At our firm, we are regularly engaged to carry out legal due diligence for investors seeking to invest into promising companies. Some of these investees/target companies are family-owned business and startups. We frequently encounter situations where contracts have been entered into by an unintended or wrong corporate entity, creating potential …

When conducting due diligence, the searches of publicly available information from the relevant government agencies and credit reporting agencies in Malaysia include the following: 1. Companies Commission of Malaysia (CCM) Company search provides corporate information, particulars of directors and shareholders, issued share capital, company charges and summary of financial information. Copies …

If you want to acquire a business or a company, should you conduct due diligence on the target? “Buyer beware” or “𝘤𝘢𝘷𝘦𝘢𝘵 𝘦𝘮𝘱𝘵𝘰𝘳” in Latin is a common law principle that a buyer buys at his own risk in the absence of an express warranty in the contract. Due to …

In an M&A transaction, how can a buyer address issues discovered during the due diligence conducted on the target? There are a few ways to address an issue: 1. Get an indemnity from the seller. 2. Reduce purchase consideration. 3. Carve-out or ring fence the risk and liability arising from …

In an M&A transaction, it is important for a buyer to understand the contractual rights and obligations binding the target company under the contracts entered by the target company. However, the contracts may be voluminous and it is easy to get drowned in the details. Some key points to look …

𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝘄𝗵𝗶𝗰𝗵 𝗯𝘂𝘆𝗲𝗿 𝗰𝗮𝗻 𝗴𝗲𝘁 𝗳𝗿𝗼𝗺 𝗱𝗶𝗿𝗲𝗰𝘁𝗼𝗿𝘀’ 𝗮𝗻𝗱 𝘀𝗵𝗮𝗿𝗲𝗵𝗼𝗹𝗱𝗲𝗿𝘀’ 𝗺𝗶𝗻𝘂𝘁𝗲𝘀/𝗿𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝘀 𝗼𝗳 𝘁𝗮𝗿𝗴𝗲𝘁 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 • Whether shares have been properly issued with shareholders’ approval? • Has the target company circulated annual financial statements to shareholders? • Have the directors approved any unusual dividends? • Where a director is interested in a …

Instead of a full legal due diligence report which sets out salient terms of contracts entered by the target companies, some buyers prefer to have a red flag report, which only highlights legal issues. In respect of contracts entered by the target companies, a red flag report may cover the …

1. Boilerplate clauses in agreements are usually not controversial. Nothing that makes your eyes widen in surprise or your heart skips a beat. Notice provisions with the header “NOTICE” towards the end of agreements usually set out the mode of serving notice, the timeline by which notice is deemed to …

I get a bit skeptical when interviewees or junior lawyers say they enjoy doing legal due diligence work. My first reaction would be, “Really?” Is it possible to enjoy doing legal due diligence work? The volume of documents to be reviewed, tight deadlines, amount of effort required to get complete …

“We do not require any licence for our business.” Sometimes I get the above reply in response to questions about licences held by companies which I am conducting legal due diligence on. Usually these are companies carrying on business that are outside the sectors regulated by the Malaysian government. Nonetheless, …