Overview
Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.
Due Diligence turns to have different meanings depending upon the nature of transactions. Due diligence takes different forms depending on its purpose. The examination of a potential target for merger, acquisition, privatization, or similar corporate finance transaction normally by a buyer. This can include self-due diligence or "reverse due diligence", i.e. an assessment of a company, usually by a third party on behalf of the company, prior to taking the business decision.
Business Due Diligence
A business due diligence is usually performed prior to the purchase of a company or investment in a company by the acquirer or investor (Buyer). A due diligence helps the buyer take an informed investment decision and mitigate risks associated with a business Purchase transaction. It involves looking into the parties involved in the transaction, prospects of business and the quality of investment.
Documents
Documents Required During Company Due Diligence
- Articles of Association
- Memorandum of Association
- Shareholding Pattern
- Financial Statements
- Bank Statements
- Tax Registration Certificates
- Tax Payment Receipts
- Certificate of Incorporation
- Statutory Registers
- Property Documents
- Utility Bills
- Employee Records
- Operational Records
- Income Tax Returns
- Intellectual Property Registration or Application Documents
Company Information:
- Incorporation Certificate
- Authorised Capital
- Paid up Capital
- Status of Company
Directors Information:
- Details of Director
- Date of Appointment of Directors
Charges Registered:
- Quantum of Secured Loans
- Details of Secured lenders of the Company.