Question 1: What does due diligence mean? Due diligence, also known as prudential investigation, means that after an investor reaches a preliminary intention to cooperate with the target company and reaches an agreement through consultation, the investor will conduct a thorough investigation of all aspects of the target company that are related to this transaction. A series of activities including on-site investigation and data analysis on investment-related matters. Including financial due diligence and legal due diligence, etc. The investigation content generally includes: research on the industry of the target company, all employees of the company, history, human resources, marketing and sales, research and development, production and services, procurement, legal and supervision, finance With accounting, taxation, management information systems, etc.
Question 2: What aspects need to be investigated in legal due diligence? Under normal circumstances, legal due diligence should include the following aspects:
1. The subject qualifications of the target company: mainly investigate its establishment, registration, shareholders, registered capital payment, and annual review status , changes in the company, whether it has been revoked or canceled, etc.
2. The establishment contract and articles of association of the target company: Pay attention to whether the contract and articles of association contain the following clauses, contents or provisions for defense against acquisitions; whether there are any relevant mergers, acquisitions or other matters that may lead to the transfer of control of the company All major transactions require the approval of an absolute majority of the company's shareholders before they can be implemented; whether there are restrictions prohibiting the replacement of directors or rotation of directors to determine whether control of the board of directors can be obtained after mergers and acquisitions; whether there is high salary compensation for dismissed senior managers Personnel and equity rights plans to correctly analyze the difficulty of the target company being acquired, and whether or to what extent the acquisition costs will increase.
3. The target company’s board of directors’ resolutions, shareholders’ meeting resolutions, minutes, etc.: In the case of a merger, in accordance with the provisions of the Company Law, there must be corresponding board of directors and shareholders’ meeting resolutions. This procedure must Indispensable. Lawyers should pay attention to review whether the relevant board of directors and shareholders' meeting resolutions are made in accordance with the law, whether they have reached the statutory number of consent votes or stipulated in the articles of association, whether the voting rights are valid, etc., to ensure that there are no flaws in the procedures.
4. The assets of the target company: The assets mentioned in this item refer to the target company’s tangible assets such as land, real estate and equipment.
4.1. The value of land and property depends on the rights therein. Focus on investigating the purpose of the land and property, whether it can be transferred, how long the right of use or ownership is, whether the rights are complete and restricted, whether there are any defects, and whether there are any events that may affect the rights, such as expropriation, forced relocation, etc. in the short term occurs, whether the consideration for obtaining the right has been paid in full, whether the certificate of the relevant rights has been obtained, whether there is a lease or mortgage, what are the conditions of the lease or mortgage, etc.;
4.2. Regarding mechanical equipment, it is necessary The first thing to note is its source and nature; the second is its transfer restrictions; and the third is the handling of transfer procedures.
4.3. The significance of the lawyer's review is to discover or straighten out the property rights of the target company in advance, identify problems in advance and propose solutions to the problems, and ensure that the property rights of the target company acquired by the acquirer are clear. The rights are intact and without any legal consequences.
5. Intellectual property: In some target companies, intangible assets in the form of intellectual property may be more valuable than their tangible assets. The review of all intellectual property rights is to ensure that the acquiring party can continue to benefit from it after the acquisition. At the same time, attention should be paid to whether there are related infringement lawsuits to accurately evaluate the risks that may affect rights.
6. Key Contracts and Contractual Commitments:
6.1. Most companies have a number of key contracts that are critical to their success. Termination of the contract may be allowed when a change of control occurs, so the acquirer should carefully consider the acquisition arrangement. A similar situation can occur when a company relies too heavily on the technical expertise or experience of one individual.
6.2. The acquirer should also determine whether any of the recent contractual commitments made by the target company are inconsistent with the acquirer's own business plan, such as providing services to new production lines or new enterprises, or joint ventures. Capital, sell key patents and copyrights, sign new long-term contracts with suppliers or customers, promise new high compensation or stock option arrangements to employees, etc.
6.3. In addition, pay special attention to loans, mortgage contracts, guarantee contracts, agency contracts, franchise contracts, etc. to see if there are any provisions in them that need to be addressed in advance when the control of the target company changes. Provisions to fulfill payment obligations, or terminate the right to use or related rights, etc. Reviewing such provisions means weighing whether the acquirer will lose certain expected benefits or rights as a result of the merger after the merger is completed.
7. Employee placement in the target company: In this regard, the main issues are the level of benefits provided and the required notice period and possible compensation before terminating the contract.
8. The target company’s creditor’s rights and debts: The target company’s debts can be divided into known debts and potential debts. Potential debts mainly include contingent liabilities, and tax and environmental protection liabilities are included in contingent liabilities.
8.1. For tax investigations, attention should be paid to investigating the status of taxes paid, whether there are any outstanding payments, and whether the tax country has adjustments and preferential regulations on the target company, etc., to avoid the merger and acquisition party. There will be an increased burden of back taxes and fines.
8.2......gt;gt;
Question 3: What do rom and rod in legal due diligence documents mean? 1. Comply with predetermined procedures and work Methods; 2. Be familiar with relevant background knowledge and transaction purposes, and learn as much as possible about customers; 3. Be familiar with industry knowledge, business knowledge, business models, such as infrastructure, energy, real estate, communications, etc.; 4. Be familiar with laws and do a good job Necessary legal research
Question 4: What is the purpose and significance of lawyer due diligence? Due diligence, translated from the English "Due Diligence", its original meaning is "appropriate or due diligence". Due diligence is an important task for Chinese lawyers in providing overseas listing services for domestic companies. It is also one of the legal documents that overseas securities firms (sponsors) usually require domestic lawyers to issue. The due diligence work of Chinese lawyers is mainly to investigate and verify the companies to be listed or the domestic interests of the companies to be listed (collectively referred to as "domestic companies"), and to make corresponding decisions after analyzing the results of the investigations and verifications. Professional judgment. The main purposes and significance of due diligence conducted by Chinese lawyers in providing overseas listing services for domestic companies are as follows: First, through due diligence, lawyers can provide legal advice on overseas listing plans and pre-listing restructuring and mergers and acquisitions for companies planning to be listed and overseas securities firms ( sponsor) reference. Secondly, through due diligence, lawyers can discover possible legal problems with the company to be listed or the rights and interests of the company to be listed in the country, so that they can be corrected in a timely manner to meet the requirements of overseas stock exchanges and securities regulatory authorities. Finally, through due diligence, lawyers can lay a solid foundation for issuing legal opinions.
Question 5: What is lawyer due diligence? Lawyer due diligence, also known as prudential investigation, refers to a series of on-site investigations and data analysis conducted by the investor after the investor reaches a preliminary cooperation intention with the target company and upon consensus, on all matters related to the investment of the target company. Activities include financial due diligence and legal due diligence. Due diligence mainly refers to the financial, operational, legal and other matters of transaction objects and transaction matters in transactions such as stock issuance and listing, mergers and acquisitions, major asset transfers, etc. The client entrusts lawyers, certified public accountants and other professional institutions to, in accordance with their professional standards, Careful and appropriate investigation and analysis. 1. Classification of due diligence: In the capital market, due diligence can generally be divided into three categories according to the different entities involved in the investigation: lawyer due diligence, certified public accountant’s financial due diligence and investment bank due diligence.
2. The significance of lawyer due diligence: 1. Through investigation, understand whether the business project faced by the target enterprise can be carried out and whether there are insurmountable legal obstacles and risks. You know, by spending tens of thousands of dollars on legal due diligence, you can avoid being defrauded of millions on a project. Many projects are simply unlikely to work, and the goal of legal due diligence is first to confirm whether the project is likely to work. 2. For projects that can be operated, understand what legal risks exist in the project and how to avoid and deal with them. After all, legal risks accompany corporate operations everywhere, including equity structure, shareholder relations, internal management models, intellectual property protection, finance and taxation, labor relations, transaction models, etc. Unforeseen legal issues may arise in every link. In specific projects, It is also necessary to coordinate the relationship with ***, the relationship with transaction partners, the relationship with shareholders within the company, etc. Through investigation, existing problems and potential problems can be understood. 3. Propose operation plans for operational projects based on specific situations to ensure that the company eliminates legal risks that should not exist, tries its best to avoid unavoidable risks, and prevents risks that may actually occur to ensure that losses are minimized when risks occur. 3. The role of lawyer due diligence: 1. Lawyer due diligence can help the investigating party understand the situation of the party under investigation and determine the possibility of in-depth negotiations on the proposed business plan or transaction. 2. Lawyer due diligence will help the investigating party decide whether to adjust the price of the business plan or transaction and determine the extent of the price adjustment. 3. Lawyer due diligence will help the investigating party further reasonably and legally adjust the terms and structure of the business plan or transaction-related contracts according to the actual situation, and determine the timetable for the completion of the business plan or transaction. 4. Lawyer due diligence will help the investigating party more accurately determine the prerequisites and post-completion obligations of the business plan or transaction. 5. The results of the lawyer's due diligence will help the party under investigation take necessary remedial measures as early as possible to promote the basic realization of the business plan or transaction, or help the party under investigation to add the representation and warranty clauses of the party under investigation to the relevant agreement.
Question 6: Introduction to legal due diligence Legal due diligence refers to the legal existence and corporate qualifications of the target company or issuer conducted by lawyers in major corporate actions such as corporate mergers and acquisitions and securities issuance. , assets and liabilities, external guarantees, major contracts, related relationships, taxation, environmental protection, labor relations and other legal issues.
Question 7: What is the role of the legal due diligence checklist? What issues should lawyers review? The content that lawyers agree to review during due diligence includes: the organizational structure of the unit being reviewed, senior executive qualifications, labor contracts, major litigation case. Review the unit's performance ability and integrity based on the audit results of accountants.
During the lawyer's review, the unit under review should be required to provide the original contract. The lawyer can proactively check the employer's manufacturer registration status and related registration information such as related holding units.
I can’t tell you everything else. . . . :)
Question 8: What is a legal due diligence report? This document form has been gradually introduced to China in the past ten years and has now been widely used in company mergers and acquisitions, equity or project transfers, Asset or debt restructuring, securities listing, distressed asset trading and other major economic activities. According to reports, the well-known Motorola spent as much as US$100 million on due diligence before deciding to invest in China.
What is a legal due diligence report? Generally speaking, before the two parties reach a transaction, one party entrusts a lawyer to investigate and understand the background of both parties, the legality of the transaction object, and the transaction model and procedures, and form a written report for the reference of the transaction party. Due diligence is the process of trying to change transaction information from asymmetric to symmetrical (of course, there is also the possibility of creating new information asymmetries), thereby effectively reducing or minimizing the risks caused to both parties to the transaction due to information asymmetry. Therefore, the results of due diligence play a very critical role in whether the two parties finally reach a deal.
Question 9: What is due diligence? Due diligence generally occurs in corporate acquisitions, corporate public offerings and listings, and fund management.
An independent third-party agency, with the cooperation of the enterprise, will conduct a comprehensive and in-depth review of the enterprise's historical data and documents, management personnel's background, market risks, management risks, technical risks and financial risks.
Question 10: How to do a good job in legal due diligence. Legal due diligence is the first basic business that people entering the non-litigation law industry must learn and master. If you are not proficient in it, you cannot be called a qualified non-litigation lawyer! The whole book focuses on each step of the non-litigation core business one by one.
The level is very clear, making it easy for readers to quickly grasp all aspects of the due diligence business. The author is a professional and senior lawyer who has in-depth experience and thinking about this business. Many contents in the book are summaries of his valuable experience, and are equipped with a large number of cases and practical tips modules according to the explanation
needs. To help readers deepen their understanding and mastery of the content, there is also a real due diligence report template at the end of the book, which is valuable information that readers are difficult to obtain elsewhere. Through this book, readers can systematically learn all aspects of legal due diligence, master corresponding skills and techniques, and lay a solid foundation for their career as lawyers.