DUE DILIGENCE | LAW FIRM MAJOR IN DEAL ADVISORY IN VIETNAM
When an investor intends to invest in a business or considers a merger or acquisition with another entity (M&A), serious research and careful review before making the deal will bring give investors confidence when implementing and achieving success from that deal. Due Diligence is a key component in the Mergers and Acquisitions (M&A) process in Vietnam giving investors a complete picture of a company before entering into a proposed transaction. In this article, Doanh Tri will make an attempt to shed more light on this problem.
I. Legal basis
- Law on Enterprise 2020
II. General provisions
1. What is Due diligence?
Due diligence is simply an investigation or due diligence that a business or reasonable person is expected to do before entering into an agreement - a contract with another party, or an agreement with a standard. certain care. Due diligence is also a mandatory legal obligation to conduct M&A.
2. The importance of Due diligence process
When purchasing a business, the Due Diligence phase allows the buyer to assess the value of the business and verify information related to the business to determine whether to proceed with the purchase. The due diligence period also allows the buyer to determine if there are any barriers or risks involved in the transaction. Accordingly, the transaction is usually conditional upon the completion of the due diligence phase.
The due diligence period usually lasts no more than one month, but can vary depending on the complexity of the transaction and can also be extended in some cases. Usually, the buyer and seller will enter into confidentiality agreements before the Due diligence process begins. This is to ensure that the information that buyers receive and evaluate will be kept strictly confidential. Much of the information for completing Due diligence is obtained directly from the seller.
The Due Diligence phase also provides the buyer with information to assist in negotiating the main deal. The results of due diligence may indicate that specific action is required or may cause the buyer to claim specific representations and warranties outlined in the definitive agreement, or some additional indemnification accounts. offered by the seller. If you are purchasing a property or a business, it is important to ensure that due diligence is conducted fully and thoroughly.
There are many types of Due diligence such as Financial due diligence, Asset due diligence, Human due diligence; … However, in this article, we mainly focus on Legal Due diligence.
III. Legal Due Diligence
1. What is Legal due diligence?
Legal due diligence is the review of all legal elements that constitute and maintain the presence and existence of an enterprise. The result of the legal due diligence of the enterprise is a report which is presented in a scientific, logical manner, fully and objectively reflecting all the legal appraisal information of the appraised enterprise along with other relevant information. Annotations by legal experts help readers have a comprehensive view and accurately assess the legal status of the business.
Legal Due diligence activities include a comprehensive consideration of legal issues from the establishment, capital contribution, organizational structure, legal compliance in the course of business operations, property legal, contracts, material agreements, labor, …
2. Legal Due diligence’s Subject
Those who want to restructure an enterprise need to have a comprehensive review and re-evaluation of the legal operations of the enterprise, standardization of legal documents, documents, and records of the enterprise; is in need of transaction, investment cooperation, and/or capital acquisition of an enterprise, so it is necessary to know the legal status of that enterprise and other relevant parties need clear legal appraisal documents and fully of the enterprise for the purpose of taking over, administering, as legal proof of the enterprise.
3. Dossiers for legal due diligence
Dossiers for legal due diligence are documents related to the establishment, investment as well as operation of the enterprise, as a basis for carrying out the legal due diligence of the enterprise.
- Certificate of business registration;
- Company charter;
- Investment certificate (for enterprises, an investment certificate is required as prescribed by law);
- Certificate of registration of tax code and customs code;
- List of capital-contributing members, for limited liability companies, partnerships, and register of members, for joint-stock companies;
- Powers of attorney of the legal representative of the enterprise and authorizations of shareholders and owners in the enterprise (if any);
- Labor contract, collective labor agreement;
- Accounting books, financial statements, operational reports;
- Company meeting minutes;
- Contracts for purchase and sale of assets;
- Contracts and transactions related to the company's activities.
The above information is about the ‘Due Diligence - Law Firm Major In Deal Advisory In Vietnam.' For more information and advice on this issue, please contact Doanh Tri Law Firm directly via:
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