Once you have conducted a due diligence exercise, what is to be done thereafter? You need to report the outcome of your exercise to the concerned party, right?
Let us discuss a simplified example of a legal due diligence report structure. Please note that this example is only for illustrative purposes and does not contain real data.
Legal Due Diligence Report
Executive Summary
- Overview of the target company's legal standing
- High-level identification of potential legal risks
- Summary of key legal findings
Introduction
- Purpose of the due diligence report
- Scope of the legal review
- Methodology used for the due diligence process
- Disclaimers
Corporate Structure and Good Standing
- Details of the company's incorporation
- Examination of the company's bylaws and articles of association
- Review of shareholder agreements and minutes from board meetings
Material Contracts
- Analysis of key contracts, including customer and supplier agreements
- Review of loan agreements and financial obligations
- Examination of employment contracts and labour relations
Regulatory Compliances
- List of approval, certifications, licences issued to the target company and their validity
- Any applications filed for the aforesaid approvals, etc. and the status thereof
- Periodical filings made by the target company as mandated under different laws, rules and regulations and any discrepancies thereunder
- Evaluation of the company's compliance with relevant laws and regulations
- Review of any regulatory investigations or sanctions
Litigation and Disputes
- Summary of pending or threatened litigation
- Assessment of potential legal disputes or claims
Intellectual Property
- Inventory of the company's intellectual property assets
- Listing of the registration status of these assets or transfers thereof under license, permission to use, assignment, etc.
- Analysis of IP protection strategies and potential infringements
Properties and Assets
- Review of movable / immovable, real estate holdings and property leases
- Examination of the condition and ownership status of physical assets
Insurance and Risk Management
- Overview of the company's insurance policies
- Assessment of the adequacy of coverage for identified risks
Conclusion and Recommendations
- Final assessment of the legal risks associated with the transaction
- Recommendations for addressing identified issues
- Legal opinion on proceeding with the transaction
Appendices
- List of documents reviewed
- Detailed findings for each section
- Supporting legal analysis and documentation
This report should provides a comprehensive view of the legal aspects of a company and helps stakeholders in making informed decisions regarding potential transactions.
It's important to note that the actual content and depth of a legal due diligence report shall vary immensely depending on the specific circumstances of the transaction and the requirements of the stakeholders involved.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.