Before buyers commit, their lawyers will conduct legal due diligence that may uncover gaps or non-compliance which delay the founder’s exit or reduce the price.

This list helps founders/ sellers resolve common legal issues before they’re flagged in legal due diligence.

1. Share Capital & Shareholders 

• Have all past share allotments been approved by shareholders and directors (with signed resolutions)?
• Have shareholder approvals been lodged with the Registrar of Companies (“Registrar”) within 14 days of each shares allotment?
• Have returns of allotment been lodged with the Registrar for each shares allotment?
• Is the register of members accurate and updated?
• Have all share transfers been formally approved by the board of directors (if required by the company’s constitution)?
• Have all transfer forms properly stamped with proof of stamp duty payment?
• Have all shareholder changes been notified to the Registrar within 14 days?

2. Directors & Governance

• Have the directors given their written consent to act as directors?
• Have director appointments been approved by shareholder resolutions?
• Is the register of directors current and accurate?
• Have all changes in directors or their details been notified to the Registrar within 14 days of changes?

3. Key Contracts

• Are all material contracts in writing and signed?
• Have all contract renewals been properly documented?
• Have applicable stamp duties been paid on contracts?
• Do any contracts include “change of control” clauses that require third-party consent before a sale or change in shareholders, shareholding, directors or management?

4. Real Property (Office or Commercial Premises)

• If the company owns property, are land titles and CCC (Certificates of Completion and Compliance) in place?
• Are all tenancy or lease agreements in writing?
• Are any renewed or extended tenancies also documented properly?

5. Banking & Finance

• Do any bank facilities require banks’ consent for a sale, change in shareholding, shareholders, directors or management?
• Are there covenants that could be breached by a sale, change in shareholding, shareholders, directors or management? 

Don’t Let Legal Issues Delay Your Deal

Don’t wait until the potential buyers commence due diligence to discover legal gaps that slow down your deal.

• Identify and resolve the issues.
• Ensure the relevant documents are in order for legal due diligence by the buyer’s team.

#malaysiancorporatelawyer

This post was first posted on LinkedIn on 16 June 2025.