Skip to content
Most employees don’t start a new job by asking:
“What happens if this company one day transfers its business, contracts or assets to another company?”
They look at salary.
Bonus.
Leave.
Benefits.
Job title.
Notice period.
If the company gives them shares, share options or some form of employee equity, they may look at how many shares they are getting and what those shares could eventually be worth.
Then there are all the other clauses.
Assignment. Transfer. Successors. Change of control.
They appear in employment contracts, commercial agreements, share-related documents and countless other agreements.
People sign.
The company is doing well. Salary arrives every month. The shares have value.
Why would anyone worry about an assignment clause?
Then something changes.
“What Happens to My Salary?”
Imagine Company A has been operating for years.
Employees have built their careers there. Some may have received or purchased shares. Suppliers have contracts with it. Customers know its name.
Then Company A starts experiencing serious financial problems.
Salary payments become late.
Then perhaps another company appears.
It might be a subsidiary. It might be a related company. It might have some of the same directors or management. Or it could be an entirely independent buyer.
Employees begin hearing things like:
“The business is moving to Company B.”
“The contracts are being transferred.”
“Operations will continue under the new company.”
Suddenly everyone has questions.
What happens to my unpaid salary?
Does Company B have to pay it?
Am I still employed by Company A?
Did my employment move to Company B?
I own shares in Company A. Do I now own shares in Company B?
What exactly did Company A assign?
And this is often the moment somebody finally opens the agreement they signed years earlier.
The assignment clause that nobody cared about suddenly becomes very interesting.
The Business Moved. Did the Debt Move Too?
This is probably the biggest misconception.
People see Company B continuing part of Company A’s business and understandably think:
“B took over A, so B must have taken over everything.”
Not necessarily.
“Takeover” is an everyday word. It does not tell us what legally happened.
Company B might have purchased certain assets.
It might have acquired particular contracts or contractual rights.
It might have bought Company A’s shares.
It might have acquired one division of the business.
Certain agreements might have been assigned or novated.
Employees might have received new employment arrangements.
Or Company B might have acquired selected parts of the operation while Company A continues to exist as a separate legal entity.
These are very different situations.
That is why the first question should not simply be:
“Who took over the company?”
It should be:
“What exactly was transferred?”
Assignment Doesn’t Mean Everything Moves
This is where the previous article on assignment and novation becomes relevant.
In simple terms, assignment commonly concerns the transfer of a contractual right or benefit.
Suppose Company A has the right to receive RM1 million from a customer.
Depending on the contract and applicable law, that right may potentially be assigned to Company B.
But that does not automatically mean every liability belonging to Company A travelled with it.
Company A may owe a supplier money.
It may owe employees salary.
It may have outstanding contractual claims.
It may have loans.
It may have tax liabilities.
It may have litigation underway.
It may also have shareholders.
You cannot look at one assignment and conclude:
“Everything belonging to A is now B’s problem.”
You need to understand what transaction actually took place.
“But Company B Is Doing Exactly the Same Business”
This is where employees can become understandably frustrated.
Imagine arriving at work and seeing that the business continues.
Perhaps the same products are being sold.
Some of the same customers remain.
Some employees move across.
Maybe even some of the same management remains involved.
Yet you are still waiting for salary owed by Company A.
The natural reaction is:
“How can the business continue while nobody pays us?”
That question may be completely reasonable.
But the fact that two companies appear commercially connected does not, by itself, establish that one automatically owes all the debts of the other.
You have to examine the actual structure.
Who employed you?
What happened to your employment?
What assets were transferred?
What liabilities were assumed?
Was there an asset sale?
A share acquisition?
An assignment?
A novation?
A restructuring?
An insolvency process?
The answer can change depending on what actually happened.
And What If You Own Shares in Company A?
Now things become even more personal.
Imagine an employee who has worked for Company A for ten years and also owns shares in it.
The employee may think:
“Company B has taken over the business, so what happens to my shares?”
Again, the word “takeover” isn’t enough.
There is a major difference between Company B acquiring Company A’s business or assets and Company B acquiring shares in Company A.
If B purchases selected assets or operations from A, an employee’s shares in A do not simply transform into shares in B.
You still need to know what happened to Company A and what the particular corporate transaction provides.
The same applies if a listed company is eventually delisted. Delisting itself does not simply erase the fact that securities existed. Bursa Malaysia explains that delisted securities cannot be traded on the stock exchange, but they can in certain circumstances remain in CDS and may be withdrawn or transferred through the applicable process. (Bursa Malaysia)
So:
“My company’s shares disappeared from Bursa”
and
“I no longer legally own any shares”
are not necessarily the same statement.
Your Shares and Your Salary Are Also Not the Same Thing
This distinction is particularly important for employees.
You might simultaneously be:
an employee who is owed salary, and
a shareholder who owns shares in the company.
Those are two different relationships with the company.
Your salary arises from employment.
Your shares represent an ownership interest.
If the company gets into financial trouble, they should not be treated as though they are one pot of money.
Under Malaysia’s Companies Act 2016, certain employee-related amounts receive statutory priority in a winding up. Section 527 establishes an order of priority that includes specified wages or salary, certain employee remuneration and specified social-security/provident-fund contributions. The statutory priority has conditions and limits, so it does not mean every amount owed to every employee will necessarily be recovered in full.
Your position as a shareholder is a different question.
That is why an employee saying:
“The company owes me RM20,000 salary and I also own RM20,000 worth of its shares”
is describing two legally different interests.
What About Your Employment Contract?
This is where employees can easily misunderstand what “the business has been transferred” actually means.
If Company B takes over Company A’s business, that does not necessarily mean every employee simply wakes up the next morning employed by Company B.
The business and the employment relationship are not the same thing.
Depending on how the transaction is structured, employees may be offered continued employment by the new owner, new employment arrangements may need to be put in place, or their existing employment with Company A may come to an end.
That is why employees should not focus only on the announcement that:
“Company B is taking over the business.”
They should ask what that actually means for them.
Who is my employer after the transfer?
Will my existing years of service still be recognised?
What happens to salary that Company A already owes me?
What happens to unused leave, benefits and other outstanding entitlements?
Am I being offered new employment, and are the terms different?
Do I need to sign something?
These questions become especially important when Company A is already experiencing financial difficulties.
An employee might be happy to hear that Company B will continue the business because it sounds like the job has been saved.
But that still leaves another question:
What happens to everything Company A already owes me?
A new employer continuing the business does not, simply because it has taken over operations, automatically answer who is responsible for every historical employment liability.
That depends on the transaction, the employment arrangements, the applicable law and what liabilities have actually been assumed.
So when employees hear “the business has been transferred,” they should not hear:
“Everything has automatically transferred.”
Those are two very different statements.
What If Everything Valuable Moves and Company A Is Left Empty?
This is where the situation becomes much more serious.
Suppose employees believe that valuable assets, contracts or business opportunities are moving elsewhere while the company that owes salaries and other debts is being left with very little.
People may immediately call it fraud.
That conclusion should not be made without evidence.
Companies restructure for many legitimate reasons. Businesses sell assets. Groups reorganise operations. Subsidiaries take over functions. Companies refinance. Businesses in financial distress may also sell assets as part of genuine restructuring or insolvency processes.
But neither should people assume that anything can simply be moved anywhere because the directors control both companies.
Malaysia’s Companies Act 2016 contains mechanisms dealing with transactions around insolvency, including undue preferences, as well as provisions concerning fraudulent trading and potential responsibility of company officers. Whether any particular transaction falls within those provisions depends on the evidence and circumstances; the mere existence of a related-company transfer does not establish wrongdoing.
So instead of immediately saying:
“The directors moved everything to B. That’s fraud.”
ask better questions:
What was transferred?
When was it transferred?
Who received it?
What consideration was paid?
Who approved the transaction?
What happened to Company A’s creditors?
Was Company A already in financial difficulty at the time?
Those questions lead somewhere.
Rumours don’t.
This Is Why “It’s in the Contract” Isn’t Enough
There is another lesson here.
Businesses sometimes respond to questions by saying:
“The contract allows assignment.”
Fine.
But that is the beginning of the analysis, not necessarily the end.
What does the clause actually permit?
What can be assigned?
Does it require consent?
Does notice have to be given?
Does it apply to rights, obligations or both?
Does another clause deal with change of control?
What do the employment documents say?
What do the share documents say?
What transaction actually happened?
And what does applicable law say regardless of the contractual wording?
A clause cannot be properly understood by reading its heading alone.
Nobody Cares Until Something Goes Wrong
That’s the strange thing about boilerplate.
When salary arrives on time, nobody searches their employment agreement for the word “assignment.”
When the company is profitable, employees holding shares rarely ask:
“What happens to these if the business is restructured?”
When suppliers are being paid, they don’t necessarily wonder whether their customer’s contractual rights could one day be transferred elsewhere.
Then the salary stops.
The share price collapses.
The business starts moving.
A new company appears.
And everybody starts reading.
By then, the question is no longer academic.
It is personal.
Where is my salary?
What happened to my shares?
Who is my employer now?
Who actually owes me money?
And perhaps the most important one:
What did I agree to when I signed that contract years ago?
Read the Boring Clauses While Things Are Still Going Well
You don’t need to become a lawyer every time you sign an employment contract, shareholder document or commercial agreement.
But you should understand what the important clauses mean for you.
Especially the ones that look boring.
Ask what can be transferred.
Ask whether your consent is required.
Understand what happens if another company takes over part of the business.
If you receive shares, understand what you actually own and what the relevant share documents provide.
And if the company begins restructuring, don’t rely only on phrases such as “business transfer,” “new company,” “takeover” or “nothing will change.”
Ask what is actually happening.
Because sometimes the clause everybody ignored when the company was doing well becomes the first clause everybody searches for when things start falling apart.
Nobody cares about the assignment clause when the salary arrives every month. They start caring when the salary stops.
Understand the Contract Before the Problem Starts
Assignment, transfer and change-of-control provisions can affect businesses, employees and contractual relationships in very different ways. LexMesos Solutions provides contract and document support to help businesses and individuals understand contractual structures, identify potential risks and make sense of complex wording in practical terms.
Keywords: Assignment clause, company transfer, business transfer, unpaid salary, employee shares, employee rights, assignment of contracts, corporate restructuring, company insolvency, company takeover, transfer of business, employment contract, shareholder rights, change of control, successor company, contractual rights, employee benefits, company debts and contract assignment
This article provides general information and does not constitute legal advice. The effect of an assignment, business transfer, insolvency or corporate restructuring depends on the particular documents, transaction structure, circumstances and applicable law. Matters requiring formal legal advice or representation should be referred to appropriate legal counsel.
19 September 2026