Due diligence

Due Diligence is a complex of analytical and operative actions for examination of legality and commercial appeal of a planned transaction, an investment project.

The objectives of Due diligence for our lawyers, carrying out the procedure, is consideration of the following questions on the basis of corresponding instruments:

1. Corporate management including:
1.1. Constituent documents of the Company;
1.2. The legal status of the Company;
1.3. The basic documents determining corporate management of the Company;
1.4. Copies of minutes of the meetings of board of directors, meetings of shareholders, all working groups and committees of the Company;
1.5. The list of the basic Powers of Attorney of the Company

2. Shares and the shareholders of the Company including:
2.1. The basic transactions with the shares of the Company and data on change of the owners;
2.2. The list of the shareholders of the Company;
2.3. The property and non-property rights of the shareholders of the Company;
2.4. Agreements of the shareholders of the Company;

3. Controlling aspects of the activity of the Company including:
3.1. Licenses and permits of the Company

4. Main contracts and other transactions including:
4.1. Contracts with the main suppliers and buyers;
4.2. Loans, guarantees, persons having guarantees, various types of bills and obligations;
4.3. The analysis of contracts of rent/leasing of premises and other assets: kinds, volumes, validities, the mechanism of pricing, an opportunity of termination and / or re-conclusion on different conditions.

5. Documents confirming property rights of the Company, including:
5.1. The rights to the real estate and other assets of the Company;
5.2. Shares and other securities which the Company owns;
5.3. Other essential tangible and intangible assets of the Company;
5.4. The mortgage contracts, encumbrance and other obligations on assets of the Company.

6. Staff and labour relations including:
6.1. The collective agreement and other agreements between the staff and the Company. 

7. Judicial claims and the other claims including:
7.1. Judicial claims to the Company (main cases);
7.2. Main existing claims / judicial claims;
7.3. Main pending claims/ judicial claims.

Basic key stages of examination of business (Due Diligence):

1. Valuation of business and drawing up of the report on its actual market value/value of its assets.

2. Auditor examination for accuracy of the business and tax accounting in the enterprise and drawing up of the auditor’s conclusion. 

3. Legal examination of the constituent documents confirming the rights to assets provided by the seller.

4. Drawing up of the conclusion on accuracy of execution of documents, and also on existence of legal risks of loss of property, the bases for filing of claims by the third parties and other potential legal problems.

5. Propositions on elimination of the revealed problems.

6. Execution of the investment memorandum - the detailed description of business with the following parameters: property, staff, status in the market, tendencies of development, financial status, field of activity, products and services, etc.

As a result the potential buyer receives full and objective view about the offered business, advantages, trends of development and benefits of its purchase. All these services can be rendered both separately and within the limits of the contract on complex presales preparation of business.

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Dmitrieva & Partners