Due Diligence Checklist for Cross-Border Asia Acquisitions

Due diligence on a private company in Southeast Asia runs across ten workstreams: financial, tax, legal and corporate, regulatory and licensing, HR and labour, commercial, operational, IT and data, ESG and environmental, and integrity. The scope is the same as anywhere. What differs is which items decide the outcome, and in Indonesia, Malaysia, Thailand and Vietnam those are the ownership chain, the land title class, the statutory contribution record, the open tax years, and whether the target's licences survive a change of control. Work the lists below in that order and the problems surface in week three rather than after completion.

The harder point is about evidence. A checklist written for a European target assumes the records exist and asks whether they are accurate. In an Asian mid-market company the first question is whether the record exists at all: whether the management accounts reconcile to anything, whether the lease with the founder's other company was ever signed, whether the person on the share register is the owner. When the answer is no, the right response is not a warranty. It is a price adjustment or a condition precedent.

How should the diligence plan be sequenced?

Front-load the items that can end the deal and that come from third parties rather than from the seller. Those are obtainable in week one and the seller cannot slow them down.

Week	Workstream	Why now
1	Registry, shareholder register, land titles, licences	Third-party sourced; any can stop the deal
1 to 2	Tax status, contribution statements, litigation search	Liabilities that change the price, not the decision
2 to 4	Quality of earnings, commercial, customer concentration	Needs seller cooperation and management time
3 to 6	Operational, IT and data, ESG, integrity	Shapes the post-completion plan more often than price

Managed diligence typically runs 30% to 40% shorter than an unsequenced one, mostly because document requests go out in waves rather than as one 300-line list on day one.

Financial and tax

Financial:

1. Audited or reviewed financial statements for three years, plus the current year to date, and the auditor's management letters.
2. A reconciliation between the management accounts, the audited accounts and the tax returns. Where these are three different sets of numbers, establish which one the owner believes.
3. Test whether the books are cash-basis in substance even if accrual in form: revenue cut-off around year end, accrued but unbilled costs, bonuses paid outside payroll.
4. Related-party schedule: leases from the owner or family entities, purchases from sister companies, loans to and from directors, and salaries paid to family members not working in the business.
5. Normalised earnings bridge with evidence for every adjustment. Owner remuneration, personal expenses and below-market rent are the largest adjustments in most mid-market Asian deals.
6. Working capital by month for 24 months, and the bank statements behind the cash balance.
7. Debt, guarantees and security. Personal guarantees from the owner are common and are usually released at completion, which changes the lender's position.

Tax:

1. Open years and the assessment window. Indonesia's general tax provisions allow the Directorate General of Taxes to issue an underpaid assessment within five years of the tax liability arising, so three closed years is not the same as no exposure.
2. Correspondence on every open audit, objection and appeal, including informal queries.
3. Participation in any amnesty or voluntary disclosure programme, by the company and by its shareholders, with the filings. An owner who disclosed assets under an amnesty will have a documented reason for historical numbers that do not reconcile.
4. Indirect tax registration and scope. Malaysia's service tax rate rose from 6% to 8% on 1 March 2024, with food and beverage, telecommunications, parking and logistics left at 6%, and the taxable scope widened again from 1 July 2025. Companies previously outside the scope carry the unbooked liability.
5. Transfer pricing documentation for intragroup sales, royalties and management fees.
6. Seller-side tax that shapes the structure. Malaysian capital gains tax on unlisted shares applies from 1 March 2024 at 10% of the net gain, chargeable only on companies, limited liability partnerships, trust bodies and co-operative societies, not individuals.
7. Withholding tax on the consideration, and any indirect transfer rules catching an offshore holdco sale.

Legal, corporate and the ownership chain

This is where cross-border buyers lose deals in Asia, and the reason is nominee shareholding.

1. Constitutional documents and every amendment. In Indonesia, the deed of establishment and its amendments approved by the Ministry of Law are the ownership record.
2. Share register, share transfer history and consideration actually paid for each transfer.
3. Beneficial ownership register. Malaysia's framework under Division 8A of the Companies Act 2016, sections 60A to 60E, has been in force since 1 April 2024 and requires each beneficial owner's name, address, nationality and identification to be recorded.
4. Nominee arrangements. Look for shareholders holding small stakes with no commercial role, blank share transfer forms held in escrow, loan agreements between shareholders, and powers of attorney. In Indonesia, an agreement stating that shares are held for and on behalf of another person is declared null and void by Article 33(2) of Law No. 25/2007 on Investment, a provision aimed at disguised ownership rather than at the wording of the document, so a side letter does not rescue it. In Thailand, section 36 of the Foreign Business Act B.E. 2542 makes nominee holding a criminal offence carrying up to three years' imprisonment and a fine of THB 100,000 to THB 1,000,000 for both the nominee and the foreigner behind it, with dissolution of the company available to the court. Thai authorities investigated 861 nominee cases between September 2024 and May 2025, with estimated economic damage of THB 15.3 billion, and in the Phuket network case the Criminal Court sentenced 23 defendants and ordered the companies dissolved.
5. Shareholders' agreements, pre-emption rights, drag and tag provisions, and any option over shares.
6. Litigation and enforcement searches in every jurisdiction where the group has an entity, not only the target's.
7. Change of control clauses in customer, supplier, franchise, distribution and lending agreements. Assume one key customer contract requires consent.

Land, property and licences

Title class, not title existence, is the question. Get the issue documents, not a schedule prepared by the seller.

Country	What to check
Indonesia	Whether the site is held under Hak Guna Bangunan (right to build) or Hak Milik (freehold). Under Government Regulation 18/2021, HGB over state land runs for a maximum of 30 years, extendable by up to 20 and renewable for up to 30. A foreign individual cannot hold HGB, and a company with foreign shareholding holds land through the PT itself. Read the expiry date and the extension history before you value the site
Thailand	Foreigners cannot own land under the Land Code. A Thai company with foreign shareholding at or below 49% can, which is why nominee structures cluster in property-heavy targets. Leases to foreigners run to 30 years under the Civil and Commercial Code, with up to 50 years for industrial and commercial use. BOI-promoted companies may be granted the right to own land for the promoted activity
Malaysia	Leasehold expiry date and remaining term, category of land use and express conditions, whether the land is Malay reserved land, and whether earlier transfers to a foreign-owned entity obtained State Authority approval under section 433B of the National Land Code. Since 1 January 2017 a dealing in land categorised as industry in favour of a foreign company also needs State Authority approval

Licensing and regulatory:

1. Every operating licence, permit and registration, with expiry dates and the conditions attached to each.
2. Transferability on change of control. Licences attach to the entity, so a share purchase usually preserves them, but the conditions often do not survive unexamined: equity, local employment and Bumiputera participation conditions in Malaysia are reviewable, and in Thailand a shareholding change can alter the company's status under the Foreign Business Act.
3. Environmental approvals and impact assessment documents for any manufacturing or processing site, with evidence that operations match what was approved.
4. Sector approvals that the buyer needs, not the target: financial services, telecommunications and property-heavy acquisitions each carry their own approval path. Our guide to buying a privately owned business in Malaysia sets out which regulator approves what.

HR, labour and social security

1. Employee list with hire dates, contract type and salary. Long-service severance entitlements are the largest unbooked HR liability in Indonesian and Thai targets.
2. Statutory contribution statements obtained from the agency, not from the seller. In Malaysia, Employees Provident Fund contributions run at 11% from the employee and 12% to 13% from the employer for citizens, and since 1 October 2025 contributions are required for non-Malaysian citizen employees on valid passes at 2% from each side. In Indonesia, the 2025 BPJS Kesehatan rates are 4% from the employer and 1% from the employee, with the contribution wage capped at IDR 12 million a month, and the BPJS Ketenagakerjaan pension wage cap was set at IDR 10,547,400 a month from 1 March 2025.
3. Expatriate work permits. Indonesia requires an RPTKA approval under Government Regulation No. 34 of 2021 before a foreign national can be employed, with a compensation fund levy of USD 100 per foreign worker per month. Thailand's Department of Employment criteria, reissued in 2025, require THB 2 million of paid-up capital and four Thai employees for each foreign employee, with BOI-promoted companies outside that ratio. If the target's general manager is on a permit that depends on shareholding you are about to change, fix the sequence before completion.
4. Local hiring ratios and nationality conditions written into licences, plus union recognition, collective agreements and the record of labour inspections.
5. Key-person dependency: who holds the customer relationships, who holds the regulatory relationships, and what they are paid. Why M&A deals fall apart covers how often this becomes the real deal issue.

Commercial, operational, IT, ESG and integrity

1. Revenue by customer for three years, with contract terms and payment history. Concentration above 30% in one customer changes both the price and the earnout structure.
2. Supplier concentration, purchase terms, and whether any supplier is a related party.
3. Capital expenditure history and plant condition, assessed by someone who has seen comparable sites in that country.
4. IT and data: system ownership and licences, whether source code and domains are registered to the company or to an employee, personal data holdings and cross-border transfer arrangements.
5. ESG and environmental: site contamination, waste and effluent permits, energy and water use, and any community or land-acquisition dispute affecting the site.
6. Integrity and anti-bribery. Map every government touchpoint: licences, customs, tax audits, land permits, inspections, and ask who handles each one and how. For buyers with US exposure, the Department of Justice issued new FCPA enforcement guidelines on 9 June 2025 following the executive order of 10 February 2025 that paused enforcement pending guidance; the posture changed, the statute did not. For UK-connected buyers the corporate offence of failing to prevent bribery under section 7 of the Bribery Act 2010 still applies, and the failure to prevent fraud offence under section 199 of the Economic Crime and Corporate Transparency Act 2023 came into force on 1 September 2025 for organisations meeting two of three tests: turnover above GBP 36 million, assets above GBP 18 million, or more than 250 employees.
7. Local anti-corruption law applies to the target whatever the buyer's nationality. Get the company's policy, its gift and entertainment records, and the identity of every agent paid to deal with a government body.
8. Third-party payments with no clear service: consultancy fees to individuals, round-sum facilitation payments, and cash expenses approved by the owner alone.

What to do first, given where you are

1. Pre-LOI. Run the registry, shareholder register and land title checks before you sign anything. They cost little and they answer the nominee question, which is the one that cannot be fixed by negotiation.
2. Week one of exclusivity. Send the third-party document requests and the statutory contribution requests on day one. Everything else can wait a week.
3. Findings in hand. Sort each one into price, condition precedent, indemnity or walk away. A finding with no category attached is one nobody acts on at signing.
4. Approaching signing. Get the regulator's position in writing on any licence that matters, and reconfirm the seller's tax position. Both move.

One thing this checklist cannot give you is how long each third-party request takes. Registry extracts come back in days; land office searches, statutory contribution statements and regulator confirmations run from one week to two months depending on the province or state, and we have not seen published processing times for Indonesia or Vietnam that we would ask you to plan around. Ask your local counsel for their own last three timings rather than an average.

If you want the diligence run by people who have already seen how these records look in Jakarta, Kuala Lumpur and Bangkok, start a confidential conversation about the target and where the risk is likely to sit. Our guide to finding vetted mid-market businesses for sale in Asia covers the screening that happens before this checklist, what buyers look for in due diligence sets out the standard scope, and our 2026 outlook for mid-market M&A in Southeast Asia gives the market context.

Frequently Asked Questions

How long does due diligence take on a Southeast Asian mid-market target?

Four to eight weeks is normal for a business valued between $2 million and $50 million, assuming the seller has the documents. Where audited accounts, land titles or contribution statements have to be reconstructed, it runs longer. Managed diligence typically shortens this phase by 30% to 40%.

What is the single most common Asia-specific finding?

Related-party arrangements that change normalised earnings: the factory rented from the owner's personal company at below market rent, family members on payroll, and trading terms with a sister company that are not arm's length. None of it is fraud, and all of it has to be repriced or renegotiated before completion.

Why does nominee shareholding matter so much?

Because the arrangement is unenforceable or criminal rather than merely irregular. Indonesia's Law No. 25/2007 declares nominee share ownership agreements null and void, and section 36 of Thailand's Foreign Business Act carries up to three years' imprisonment and a fine of THB 100,000 to THB 1,000,000, with company dissolution available to the court. You cannot warranty your way out of either.

Do the target's licences survive a change of control?

Usually the licence does, because it attaches to the company rather than the shareholder. The conditions attached to it often do not survive unexamined: equity, local employment and participation conditions can be reviewed, and in Thailand a shareholding change can alter the company's status under the Foreign Business Act. Get the regulator's position in writing for any licence the business cannot trade without.