“Explaining the “how” and “why” in legal due diligence

Due Diligence

Legal due diligence could be an exercise of frustration at times.

There may be tight deadlines sometimes, but the documents required for legal due diligence are not forthcoming from the target company.

If the target company is going through the due diligence exercise for the first time, the team at the target company may not be familiar with the extent of details required. They may be under the impression that they have provided all the information and documents requested.

However, the lawyers reviewing the target company’s responses to the legal due diligence checklist may sigh at the thought of having to prepare another list to seek further information.

I find explaining how the due diligence process would be conducted and why we need certain documents to the team at the target company to be helpful in this kind of situation.

For example, the target company may provide only its annual return to show its issued share capital regardless of the extensive legal due diligence checklist. If the scope of due diligence is to verify that the shares have been properly allotted and the relevant statutory forms have been lodged in accordance with the laws, the target company would need to provide the relevant resolutions and returns of allotment of shares.


This post was first posted on Linkedin on 18 March 2022.

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