MALAYSIA Law and Practice Contributed by: Munir Abdul Aziz, Ee Von Teo and Addy Herg, Wong & Partners
• asset/business transfer; or • change of composition/control of the board of directors of the target. Merger Control/Antitrust Filing At present, there is no merger control regime for general M&A activities in Malaysia, except in spe - cific industries (ie, the aviation service industry and the telecommunications industry). The regulator, the Malaysian Competition Commission (“MyCC”), has completed public consultation on proposed amend - ments to the Malaysian Competition Act, to introduce and include a merger control regime, and to increase its own investigation and enforcement powers. The proposed amendments need to be finalised and pro - posed to parliament, and subject to parliament pass - ing them, the merger control regime will come into effect, with a one-year transition period. Approach to ESG Concerns While there is no statutory or regulatory requirement with respect to ESG from an M&A perspective, the constantly evolving and growing ESG issues and the exposure to regulatory, financial and reputational risks associated with ESG issues, have an impact on the approach towards M&A activity (including the private equity space). ESG issues that might traditionally have been considered as transactional issues (from the compliance perspective, and given their financial impact on value) are now also considered for the repu - tational risks they pose in the near to long term. There has been increasing focus on the identification of ESG issues in due diligence, to enable private equity funds to assess the sustainability risks of their current port - folio and future investments.
the nature and complexity of the transaction (as well as the target). The key areas of focus for legal due diligence are typi - cally: • corporate information and ownership; • regulatory approvals, licences and permits; • material contracts;
• related party transactions; • real property and/or assets; • intellectual property rights; • employment and labour disputes; • material litigation; and • financing and/or borrowings. 4.2 Vendor Due Diligence
Although there has been a growing trend for vendor due diligence in recent years, reliance on vendor due diligence reports is not common. Vendor due dili - gence has become increasingly common for auction processes implemented by private equity sellers to maintain a high level of competitiveness, with the goal of ensuring an organised and speedy process. Notwithstanding the increasing trend towards vendor due diligence, bidders/investors typically still conduct their own due diligence and do not always accept ven - dor due diligence reports made available in the pro - cess. Typically, the vendor due diligence report is pro - vided on a non-reliance basis to the bidder/investor. The acquisition structure is ultimately determined by the considerations and assessments of the private equity investor, which differ from case to case, hav - ing regard to the nature of the target and/or assets. As in other jurisdictions, the acquisition in Malaysia is largely structured as either a sale of shares or a sale of assets (or a combination of both). For private target companies/assets, the acquisition is typically structured as a private treaty sale and pur - chase agreement. The process could be a bilateral transaction or an auction process. The terms of the 5. Structure of Transactions 5.1 Structure of the Acquisition
4. Due Diligence 4.1 General Information
Generally, in-depth due diligence is carried out by pri - vate equity buyers/bidders. Depending on the sector in which the target operates, the typical due diligence areas that will be covered include financial, tax, legal, commercial, technical and compliance. The scope and materiality of the due diligence will be based on the buyer/investor’s commercial assessment, financ - ing requirements and risk appetite, taking into account
390 CHAMBERS.COM
Powered by FlippingBook