Legal Audit

Key Information

The scope determines the findings

Due diligence can cover different areas, so first establish its purpose. A buyer needs asset rights, liabilities and corporate decisions reviewed; existing management may also need internal processes and document handling assessed. Not every instruction covers the company’s entire history.

Legal due diligence assesses legal aspects from available material. It does not guarantee that no hidden circumstances exist or replace an accounting audit or valuation. Findings must distinguish facts, risks, assumptions and questions lacking sufficient information.

Corporate documents and authority

We examine constitutional documents, ownership, management, company resolutions and relevant authority. We check consistency with actual working arrangements. For a proposed transaction, establish who may decide, sign the contract and take the required corporate steps.

Where needed, we analyse acquisitions of businesses, company interests or securities, reorganisations and hostile takeover risks. Capital markets, competition and anti-money laundering requirements are assessed for the transaction. A constitutional document review does not cover every specialist regulatory issue in full.

Contracts, permits and document handling

The agreed scope may include commercial contracts, licences, permits, employment papers and internal procedures. We check not just whether documents exist but whether they reflect actual operations. Contracts are reviewed for authority, material terms, performance and potential grounds for dispute or challenge.

Findings may lead to recommendations on documents, management and legal work. Assessing a legal department requires defined criteria, period and material. An audit should not simply conclude that work is ‘correct’ without explaining the processes reviewed and shortcomings found.

Assets, liabilities and litigation

For assets, we examine rights, restrictions and contracts. Receivables and payables are compared with supporting records, considering disputes and recoverability. Accounting treatment of bad debts and financial value require appropriate rules and may fall outside a purely legal opinion.

We review dispute papers, demands and possible claims against the company. Administrative or criminal liability risks arising from employees’ conduct may also be assessed. A risk finding does not replace a competent authority’s decision or assert that a person’s guilt has been established.

Funding, insurance and tax risks

The legal review considers funding sources, contractual terms, security and insurance papers. Financial information helps explain transaction structures, but verifying accounting figures requires separate work and an appropriate provider.

For business tax matters we identify transactions, documents and the period. Reviewing potential liabilities does not automatically include recalculating all returns. For an international structure, countries and local advice availability are established before the scope is finalised.

Checks before investment or acquisition

For an investment project compare the asset’s stated characteristics with evidenced rights and restrictions. Risks may affect contract terms, approvals or the sequence of steps. Due diligence itself guarantees neither profitability nor funding.

A review may be needed for a business sale or purchase, joint venture, bank application, investor funding or access to capital markets. Bank or investor requirements are clarified separately. The report is not automatic approval of the transaction by those institutions.

The report and subsequent remedial work

The output may list documents reviewed, issues, their potential effects and recommended steps. Distinguish an established defect from a risk dependent on further facts. For significant gaps, identify the material or answers still needed.

If only an initial counterparty check is needed, it can be agreed as a narrower task. Corrections, negotiations and representation after due diligence are arranged separately. A recommendation does not mean the change has been made or the risk removed.

Preparing documents and access

Describe the review’s purpose, company or asset, countries and period. Prepare a list of available corporate, contractual, permit, employment and dispute papers. Before transferring the entire set, we identify required categories and responsible people who can explain the actual transactions.

If acting for another buyer or investor, agree authority and limits on information use. Confidential papers are supplied through the agreed channel. Identify missing material explicitly: an oral assurance does not make an unknown fact verified.

Organising the review

We record the subject, scope, sources and output, and agree fees and third-party costs. An initial review identifies clarifications and gaps. Other providers for technical, valuation or foreign matters are confirmed separately.

The report reflects information examined and defined limits. A changed transaction structure or new material may require an update. Discovery of every possible circumstance cannot be guaranteed regardless of information access and the agreed review scope.