M&A: Categorising Seller’s Representations and Warranties
M&A: Categorising Seller’s Representations and Warranties (particularly if you don’t have Representation & Warranty Insurance) The representations and warranties (R&W) given by a seller in an M&A sale and purchase agreement (“Seller’s Warranties”), if breached, may affect the M&A transaction to varying degrees. It is worthwhile categorising the Seller’s Warranties …
Do regulators really impose penalty for “administrative breach” of the Companies Act in Malaysia?
When non-compliance with laws is discovered during legal due diligence, clients often ask about potential penalties. Some common instances of non-compliance encountered in legal due diligence include administrative aspects of running a company, such as failure to: lodge statutory forms with the Companies Commission of Malaysia within the prescribed period …
Saying “No” to do better
I bought this book to seek solace during a period when I was up to my neck in running corporate transactions simultaneously, each with pressing deadlines. When working as part of a group of advisers for a mutual client’s corporate exercise, no adviser wants to be the one to drop …
Three Key Points for Company Constitutions
We are often asked by corporate clients to review template company constitutions to ensure compliance with Malaysian laws. Although some clauses in these templates may comply with the laws, they may not always reflect the clients’ intention. The following are three common issues I encounter: 1. Waiver of pre-emption right …
What should purchasers consider in M&A transactions?
Other than the purchase price, what should purchasers consider in M&A transactions? In M&A deals, purchasers should consider aspects beyond the purchase price that could impact their acquisitions. The following are three factors to consider: 1. Guarantee for the target’s borrowing If the target has financing facilities guaranteed by the …
Frequently Encountered Issues in Acquisition of Entrepreneurs’ Businesses
There are some issues that I frequently encounter in start-ups/ entrepreneurs’ businesses when conducting legal due diligence for buyers seeking to acquire such businesses. Here are some of the issues: 1. No Separation of Legal Entity A founder may own several companies at the same time. It’s common for a …
M&A: Is consent or notification required?
In an M&A transaction, it should be determined early on whether consent from or notification to the following parties is required for the change of shareholder or director of the target company: (a) regulatory body (pursuant to a condition imposed on a licence or regulatory requirements) (b) counterparty of a …
What to Look Out for When Acquiring Companies: Material Contracts
Potential buyers/ investors who want to acquire companies should consider conducting legal due diligence on the target companies before their investments. One key aspect of legal due diligence are material contracts of the companies. Legal due diligence on material contracts allows the potential buyers/investors to assess the business, liabilities and …
Is there any good reason not to conduct legal due diligence in M&A transactions?
I have read articles and written about why legal due diligence is important for M&A transactions and buyers should not merely rely on sellers’ warranties. I have yet to come across any articles suggesting that there may be valid reasons to skip legal due diligence in M&A transactions. Whenever potential …
Regulatory requirements for M&A in Malaysia
I find one of the most challenging aspects of an M&A transaction in Malaysia is the regulatory regime in which the target company operates. If the target company requires certain licences for its operations or operates within a regulated industry, the M&A process must take into account the relevant regulatory …