Legal audits: a strategic tool for staying investible and resilient

HOW LEGAL AUDITS PROTECT YOUR BUSINESS AND ATTRACT INVESTMENT

In today’s rapidly evolving Asian business landscape, robust governance and internal controls have proven to be non-negotiable prerequisites for long-term viability and attracting investment. For businesses operating across the region, proactively mitigating legal risks is a cornerstone of business resilience.

Recent high-profile corporate governance lapses in Southeast Asia’s startup scene have demonstrated that weak internal controls pose existential threats to even the most promising ventures.

• Tanihub, an Indonesian agriculture startup backed by prominent venture capital firms, was the subject of a multi-million dollar corruption and money-laundering scandal.

• Aquaculture technology company eFishery faced regulatory and investor probes in Indonesia after a whistleblower reported financial irregularities, revealing inflated revenues.

• Reports suggest increased investor caution and wariness:

  • Venture capital funding in Indonesia in the first half of 2025, for example, was US$80 million, 60% lower than the US$200 million recorded for the same period in 2024.

  • In November 2025, Singapore investment company Temasek Holdings stated that it will engage with like-minded businesses on governance, including to ensure suitable audits.

What legal audits can achieve for businesses

Legal audits offer a systematic and comprehensive analysis of a company’s legal and regulatory compliance and risks.

A legal audit exercise typically involves examination of matters such as agreements, internal controls, policies, compliance records, and corporate governance practices, and may also include interviews with management and stakeholders.

 A legal audit can be targeted at specific aspects of the business, such as:

• regulatory compliance

• corporate governance

• employment

• stakeholder management – shareholders, investors, suppliers, customers, etc.

• intellectual property rights

• data protection and privacy

• environmental, sustainability and governance (ESG) compliance

 For businesses aiming to stay competitive and secure capital, conducting legal audits can directly deliver key benefits:

 1.     Enhance investor confidence

In a climate where capital is restricted and investors are demanding higher integrity standards, a legal audit can be a critical differentiator. An external legal audit permits businesses to offer stronger assurance of transparency, accountability, and legal compliance, earning investors’ trust and making the business more investible.

 2.     Identify and mitigate risks early

A legal audit is a proactive approach that allows early identification and mitigation of legal risks, before penalties, reputational damage or costly legal proceedings ensue. For example, a legal audit can flag contracts with onerous or unusual obligations, or ambiguous or missing language, ahead of the next contract renewal or before liabilities arise.

 3.     Strengthen corporate governance controls

A legal audit highlights corporate governance issues and identifies ways to strengthen internal controls, through review and refinement of internal policies and governance documents such as shareholder agreements and company constitutions.

Regulatory developments

Regulatory authorities in Southeast Asia have signalled a movement toward mandatory proactive legal oversight that businesses across the region should anticipate and prepare for. In 2024, the Indonesian government introduced the draft Presidential Regulation on Legal Compliance in the Formation and Implementation of Law (the “Draft Regulation”). The Draft Regulation contains mandatory annual legal audit obligations for legal entities, business entities, and public institutions, and requirements regarding the appointment of a certified auditor and the implementation of the auditor’s recommendations.

Going forward

Businesses looking toward long-term resilience should consider adding legal audits to their arsenal. When undertaken by experienced legal professionals, a tailored legal audit exercise can enable lasting growth and operations.

If you would like to discuss how a legal audit might benefit or be conducted for your business, please get in touch.