Due Diligence Of A Company

Due diligence (DD) is an extensive process undertaken by an acquiring firm in order to thoroughly and completely assess the target company’s business, assets, capabilities, and financial performance. There may be as many as 20 or more angles of due diligence analysis.

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”). It is the responsibility of the seller of the business or shares (“Seller”) to provide the documents and information necessary for performing a due diligence on the company to the buyer. A due diligence helps the buyer take an informed investment decision and mitigate risks associated with a business purchase transaction. Both parties usually enter into a non-disclosure agreement prior to starting a business due diligence as sensitive financial, operational, legal and regulatory information would be divulged to the buyer during the due diligence process.

Documents Required During Company Due Diligence

Usually the following information and documents pertaining to a private limited company or limited company are required for performing a due diligence:

  • Memorandum of Association
  • Articles of Association
  • Certificate of Incorporation
  • Shareholding Pattern
  • Financial Statements
  • Income Tax Returns
  • Bank Statements
  • Tax Registration Certificates
  • Tax Payment Receipts
  • Statutory Registers
  • Property Documents
  • Intellectual Property Registration or Application Documents