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A Due Diligence Policy guides organizations through the process of investigating and evaluating potential business partners, investments, or transactions before making important decisions. In Malaysia, these policies help companies comply with key regulations like the Malaysian Anti-Corruption Commission Act and the Companies Act 2016.

The policy typically outlines specific steps for checking financial records, ownership structures, legal compliance, and reputation risks. It protects Malaysian businesses from fraud, money laundering, and corruption while ensuring they meet Bank Negara Malaysia's guidelines for responsible business practices. Good due diligence policies also include clear reporting procedures and accountability measures for staff conducting these checks.

A Due Diligence Policy becomes essential when your organization plans mergers, acquisitions, or major business partnerships in Malaysia. Use it before investing significant capital, entering joint ventures, or onboarding high-value suppliers and contractors. It's particularly crucial for regulated sectors like banking, where Bank Negara Malaysia requires thorough partner screening.

The policy proves valuable during strategic expansions, when dealing with foreign entities, or exploring new market opportunities. Malaysian companies often activate their due diligence processes during corporate restructuring, property acquisitions, or when engaging with businesses from high-risk jurisdictions. It helps prevent costly mistakes and ensures compliance with anti-money laundering and anti-corruption requirements.

• Financial Due Diligence: Focuses on analyzing financial statements, cash flows, and market position of target companies - commonly used by Malaysian banks and investment firms
• Legal Due Diligence: Examines compliance with Malaysian laws, licensing requirements, and pending litigation - essential for mergers and acquisitions
• Technical Due Diligence: Evaluates operational systems, IT infrastructure, and intellectual property - crucial for technology sector deals
• Environmental Due Diligence: Assesses environmental compliance and risks according to Malaysian environmental regulations - vital for manufacturing and property development
• Reputational Due Diligence: Investigates business ethics, market reputation, and potential corruption risks under MACC guidelines

• Corporate Legal Teams: Draft and update Due Diligence Policies, ensure compliance with Malaysian regulations, and oversee implementation across departments
• Board of Directors: Approve policies, set risk tolerance levels, and maintain oversight of due diligence processes
• Compliance Officers: Implement procedures, train staff, and monitor adherence to policy requirements
• Investment Teams: Execute due diligence checks during mergers, acquisitions, or major business deals
• External Consultants: Provide specialized expertise for technical, financial, or industry-specific due diligence requirements
• Regulatory Bodies: Review policies during audits and ensure alignment with Malaysian legal frameworks

• Industry Assessment: Review your sector's specific requirements under Malaysian law and regulatory guidelines
• Risk Mapping: Identify key business risks and compliance obligations unique to your organization
• Scope Definition: Outline which transactions or partnerships require due diligence checks
• Process Documentation: Detail step-by-step procedures for conducting checks and reviews
• Authority Matrix: Establish clear approval hierarchies and decision-making thresholds
• Reporting ������Ƶ: Create standardized forms for documenting findings and recommendations
• Review Mechanisms: Set up periodic policy review schedules and update procedures

• Policy Purpose: Clear statement of objectives and scope aligned with Malaysian corporate governance requirements
• Legal Framework: References to relevant Malaysian laws, including MACC Act and Companies Act 2016
• Risk Assessment Criteria: Detailed evaluation parameters for different transaction types
• Procedural Guidelines: Step-by-step processes for conducting due diligence investigations
• Documentation Requirements: Specific records and evidence needed for compliance
• Roles and Responsibilities: Clear delegation of duties and authority levels
• Review and Update Mechanisms: Procedures for periodic policy updates and amendments
• Confidentiality Provisions: Data protection measures compliant with Malaysian privacy laws

Many organizations confuse a Due Diligence Policy with a Due Diligence Checklist. While they work together, they serve different purposes in Malaysian business operations.

• Scope and Purpose: A Due Diligence Policy provides the overarching framework and principles for conducting investigations, while a Checklist is the practical tool used to execute specific due diligence tasks
• Legal Standing: The Policy carries official authority as a governance document, establishing accountability and compliance requirements. The Checklist is an operational tool without independent legal weight
• Content Structure: Policies outline procedures, responsibilities, and risk management approaches. Checklists contain specific items to verify during investigations
• Flexibility: Policies remain relatively stable, requiring formal updates. Checklists can be modified easily for different transaction types or risk levels