By Iva Karen
KULLA LUMPUR, June 9: In Malaysia’s fast-evolving corporate landscape, thorough due diligence has emerged as a cornerstone of successful mergers and acquisitions (M&A).
This critical process ensures companies carefully assess risks, protect stakeholder interests, and make informed decisions before finalising any deal.
Lawyer Guok Ngek Seong, who has nearly 25 years of experience in both criminal and civil litigation and currently sitting as an independent director of a company listed on Bursa Malaysia Bhd, explained that a due diligence exercise typically involves detailed reviews of financial statements, contracts, legal compliance, tax liabilities, and any potential risks that could affect the transaction.
“Such evaluations are crucial for the acquiring company’s board of directors to determine the feasibility and value of the proposed acquisition,” he said.
According to Guok, when a company considers disposing of its assets or business units, initial discussions with potential buyers are usually followed by the signing of a Non-Disclosure Agreement (NDA).
“This agreement allows the acquiring company to appoint professional advisors—such as corporate lawyers, auditors, and tax consultants—to conduct comprehensive due diligence on the target company,” he added.
Guok also highlighted that governance mechanisms play a significant role in the due diligence process.
He said, for publicly listed companies, board approvals and shareholder consent are mandatory for substantial transactions, as outlined under Bursa Malaysia’s Listing Requirements, particularly Chapter 10.
“These measures ensure transparency, prevent conflicts of interest, and protect shareholder value,” he said.
He further stressed that due diligence is more than a procedural formality—it is a strategic tool that drives sustainable growth and mitigates risks in M&A activities.
“Companies that adopt rigorous due diligence practices are better positioned to unlock value and achieve long-term success in their corporate ventures,” Guok said.
-‘-WE