Target company in due diligence should avoid these

Due Diligence

When public listed companies undertake corporate exercises, one of the key concerns is the timing for completion of the corporate exercises.

Timing is particularly important when PLCs are raising funds through corporate exercises such as rights issues and IPOs as these are subject to market conditions.

If the information provided for due diligence for the corporate exercises is not complete or is not provided in a timely manner, this may delay the corporate exercises.

Some of the common issues encountered when conducting legal due diligence include:

1. The information in the banking facilities documents provided for legal due diligence are inconsistent with the list of banking facilities provided.

For example, it could be the securities or the amount of facilities stated in the banking facilities documents do not tally with the list provided by the management of PLCs for legal due diligence.

2. The letters of offer for banking facilities refer to various security documents, but the security documents are not provided.

3. The agreements provided for legal due diligence refer the appendices and schedules, but the appendices and schedules are not provided.

4. The licences and approvals from authorities provided for legal due diligence refer to conditions, but the conditions are not provided.

5. Copies of the agreements provided are not dated, signed or stamped.

6. Missing pages from the documents provided.

Avoid the above to ensure issues arising from legal due diligence could be resolved in a timely manner and corporate exercises could be completed within the timeline.


First posted on Linkedin on 22 November 2021.

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