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Due diligence in Petaling Jaya, Malaysia, is a comprehensive appraisal of a business undertaken by an interested party (typically an investor) before entering into a business transaction. The legal process allows for the evaluation of the financial, legal, and compliance aspect of a business. The Commercial Code and other related regulations in Malaysia govern it. Due diligence in Malaysia has grown significantly relevant due to the increased complexity of international business transactions and the intensified regulatory environment.
You might need legal help in due diligence under various circumstances. If you're planning on acquiring a company, investing in a new business, or venturing into joint projects with other businesses, you'll need a lawyer to perform due diligence. These legal professionals help ensure proposed business transactions are sound and that all regulatory considerations are accounted for. Their knowledge ensures both parties are operating in compliance with the law, preventing potential legal complications down the line. In addition to this, a lawyer can help negotiate better terms and agreements for the deal.
Local laws in Petaling Jaya as relate to due diligence are embedded in the Malaysian Companies Act of 2016, the Capital Markets and Services Act of 2007, and depending on the sector, industry-specific legislation. These laws provide regulations on business structures, director’s duties, shareholder rights, and disclosure obligations. For instance, the Companies Act requires businesses to regularly report financial statements and hold annual general meetings, critical aspects reviewed during due diligence.
In general, there are three main types of due diligence: financial, legal, and commercial. Financial due diligence reviews the financial health of a company. Legal due diligence involves reviewing contracts, legal documents, and ensuring that the company is in compliance with the relevant regulations. Commercial due diligence relates to the understanding the business model, competitiveness, and market conditions of the business.
While there's no hard and fast rule, the duration of due diligence depends on the complexity and size of the business. It could take from a few weeks to several months.
Though you may conduct some parts of due diligence by yourself, having a qualified attorney ensures that all necessary legal components are considered. It's especially important when dealing with complex transactions where significant assets are involved.
Poor or skipped due diligence could result in serious financial loss, reputational damage, regulatory penalties, or legal disputes. Therefore, it's recommended to get professional help for any due diligence process.
The costs of due diligence can vary greatly, depending on the size and complexity of the transaction, the specifics of the business, and the rate of the legal professionals involved. It is advisable to discuss fees with your lawyer before beginning the process.
The Malaysian Bar Council hosts various resources related to conducting due diligence in Malaysia. The Companies Commission of Malaysia (SSM) is crucial for obtaining business and company records. Also, industry-specific regulatory bodies such as Securities Commission Malaysia (SC) or Malaysian Communications and Multimedia Commission (MCMC) provide regulatory guidelines.
If you need legal assistance in due diligence, you should look for a lawyer or solicitors firm that specializes in corporate law and business transactions. To ensure that you are hiring someone experienced, always ask for references, and look into their past cases. Take the time to discuss your specific needs and expectations, as well as their estimated costs before proceeding.
