case, the introducer merely facilitated one-off contact between a buyer and seller and did not operate as a professional estate agent. Therefore, the Court ruled that the Commission Agreement was valid and enforceable.
Reference: The Court distinguished earlier cases such as Brilliant Team Management Sdn Bhd v South East Pahang Oil Palm Sdn Bhd [2006] 2 CLJ 1218 and adopted the reasoning in Kunci Semangat Sdn Bhd v Thomas Varkki M V Varkki & Anor [2022] 1 LNS 424.
Lesson:
Even if your commission involves property or share transactions, it can still be enforceable if you are not operating as a licensed estate agent business.
Tip from JY Ko Advocates & Solicitors:
Always ensure your commission or introduction agreement clearly states that you are acting as an introducer or consultant — not as an estate agent — and that it is a one-off transaction.
2. Variation or Oral Changes Must Be Proven in Writing
The defendants argued that the payment terms were later varied through WhatsApp messages — that the fee was reduced or subject to resale of the property.
The Court rejected this defence, noting that the written contract contained a boilerplate clause requiring any amendment to be in writing and signed by both parties.
“A man cannot approbate and reprobate. He cannot adopt two inconsistent attitudes,” the Court quoted from Express Newspapers plc v News (UK) Ltd [1990] 3 All ER 376.
Lesson:
If a commission or profit-sharing agreement has been signed, neither party can later change its terms informally without written consent.
Tip from JY Ko Advocates & Solicitors:
Keep all communications formal. When dealing with significant commissions or partnership profits, always prepare a written variation agreement — or you may lose your legal protection.
3. Privity of Contract and Corporate Veil
The individual introducer (Mr Lim) tried to claim personally even though the contract was signed under his company’s name. The Court applied the doctrine of privity of contract — only parties to the contract can sue or be sued on it.
The Court refused to “lift the corporate veil” because there was no fraud or abuse of corporate structure, citing Solid Investments Ltd v Alcatel Lucent (Malaysia) Sdn Bhd [2014] 3 CLJ 73.
Lesson:
If your business uses a company or nominee to sign a commission or profit-sharing contract, ensure the correct party is named — otherwise, you may lose the right to enforce it personally.
Tip from JY Ko Advocates & Solicitors:
Our commercial litigation lawyers can help ensure your agreements reflect the actual parties who will benefit or bear obligations under the contract.
4. No Personal Liability Without Fraud or Misuse
The plaintiffs also tried to hold the company director personally liable by alleging he was the “alter ego” of the company. The Court disagreed, reaffirming that directors are not automatically liable for a company’s debts or contracts unless there is fraud, misrepresentation, or abuse of the corporate form.
The Court cited Ong Leong Chiou & Anor v Keller (M) Sdn Bhd & Ors [2021] 4 CLJ 821 and Prest v Prest [2013] 4 All ER 673 in explaining the principles of veil-piercing.
Lesson:
In most commission or profit-sharing disputes, liability remains with the company that signed the agreement — not automatically its directors.
Tip from JY Ko Advocates & Solicitors:
If you intend to hold a company director personally liable, you must demonstrate clear evidence of fraud or misuse of corporate structure. Our team can assess if your case meets this threshold.
Profit-Sharing Disputes: Similar Legal Challenges
Profit-sharing arrangements often arise in business partnerships, project collaborations, and investment ventures. Like commission disputes, they hinge on clear terms, evidence of contribution, and performance conditions.
1. Common Causes of Profit-Sharing Disputes
- Unclear terms on what constitutes “profit.”
- Disagreement on expense deductions before profit calculation.
- Failure to disclose financial records or project accounts.
- One party claiming sole ownership of proceeds.
Under Malaysian law, such disputes are governed by both the Contracts Act 1950 and, if structured as a partnership, the Partnership Act 1961.
JY Ko Advocates & Solicitors frequently assist clients in identifying whether the relationship is a partnership, joint venture, or contractual collaboration — as this affects their legal remedies.
2. Key Legal Principles in Profit-Sharing Disputes
a. Intention to Create Legal Relations
Courts will not enforce mere “gentlemen’s agreements” unless there was a clear intention to create legal obligations.
b. Contribution and Performance
Each party must show that they performed their part — whether through investment, work, or introductions.
c. Written vs Oral Agreements
While oral profit-sharing agreements can be enforceable, written contracts provide stronger proof. Courts weigh WhatsApp messages, invoices, and conduct as supplementary evidence.
d. Remedies
- Specific performance (forcing payment of profits or commission).
- Damages for breach of contract.
- Accounting orders to verify profits.
- Injunctions to prevent misuse of funds.
Proving Your Claim in Commission and Profit-Sharing Disputes
To succeed in a Malaysian court, you must provide credible evidence that:
- A valid agreement existed.
- You performed your part (e.g. introduced the buyer, worked on the project).
- The other party benefited or completed the transaction.
- The amount owed is calculable and proven.
The RM Link decision illustrates that courts will carefully scrutinise the evidence — including WhatsApp chats, invoices, and witness testimony — but ultimately uphold legitimate agreements supported by facts.
At JY Ko Advocates & Solicitors, our commercial dispute lawyers guide clients on assembling strong documentary evidence before filing suit, increasing the chance of early settlement or favourable judgment.
Defences Commonly Raised by Debtors
In many commission and profit-sharing disputes, the paying party raises one or more of these defences:
- Illegality: claiming the agreement violates licensing laws (as in the RM Link case).
- Lack of privity: arguing the claimant is not a contracting party.
- Non-performance: alleging the claimant did not fulfil their part.
- Variation: claiming the terms were later changed.
- Corporate separation: blaming a different company entity.
The High Court in RM Link made it clear that such defences must be specifically pleaded and proven. Bare allegations without evidence are insufficient.
How Malaysian Courts Approach These Disputes
Courts favour written, clear, and commercially sensible agreements. Judges apply the Contracts Act 1950 and relevant case law to balance fairness with legal certainty.
In RM Link, Justice Elaine Yap Chin Gaik emphasised that:
- The commission agreement was not illegal.
- The defendant company breached its payment obligation.
- The plaintiff was entitled to RM 1,763,000 + 5 % interest until full payment.
This judgment reinforces that Malaysian courts protect legitimate business agreements when the claimant acts in good faith and can substantiate their claim.
Preventing Future Commission and Profit-Sharing Disputes
JY Ko Advocates & Solicitors recommends several best practices for businesses and introducers:
- Always sign a written agreement before performing your services.
- Specify payment triggers — for example, “upon completion of sale” or “upon receipt of funds.”
- Clarify parties — ensure the contract is between the correct entities.
- Include variation and dispute-resolution clauses.
- Keep all correspondence and documentation.
Our firm assists clients in drafting and reviewing commission, introduction, and profit-sharing contracts that are legally sound and enforceable.
How JY Ko Advocates & Solicitors Can Help
We (JY Ko Advocates & Solicitors) is a Malaysian law firm experienced in:
- Contract and commercial litigation
- Commission and profit-sharing disputes
- Partnership and shareholder disagreements
- Debt recovery and enforcement proceedings
Our lawyers have successfully represented clients in High Court and Sessions Court cases involving breach of commission agreements, profit-sharing conflicts, and corporate veil issues similar to RM Link v DK-MY Properties.
We offer strategic advice, strong advocacy, and efficient resolution — whether through negotiation, mediation, or litigation.
Call to Action:
If you are facing a commission or profit-sharing dispute, contact us JY Ko Advocates & Solicitors today for a consultation. Let our experienced commercial litigation team help you enforce your rights and recover what you are entitled to.
FAQ: Commission and Profit-Sharing Disputes in Malaysia
1. Is an oral commission agreement enforceable in Malaysia?
Yes, oral agreements can be valid under the Contracts Act 1950, but proving their terms is difficult. Written agreements supported by documentation provide stronger legal protection.
2. Can I claim commission if the deal didn’t close?
Usually no — unless the agreement clearly provides for payment even if the sale or transaction does not complete. The payment trigger clause is critical.
3. How long do I have to file a claim for unpaid commission or profits?
Under the Limitation Act 1953, you generally have six years from the date the payment became due.
4. Can I sue a company director personally for unpaid commissions?
Only if there is fraud, deceit, or misuse of the corporate entity. Otherwise, the liability rests with the company.
5. What if the other party changes the agreement via WhatsApp or email?
If the written contract states that amendments must be in writing and signed, informal messages will not vary the agreement unless both parties formally agree.
6. What if I agreed to a “profit-sharing” verbally with no written contract?
You may still claim your share if there is clear evidence (messages, bank transfers, witnesses). Courts will look at conduct and documentation to infer an agreement.
7. How can a lawyer help in a commission or profit-sharing dispute?
A lawyer can review your documents, assess the strength of your claim, issue a letter of demand, negotiate settlement, or commence court proceedings if necessary.
Conclusion
Commission and profit-sharing arrangements are powerful motivators in business — but when trust breaks down, they can turn into complex legal battles.
The decision in RM Link Sdn Bhd & Anor v DK-MY Properties Sdn Bhd & Ors [2025] CLJU 932 demonstrates that Malaysian courts uphold legitimate agreements where parties act honestly and provide sufficient evidence.
Whether you are an introducer seeking unpaid fees, a partner in a profit-sharing venture, or a business facing an unfair claim, JY Ko Advocates & Solicitors offers clear, strategic, and effective legal representation to protect your interests.
📞 Reach out for a consultation with our experienced commission dispute lawyers and commercial litigation team.
Let us help you achieve a swift, affordable, and fair resolution to your commission or profit-sharing dispute in Malaysia.
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Disclaimer: The above proposition is subject to actual facts and circumstances and shall never be referred as the actual law without seeking legal advice. Consult us for more information!