When is Due Diligence Required in Indonesia?

No business owner in Indonesia wants to face the risk of an unpleasant business partner or a new hire. And, we all know that making the decision to start a joint venture and hire a new employee may not be as simple and as easy as predicted. One incorrect move can cause a huge blow to your company’s bottom line or morale. 

As a result, there has never been a greater demand for a solid due diligence and background investigation partner. Whether you are hiring a new employee, getting a business partner, or acquiring a new board member, you should be always confident that you have found the right one. Having due diligence in place is the only way to ensure that you have identified all possible risks and know how to avoid them. 

In this article, Cekindo will let you know when due diligence and background investigations are needed. 

When do You Need Due Diligence in Indonesia?

Due diligence in Indonesia should be carried out when the following situations apply:

Wanting to Know the Shared Ownership Details

Due diligence is mandatory when a business is in share transfer activity. With due diligence, you are able to know the share ownership details before and after the share transfer. 

Wanting to Analyse the Company’s Legal Status

A company’s legal status has to be reviewed before going ahead with partnership, merger and acquisition and other major transactions. Hence, due diligence can help analyse a company’s legal status to mitigate all potential risks to avoid problems that may be caused by bogus companies with unethical practices. 

Wanting to Produce Legitimate Documents 

Due diligence is vital to produce proper and legitimate documents regarding any company’s changes. These documents include agreements, policies, warranties and standard operating procedures. The purpose of a due diligence is to acquire necessary documents and information from the companies you are working or partnering with. 

Wanting to Understand Potential Company’s Values and Liabilities

Due diligence is able to help business owners understand potential company’s values and liabilities. These values and liabilities are labor and benefit systems, intellectual property ownership, lawsuits records, claims or business restrictions. 

Why is Due Diligence Important in Indonesia?

Companies in Indonesia can take advantage of what due diligence can offer:

Saving Costs

Due diligence can help your company avoid tremendous expenses caused by unwanted lawsuits via thorough analysis of business partners and recruitment. 

Managing Risks

Only with good measures of risk management a company can run smoothly and successfully. You can mitigate your business risks greatly by analysing all your potential partners and employees’ legal histories. Through due diligence, you can make an informed decision before finally settling on a partnership or employment agreement.  

Adapting to the Change of Regulation

The world’s economy shifts and fluctuates frequently, leading to the change of financial and governmental regulations. Through due diligence with a reliable consultant, you will be able to keep up and comply with the latest regulations.
  
Building Better Business Relationship

Due diligence in Indonesia allows you to create greater bond between your business and other businesses. When legal histories are requested from your target business, it is necessary for representatives of your business and the target business to meet on a regular basis. Through meeting, discussion and communication, two businesses will be able to foster better business relationships and determine other business opportunities. 

Ensuring Greater Business Assurance

Your business is only able to create better business strategies when you have greater business assurance. As a business investor, you are able to get more assurance through due diligence, leading you to make major decisions and execute them. This is particularly vital for merger and acquisition process. 

How Cekindo can Assist with Due Diligence in Indonesia

At Cekindo, we actively collaborate with your team to provide all the due diligence services and background investigations your business need. Our team of experts understands what’s critical for your company’s efficiency and reputation.

Talk to us now for more information. 

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