Legal Due Diligence - WIRC-ICAI
Legal Due Diligence Sharad Abhyankar ADVOCATE ICAI - WIRC Mumbai 1 June 2013
Perception about legal advisors
Role of a Corporate Lawyer – Paradigm shift in role of commercial lawyer over last 2 decades. § Expected to advise not only law but also on commercial aspects of the transaction Play a pro-active role throughout the transaction – “stepin-shoes Counsel” Be ‘meticulous’ in drafting and positive in negotiations § Has to work towards successful completion
Meaning of Due diligence
§ Purpose of Due Diligence Ensure Complete & Accurate Disclosures § Analyze Strengths and identify Weaknesses § Determining the advisability of the Transaction § To assess the benefits and the liabilities of a Transaction by inquiring into all relevant aspects of the past, present, and predictable future of the Business § Structuring, Negotiating and Crafting Transaction Documents including the Representations, Warranties & Indemnities
Focus of Legal Due Diligence § Conditions Precedent for achieving Transaction Completion in timely and compliant manner § Comprehensive compliance check § Identify legal risk factors and value depletors § Assess exposure to parties from existing or potential litigation § Contingent liabilities and contingent assets § Effect of change of control or change of shareholding on the ongoing contracts
Different Transactions & Areas of Due Diligence Acquisition of a Business or Company – Structure of entity/shareholding – Assets and liabilities (real & intangible) – Disputes & Litigation – Permits/Consents/Registrations – Environmental issues – Direct and indirect tax liabilities
Principal Areas of Legal Due Diligence Joint Venture – Credibility of JV Partner – Contribution from JV Partner – Regulatory restrictions on transactions Financing – Viability of the Project – Status of the Borrower – Debt servicing ability – Assessment of security
Principal Areas of Legal Due Diligence Listing of Securities – Risk factors to be included in the Offer Document – Permits/Licences/Registrations of existing and proposed Project – Litigation concerning the Issuer Company, Promoters & Promoter Group entities – Vetting of Offer Document
Principal Areas of Legal Due Diligence Commercial Agreements – Viability of Transaction – Performance record of contracting Parties Privatisation – Assets and liabilities – Regulatory restrictions
Transaction Activities Before restructuring NDA, Exchange of Information Term Sheet/MOU/HOA/LoI During transaction Due Diligence Negotiation Documentation – CP completion Post Completion Post completion audit & price adjustment, if any Regulatory compliance & reporting
Essential Terms of MoU/LoI Broad concept of proposed transaction Non-Disclosure / Confidentiality Information Exchange - Scope of Due Diligence Exclusivity Time table Drop Dead Provisions Enforceability - Binding Effect Arbitration - Dispute Resolution?
Preparation for Legal Due Diligence – The First Meeting § Scope of Due Diligence – Comfort Letter – Preliminary Review – Extensive Due Diligence Report § Mandate Letter § Confidentiality Agreement
Look before you leap
Types of Due Diligence Legal & Secretarial Financial / Accounting Technical / Environmental Commercial / Market Intelligence Social / Cultural / Ethical
Essence of Due Diligence – Trust but verify!!!
Overlap of Due Diligence Activities
Diligence
The Due Diligence Team § Identify teams for conduct of Legal, Financial, Technical & Commercial Due Diligence § Legal Due Diligence Team members should include specialists in relevant industry § Conduct a common briefing session for all Identify personnel from Target for interaction § Identify target's Auditors, Legal Counsel and other Transaction Advisors § Identify Target's Vendors and customers for third party Due Diligence
Methodology of Data Gathering § Do your homework thoroughly § Prepare a comprehensive Information Request for each type of Due Diligence Customize the check-lists based on preliminary information § No check list is "final" ! § Request for Management Presentation from target or its Investment Advisors § Set up a physical or virtual data room Personnel interviews Document review Onsite inspections Independent investigations
Virtual Data Rooms
Document Review § Make a Wish List of what to review § Select a Team of representatives and counsel § Make sure the Team understands the context, purpose & key terms of intended business deal § Establish a realistic time line for review § Be selective but thorough: consider review of representative documents § Liaise with specialist Attorneys for specific areas
HR Diligence
Emotional Due Diligence
Conclusion of Due Diligence § § Identify a Cut-off date for data gathering Are you comfortable with the info received? Next steps - Co-ordinate with other Due Diligence teams Prepare a draft report addressing main areas of exposure and concerns Hold meetings with target management for confirmation of information and conclusions
Due Diligence Analysis & Completion of restructuring Red flags / Show stoppers Value depleting factors - negotiation Conditions precedent Representations, Warranties & Indemnities Regulatory and contractual compliance Implementation of restructuring and post completion activities
Clarity of communication !!
Global Concerns
THANKYOU
The Due Diligence Team § Identify teams for conduct of Legal, Financial, Technical & Commercial Due Diligence § Legal Due Diligence Team members should include specialists in relevant industry § Conduct a common briefing session for all Identify personnel from Target for interaction § Identify target's Auditors, Legal Counsel and other
RGF Due Diligence Engagement Template Terms . 1 Introduction The [Applicant] is required to submit to BIS a Due Diligence report prepared by the Due Diligence Service Provider which covers the scope of the Due Diligence work set out in Appendix 7 of the Conditional Grant Offer Letter (the "Due Diligence report"). These termsof engagement set
Section 01 - Legal Due Diligence 04 1.1 Purpose of Legal Due Diligence 05 1.2 Conclusion 1 4 Section 02 - Finance Due Diligence 1 5 2.1 Purpose of Finance Due Diligence 1 6 2.2 Conclusion 2 8 Annexure 2 9 Annexure 01 - Statement of Comprehensive Income 30 Annexure 02 - Statement of Financial Position 31
WIRC Reference Manual v v 2019-20 Foreword Presenting the WIRC Reference Manual 2019 is a huge privilege for us. The WIRC Reference Manual has grown from strength-to-strength over the years. This publication has been continuously innovating and redefining itself. Today, it has grown into a treasure trove of information on a vast gamut of subjects
Phase 1 is concerned with the basics of due diligence with a focus on tools and techniques of due diligence analysis. Day One: The basics of due diligence in the oil and gas business The changing dynamics of the global oil and gas business The strategic relevance of due diligence in market analysis
finalizes the due diligence report - The due diligence report must seek to prov ide the most pertinent information at a gi i i i i h il b bd f ibliven point in time in the most easily absorbed form possible - It is particularly critical to relate the due diligence report to the strategic objectives of the due diligence process.
§ 1.03[1] DUE DILIGENCE 1-8 § 1.03 Benefits of the Due Diligence Investigation If not carefully conceived and managed, due diligence investiga-tions can become expensive boondoggles that never end and never lead anywhere. It should be kept in mind that process without results is useless. The due diligence investigation is all about producing .
5. Anti-bribery due diligence starts sufficiently early in the due diligence process to allow adequate due diligence to be carried out and for the findings to influence the outcome of the negotiations or stimulate further review if necessary. 6. The partners or board provide commitment and oversight to the due diligence reviews.
Grade 2 collected 25 books. Grade 3 collected 15 books. Grade 4 collected 10 books. The school had a book drive to support the local shelter. Grades 1, 2, 3, and 4 collected books. Organize the book data into the pictograph above. 1. Who collected the most books? _ 2. What was the total amount of books collected? _ 3. Which grade .
