Compliance and Legal Due Diligence: An Exercise of Frustration?
Lawyer: Please provide register of members, register of directors, all returns of allotment, all stamped transfer forms… Representative of Target Company: Please refer to company search from the Companies Commission of Malaysia. Lawyer: CCM search is not sufficient. Please provide register of members, register of directors, all returns of allotment, …
Legal Due Diligence on Public Listed Companies in Malaysia
When conducting legal due diligence on public listed companies (PLCs) in Malaysia, the scope of due diligence is limited by the laws of insider trading. Insider trading occurs when someone uses confidential, non-public information about a company to make a profit or avoid a loss in the stock market. Therefore, …
What to Look Out for When Acquiring a Company with Valuable Intellectual Property
1. Ownership of IP Identify the IP that is material to the business and who owns the IP. Request the sellers to provide a comprehensive list of all IP material to the business, whether registered or not. For registered IP, such as patents and registered trademarks, conduct searches for all …
The Mind That Never Rests
What does a corporate transactional lawyer do while waiting in the lift, at a restaurant counter or for coffee at a café? I read the licenses on display, check their validity periods, and scan for conditions. When I see certificates on the walls, I can’t help but examine them too. …
Why Legal Due Diligence is Essential in Acquisitions
I usually get a bit concerned when potential buyers say they do not require legal due diligence on the target company or business. This is usually because they believe they already know the business or due to budget constraints. Unless the buyers are already involved in the management of the …
Why Agreement Is Not a Substitute for Legal Due Diligence
In my previous post, I proposed alternatives for buyers facing budget constraints in conducting legal due diligence, including obtaining robust representations and warranties from sellers in sale and purchase agreements. However, buyers should note that contractual protection is not a substitute for legal due diligence for the following reasons: The …
Limited budget for due diligence
When a buyer wants to acquire a company or business but has a limited budget for legal due diligence: 1. Searches Conduct all standard public searches. 2. Targeted due diligence Focus legal due diligence on: Key areas important to the buyer, i.e. why the buyer wants to acquire the company …
What information can you get from directors’ and shareholders’ minutes/ resolutions?
During legal due diligence for a corporate exercise, review the resolutions and minutes books of a target company for the following: Were shares properly issued with shareholders’ approval? Did the company circulate its annual financial statements to shareholders? Have the directors approved any unusual dividends? Where a director is interested …
How do you assess risk in legal due diligence?
When I started out as a corporate lawyer, the most difficult part of legal due diligence was not the voluminous review of documents and preparation of reports. Some clients or instructing counsels prefer a summary of legal issues with a significance rating for each issue in legal due diligence reports. …
What is one basic skill for legal due diligence?
I think it’s the ability to spot inconsistencies in the information provided and ask follow up questions. Here are a few examples: 1. The Phantom Employees The target company’s representatives claimed that there were no employees in a seemingly dormant company. Yet, its audited accounts showed salaries and wages being …