Escolar Documentos
Profissional Documentos
Cultura Documentos
A Comprehensive
Assessment
Rachana Hingarajia
Introduction
The objectives of a legal due diligence exercise may vary from case to
case. However some of the common objectives in most of the cases would
be as follows:
To take an Informed decision on the Proposed transaction
For Eg: While providing the corporate credit facilities by the Banks and
Financial Institutions, the scope of due diligence would be limited to
financial performance, statutory and secretarial compliances and title
diligence with respect to the property offered for security.
SCOPE OF LEGAL DUE
DILIGENCE
Regulatory compliance
Contractual compliance
Suppliers Contract
Customer Agreement
SCOPE OF LEGAL DUE
DILIGENCE
Articles of Association
Corporate policies
Financial aspects
It includes thorough reading of the balance sheet to identify the
financial obligations of the company, penalties paid for violations of
laws in the past etc.
.
SCOPE OF LEGAL DUE
DILIGENCE
Pre Post
Diligence
Diligence Diligence
LEGAL DUE DILIGENCE
PROCESS
Diligence
Post Diligence
Drafting of preliminary report
Discussions with the management of the target company
Finalisation of the Report
Determination of strategy
DOCUMENTS/ASPECTS
TO BE COVERED
Financial Aspects
Financial Statements for the last five years
Qualifications in Audit Reports and Internal Audit Reports
Details of various financial reports published under listed agreement
Capital Budgets and projections and Cash flows
Details of fixed and variable expenses
Details of internal control procedures.
Unrecorded liabilities
Commitments, contingencies
Accounting policies
Reliance on debt funds and usage of debt
Debt repayment and potential debt trap
Working capital lock up
Material Contracts
Partnership
Employee litigations
Hurdles
Non availability of information
Actions to break hurdles in due diligence The following actions may break
the afore said hurdles