Drafting Business, Corporate, and Shareholder Agreements in Malaysia: Lessons from the QVC Rock Products v Pohmix Kuari Case
Introduction: Why Proper Agreements Are the Foundation of Business Success
In business, trust matters — but contracts are what protect you. Many entrepreneurs, SMEs, and corporations in Malaysia enter into business agreements, corporate contracts, or shareholder agreements without paying close attention to drafting. Unfortunately, unclear terms, vague pricing, or incomplete provisions can lead to costly disputes.
A recent Court of Appeal decision, QVC Rock Products Sdn Bhd v Pohmix Kuari Sdn Bhd [2024] 4 CLJ 708, demonstrates this risk. The case revolved around a multi-million ringgit sale and purchase agreement (SPA) that was poorly structured, leading to years of litigation.
At JY Ko Advocates & Solicitors, we specialise in drafting and reviewing agreements to ensure your business deals are legally enforceable, commercially practical, and future-proof.
Case Study: The QVC Rock Products v Pohmix Kuari Dispute
Background of the Dispute
- Parties entered into a single SPA for quarrying operations covering two land lots, valued at over RM4 million.
- One party later argued that the contract should be treated as two separate agreements (one for each lot).
- They also alleged misrepresentation because one lot was not in pristine condition.
What the Court Decided
- The Court held the SPA was a single, unified agreement — not divisible.
- Attempts to split the consideration between the two lots were rejected.
- The buyer’s claim of negligent misrepresentation failed because the agreement had a non-reliance clause, and the buyer should have inspected the site before signing.
- The SPA was enforceable despite allegations of illegality (prior quarrying).
The Lesson
A poorly drafted contract left one party unable to rescind part of the deal or avoid payment obligations. This is a cautionary tale for all Malaysian businesses: contracts must be drafted with precision to avoid ambiguity and unintended consequences.
Why Drafting Matters in Malaysian Business Agreements
1. Preventing Ambiguity
If a contract covers multiple assets or obligations, unclear drafting can cause disputes. Courts will interpret based on written terms, not verbal agreements or assumptions.
2. Allocating Risk Clearly
Well-drafted agreements specify who bears risks (e.g., defects, delays, regulatory approvals). Poor drafting leaves gaps that can cost millions.
3. Avoiding Costly Litigation
Litigation drains resources and disrupts business. Clear agreements reduce the chances of disputes escalating to court.
4. Enforceability in Court
Agreements must comply with the Contracts Act 1950 and Malaysian corporate law. A sloppy contract may be unenforceable, even if parties had good intentions.
Common Types of Agreements Every Business Needs
Shareholder Agreements in Malaysia
- Define roles, voting rights, dividend policies, and exit strategies.
- Prevent shareholder deadlocks and protect minority shareholders.
- Anticipate disputes with buy-sell clauses and clear decision-making processes.
Corporate Agreements
- Joint ventures, mergers, acquisitions, and financing agreements.
- Need precise terms to balance control, profit-sharing, and liabilities.
- Ensure compliance with the Companies Act 2016 and regulatory approvals.
Business Agreements
- Cover day-to-day operations: supply contracts, service agreements, distribution arrangements.
- Must protect cash flow, outline payment terms, and set penalties for breach.
Partnership Agreements
- Clarify profit-sharing, responsibilities, and dissolution procedures.
- Prevent disputes that often arise in informal partnerships.
How We (JY Ko Advocates & Solicitors) Protects Your Business
At JY Ko Advocates & Solicitors, we don’t just draft documents — we anticipate future risks and protect your interests.
Our Services Include:
- Drafting shareholder, partnership, and corporate agreements tailored to your needs.
- Reviewing and tightening business contracts before you sign.
- Advising on enforceability under Malaysian contract law.
- Representing clients in dispute resolution and litigation if agreements are challenged.
Why Clients Choose Us:
✅ Court-tested expertise – We know how judges interpret agreements.
✅ SME and corporate focus – Practical solutions for real business challenges.
✅ Preventive approach – Closing loopholes before they become disputes.
✅ Full-service firm – From drafting to litigation, we cover all aspects of business law.
Frequently Asked Questions (FAQs)
1. Do I really need a lawyer to draft a shareholder agreement?
Highly recommended. Generic templates don’t cover specific shareholder rights, exit strategies, or compliance with the Companies Act.
2. Can one agreement cover multiple assets or deals?
Yes, but as the QVC case shows, it’s risky unless drafted properly. Sometimes, separate agreements are safer.
3. What happens if my business contract is unclear?
Courts will interpret it strictly. You may lose rights you might thought you had.
4. How much does it cost to draft an agreement in Malaysia?
It depends on complexity. At JY Ko, we offer transparent, tailored packages for individuals, SMEs and corporations.
Conclusion: Protect Your Business with Proper Agreements
The QVC Rock Products v Pohmix Kuari case proves a vital truth: poorly drafted contracts can cost millions. Don’t rely on assumptions, templates, or handshake deals.
At JY Ko Advocates & Solicitors, we ensure your shareholder, corporate, and business agreements are clear, enforceable, and strategically designed to protect your interests.
📞 Contact us today to safeguard your business before a simple agreement turns into a costly dispute.
🌐 Call us: 017-6965 966 (Call/Whatsapp) / 013-4400 128 (Whatsapp)
📩 Email Us: nick@jykolaw.com
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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!