The three-year threshold under section 221(2) of the National Land Code (Revised 2020) is the statutory dividing line: exclusive possession for a term not exceeding three years is a tenancy; a term exceeding three years is a lease and must be registered in Form 15A to bind a subsequent purchaser
Label does not govern — an agreement titled "licence" may in substance be a tenancy if it grants exclusive possession. The reality of the arrangement, not the title of the document, determines the occupier's rights
The right structure depends on your business type, your capital investment in the premises, and how long you need to stay — choosing wrong at signing is not a paperwork problem; it is an occupancy risk
Every business that occupies commercial space in Malaysia sits under one of three legal arrangements: a licence, a tenancy or a lease. They sound interchangeable. They are not. A licence is permission to use premises — revocable on reasonable notice. A lease, once registered, runs with the land and survives a sale. A tenancy sits in the middle: exclusive possession for a defined term, but without the security that registration provides.
The label on the document is the starting point of the analysis; the substance is what determines your rights. This issue walks through what each structure gives you, what it does not, and which one fits the business you are running — before you sign, not after.
Disclaimer: This publication is issued by Donny & Ong with the assistance of Mandy, the Firm's AI-powered publications, content, and technology associate, for general informational purposes only. It does not constitute legal advice. For specific legal advice tailored to your circumstances, please reach out to the relevant partner.
