M&A: Financial assistance
When structuring an M&A transaction, consideration should be given to laws relating to financial assistance which may have impact on the financing of the transaction. The laws of Malaysia relating to financial assistance is summarised below: A seller is not prohibited to provide financing to a buyer. The assets of …
Indemnities and warranties in M&A transactions
A purchaser typically requires a seller to give indemnities and warranties to safeguard the purchaser’s interest in a share or asset purchase agreement. From the purchaser’s perspective, there are some advantages of having indemnities over warranties, including the following: 1. The seller may be able to avoid liability under warranties …
Shareholders’ prior approval required for allotment of shares
The consequence of not getting shareholders’ prior approval for allotment of shares (if the approval is required under the Companies Act 2016 of Malaysia) could be severe. Therefore, if the scope of due diligence for an M&A transaction includes verifying shares in the target company have been duly allotted, the …
Sellers’ liability in M&A transaction
Where there is more than one seller in an M&A transaction, the sale and purchase agreement should set out whether the obligations of the sellers under the SPA are (1) joint and several; or (2) several and not joint. From a buyer’s perspective, it is better for the sellers’ obligations …
Completion account clause in SPA
Points to consider when drafting completion account clause in SPA 1. How much will be paid on completion of the transaction? Typically, the parties will agree on the amount to be paid on completion based on the parties’ best estimate of the purchase price with adjustment to the purchase price …
What to consider when negotiating sale and purchase of business
Today’s post is on matters to consider when negotiating M&A deals, in particular during times of uncertainty. Parties may want to consider the following: 1. Whether to include price adjustment based on agreed parameters. Price adjustment is relevant if the value of the target company at the execution of the …
How to verify allotment and issuance of shares
Investors who want to invest in a company in Malaysia would want to know that the issuance and allotment of the shares in a company since incorporation have been duly authorised and lodged with the Registrar. What do you need to check to verify that? The documents you need to …
Consider these when drafting representations and warranties for M&A transactions
As a junior lawyer, the schedule on representations and warranties given by sellers (“R&W”) was the part I disliked the most when drafting sale and purchase agreements for M&A transactions. I think it is safe to say that M&A lawyers don’t draft R&W from scratch. Usually there are precedents to …
Exclusivity in M&A negotiation
Today’s post is on exclusivity when negotiating an M&A deal. If you are a buyer entering into a negotiation to acquire business or shares of a company, you would want to ensure that you do not incur costs during the negotiation only for the seller to end the negotiation and …
Searches to verify existence of companies
When a buyer acquires a company, a basic but important aspect of due diligence is to ensure the company is properly incorporated under the relevant laws and validly existing. Other than the usual company search with the Companies Commission of Malaysia (“CCM”) and winding up search with the Malaysian Department …