Due Diligence and Legal Risk
As much as India integrates into the global economic order and as much as foreign equity participation increases in all sectors of the Indian economy, legal Due Diligence has become an important exercise for any corporate transaction. Legal Due Diligence is usually conducted by accessing not only publicly available documents but also documents not so available. Apart from ascertaining the financial viability of the parties involved, it is very important to ascertain the number and nature of judicial or quasi judicial proceedings, if any, pending against a party to a commercial transaction.
India being a federal country with multi-layered judicial system spread across its 28 states and seven union territories, Due Diligence on the activities of a corporate entity in India is quite a comprehensive exercise. (i) One, because of the large number of courts in 28 separate jurisdictions; (ii) two, multiplicity of legal proceedings – liquidation, infringement, unfair trade practice, recovery, criminal proceedings etc.; (iii) three, the variety of judicial and quasi-judicial bodies in India – Courts, Tribunals, Commissions etc.; (iv) four, variety of sector specific regulatory bodies like RBI, SEBI, IRDA etc. Hence, due diligence in India requires information from various judicial, quasi judicial and regulatory bodies spread across the length and breadth of India.
Most Due Diligence Exercises being sector specific and for different purposes, lawyers and solicitors in India use different methodologies and mechanisms for conducting due diligence. Due diligence is not only about collection of relevant information/data from the right sources but also about reaching at the right conclusions and recommending right strategies for addressing the weak links.
CLG Due Diligence, Compliance and Legal Risk Practice
It has been CLG’s practice to advise its clients to have full-proof due diligence on the financial viability and corporate credibility of their potential business partners, before entering into major transactions like Joint Ventures, Mergers, Acquisitions, transfer of shares etc. CLG’s primary objective in such Due Diligence exercises is ensuring that -
- documents relied on are authentic;
- it is exhaustive enough to cover every conceivable head – assets and liabilities, financial viability, contractual obligations & liabilities, Intellectual Property rights, court proceedings (past, present and potential) etc.;
- it is designed to meet specific requirements of the industry, business transactions in question;
- right experts in the covered issues are involved in the exercise;
- information and documents are always cross-checked, compared and confirmed;
- inferences made and conclusions drawn are accurate, justifiable and reliable;
- the report addresses every possible aspect of the terms of inquiry and issues involved;
- the report, apart from identifying problems and possible risks, also comes up with possible remedial measure(s)/solution(s).
CLG has conducted industry specific Due Diligence against diverse backdrops – WTO Agreements, Stock markets, Liquidity Status, Hidden liabilities, contractual liabilities etc., covering even such sensitive sectors like Banking, Non-Banking Financial Services, Insurance etc. Our Clients for Due Diligence include well-known business houses in India as well as big multinational companies.
CLG has the competency and experience to effectively undertake complete due diligence exercises and offer viable solution of business, legal and financial issues in a comprehensive and integrated manner, help clients in assessing business proposals, identify potential legal problems and enable its clients in taking well-researched corporate decisions. Due Diligence at CLG is with inputs/technical feedback from in-house experts on different fields, thereby ensuring that every aspect is thoroughly examined and appreciated.
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