Due diligence legal audit

Our clients most often turn to us for support in conducting legal due diligence in the case of selling a company, a package of shares or stakes, or selling a business. However, this does not exhaust the transactions in which conducting legal due diligence is recommended. We provide our services to both buyers and sellers, as legal assistance on the seller’s side is often indispensable in complex and multidimensional transactions.

The scope of the legal audit is always determined by the client’s needs and the specific nature of the business. We always start by presenting the recommended scope and duration of the audit. Depending on the client’s needs, we provide a report, recommendations, and observations upon completion of the legal audit. Our legal audit then forms the basis for decision-making regarding the transaction and its terms, as well as its final shape. We examine the condition of the company in which our client intends to invest and conduct due diligence on the company whose shares or stocks our client intends to acquire.

To meet our clients’ expectations, we prepare both comprehensive legal due diligence and partial legal audits covering a specific branch of activity or assets of the entity. Additionally, we prepare tailor-made audits for our clients, focusing on smaller transactions, not necessarily entire companies or corporations right away. We help assess the risk before purchasing real estate, providing financing to an unknown entity, or investing in a startup.

Conducting legal due diligence consists of several stages:

1. The first stage involves gathering all necessary documentation for a proper analysis and examination of the company. Before commencing any actions, we compile a list of necessary documents and update it during the audit if necessary. We ensure that nothing escapes our attention during the due diligence process. We inform clients promptly about any difficulties encountered, identified irregularities, or risks on the part of the audited entity.
2. The second stage consists of a detailed analysis of the gathered documents and information. During this stage, we often prepare a due diligence report or memorandum, which we then provide to the client upon completion of the examination.
3. The third part of the audit involves discussing the results of the analysis with the client, presenting both identified regularities and compliance with applicable regulations, as well as irregularities. We then provide our recommendations regarding the identified irregularities, particularly in terms of possible corrective actions.

What does a legal audit include?

• Analysis of the company’s founding documents (articles of association, founding act, resolutions, and protocols),
• Analysis of the ownership structure, share or stock portfolio,
• Analysis of corporate matters (shareholders’ resolutions, Board resolutions, Supervisory Board resolutions, regulations, organizational structure),
• Analysis of contracts entered into, focusing on legality and risks,
• Analysis of employment contracts, their existence or absence, employment policies, provisions in contracts with employees,
• Analysis of intellectual property and industrial property protection, existence or absence, and possibilities of registering product designations as trademarks,
• Analysis of the entity’s asset structure (real estate, movables) and all resulting obligations and entitlements,
• Analysis of potential litigation, administrative proceedings in which the audited entity is involved,
• Audit of personal data processing in compliance with GDPR.

Benefits of conducting the audit:

• Obtaining detailed knowledge about the acquired entity or asset components,
• Identification of provisions in corporate documents, contracts, regulations,
• Minimization of the risk of unsuccessful investment and loss of invested funds,
• Minimization of the risk of criminal and civil liability,
• Minimization of the risk of administrative penalties, fines, damages,
• Implementation of new solutions, orders, document templates, provisions in contracts based on due diligence findings,
• Initiation of appropriate proceedings to secure investments, such as initiating court proceedings to remedy damages, recover receivables, proceedings to register trademarks.