Due Diligence for Company Acquisition in Bangalore

Due Diligence for Company Acquisition in Bangalore


What is the Due Diligence of the Company?

Due Diligence of the Company is usually performed before any business sale or private equity investment, it is the process of research & analysis that is initiated before an investment, acquisition, business partnership, joint venture, or bank loan to determine the value of the subject of due diligence and to see whether there are any major issues involved, in one sentence Due Diligence Report is a summarized report of such findings.

 

What are the Various Transactions covered by Due Diligence?

Partnership: Due diligence for strategic partnerships, strategic alliances, or other partnerships.

Mergers & Acquisitions: Due diligence in Mergers and acquisitions is done from the viewpoint of both buyer and seller to look into the financials, legal litigation, patents, and other relevant information.

Public Offers: Due Diligence is required for various aspects like disclosures in a prospectus, post-issue compliance, and other matters.

Joint Ventures & Collaborations: When two companies join together for a new venture, the reputation of the company involved is a matter of concern. Due Diligence covers such different aspects involved.

 

Types of Due Diligence

Business Due Diligence: It involves looking into the parties involved in the transaction, the prospects of the business, and the quality of investment.
Legal Due Diligence: It focuses on the legal aspects of a transaction, legal pitfalls, and other law-related issues.
Financial Due Diligence: It covers the review of accounting policies, audit practices, tax compliance, and internal controls.

 

List of Documents required during the Due Diligence of Company

  1. Articles of Association (AoA) & Memorandum of Association (MoA).
  2. Shareholding Pattern.
  3. Incorporation Certificate of the Company.
  4. Financial statements including Balance Sheets, Profit & Loss Accounts, Income & Expense Statement.
  5. Bank Statements.
  6. Income Tax Returns.
  7. Information of the Directors & Management of the Company.
  8. Statutory Registers.
  9. Utility Bills.
  10. Employee Records.
  11. Intellectual Property Registration & Other Application Documents.
  12. Tax Registration Certificates.
  13. Property Documents.
  14. Operational, Legal & Other Financial Documents.

 

Basic Information of the Company

  1. Incorporation Certificate.
  2. Authorized Capital.
  3. Paid Up Capital.
  4. Status of the Company.
  5. Details of Directors.
  6. Date of Appointment of Directors.
  7. Quantum of Secured Loans.
  8. Details of Secured Lenders of the Company.
  9. AoA & MoA.

Articles of Association (AoA) and Memorandum of Association (MoA) are important documents of the company and they should be reviewed thoroughly during the Due Diligence Process.

 

Statutory Registers of the Company

Under The Company Act, 2013 a Private Limited Company is required to maintain various statutory registers about share allotment, share transfer, board meetings, directors, shareholders, etc. Such registers must be reviewed to obtain and validate information about the company matters.

 

Financial Statements & Book of Accounts

Companies maintain the book of accounts along with detailed transaction information as required under the Companies Act, 2013. These are audited by the auditor of the Company. These should be reviewed and verified properly in the process of the Due Diligence.

  1. Validation the cash flow.
  2. Validation & Valuation of Assets and Liabilities.
  3. Validation of all financial statements against the transactional information.
  4. Validation of Bank Statements.
  5. Validation of various lenders and loans agreement of company.
  6. Taxation Aspects.

 

To check that there are no unforeseen tax liabilities/any default.

  1. Income Tax Returns.
  2. ESI/PF Returns & Payments.
  3. TDS Returns & Payments.
  4. TDS Calculations.
  5. Operational Aspects.

 

Understanding the Business Models, Business Operations, Prospects, Employees, Customers, Production, Sale Information, Machinery & Vendors Information.

  1. Legal Aspects.
  2. To check the Legal Due Diligence for all properties of the company.
  3. No objections from secured creditors of the company.
  4. Validation of all court documents & fillings.

The Due Diligence Report should provide the desired level of information about the potential investment & the inherent risks involved & the Due Diligence Report should provide the required information to the satisfactory.

 

Created & Posted by Jitender Kumar

Intern at TAXAJ

 

TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you a One Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. for any further queries related to this or anything else visit the TAXAJ | Watch all the Informational Videos Here.

 

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