An investor should verify legal existence, ownership, authority, capital structure, regulatory status, contracts, liabilities, disputes and the terms governing the proposed investment.
Legal due diligence usually covers
- incorporation
- Memorandum and Articles
- shareholder register
- directors and signing authority
- authorized, issued and paid-up capital
- shareholder agreements
- share pledges or encumbrances
- material contracts
- loans and guarantees
- litigation
- licences
- tax status
- employment liabilities
- intellectual property
- related-party transactions
- regulatory compliance