Legal Due Diligence

As a rule, a legal audit or Due diligence is ordered by an investor. Less often it is done by the startup itself.

Legal DD is a verification of title documents of a company, in which all existing assets of a given enterprise are subject to verification. The purpose of Legal DD is to study assets, risks to eliminate them, and also protect the rights of owners of the company.

Usually, all title documents from the time the company was founded are examined in detail. They concern the following questions:

The history of the company and its documentary reflection, namely:

• agreements concerning the establishment of an enterprise;
• actions taken during the establishment of the enterprise;
• who, how and when the statutory fund was formed;
• change of ownership (by whom and when it was carried out);
• obligations that are within the competence of the company’s management bodies;
• obligations existing in a legal entity to participate in the statutory fund at the moment (corporate encumbrances);
• the study of all persons influencing the activities of the organization (affiliates);
• questions of corporate activity of the enterprise.

All that concerns the contractual relationship of the enterprise:

• contracts concluded during major transactions;
• documents on the burden of others and securing their obligations;
• contracts of alienation (if any) of shares of the statutory fund;
• contracts for transactions with affiliates;
• executive documentation;
• other agreements and treaties.
  

Labor Relations Issues:

• all staff changes;
• labor contracts (agreements) that were concluded with them;
• legal (local) acts of the company;

Administrative Relations:

• agreed licenses, necessary approvals;
• claims received from regulators.

Disputes, both judicial and extrajudicial:

• documentation relating to administrative, civil and criminal liability;
• executive documentation;
• contractual relations with third parties, so-called out-of-court documentation (if any).

Intellectual property and issues relating to its protection, as well as other property, namely:

• intellectual property and other types of property;
• all contracts relating to the creation of intellectual and other property for the company or the creation of such objects according to its tasks.

For assistance in conducting a legal audit of a project, contact an Eternity Law International specialist.