Due Diligence of Company

Due diligence is carried out by the investors to find out the company's regulatory and process compliances on a regular basis. Due diligence is done before any private equity investment, business sales, bank loan funding, etc.
A method in which, legal, financial and compliance aspects of the company are reviewed and written. It examines material facts of a deal or a contract before signing of any legal contract. Both buyers and sellers can make a due diligence on the buyer. This ensures there be no bad surprises once the deal is done.

Documents needed:

Company's charter documents, Attendance Sheets and Meeting Minutes Notices, Attendance Sheets & General Meeting Minutes Statutory Registers Legal Agreements given by the Company RBI Related documents

Assessment of MCA Documents

Much of the company's due diligence begins with the Ministry of Corporate Affairs. The Ministry of Corporate Affairs' website has a company's master data which is made available publicly. The information and documents needed in this step are:

• Information about company
• Incorporation date
• Authorized capital
• Paid capital
• Date of last annual general meeting and last balance sheet done
• Company status
• Information about Directors of the company
• Date of appointment of directors
• Charges recorded
• Details about the company's secured lenders
• Certificate of incorporation
• Memorandum of association
• Articles of association

Assessment of Articles of Association

It is essential to review the company's articles of the association during the process of due diligence to classify different types of equity shares and the respective voting rights.

Assessment of Company's Statutory Registers

As per the Companies Act, 2013, a PLC must have various statutory registers related to sharing transfer, share allotment, meetings, the board of directors, etc. Hence they must be reviewed for validation of information regarding, directorship and holding of shares.

Assessment of Accounts Books and Financial Statements

The financial transaction must be kept in details and should be audited and verified according to the statements submitted by the company. Some of the things need to be verified during the due diligence process are:

• Bank statements
• Assets and liabilities
• Information about cash flow information
• Financial statements about transactions done

Assessment of Taxation Aspects

This is an important aspect to be checked during the due diligence process to ensure that there are no unexpected tax liabilities that the company face in the future. The following aspects must be checked:

• Filed IT return
• Paid income tax
• Liability of income tax calculation by the company
• Filed returns of ESI & PF
• ESI & PF payments and calculation
• Filed returns of GST, service tax & VAT returns
• Payment for GST, service tax &VAT payments
• TDS returns, payment & calculations

Assessment of Taxation Aspects

This is an important aspect to be checked during the due diligence process to ensure that there are no unexpected tax liabilities that the company face in the future. The following aspects must be checked:

• Filed IT return
• Paid income tax
• Liability of income tax calculation by the company
• Filed returns of ESI & PF
• ESI & PF payments and calculation
• Filed returns of GST, service tax & VAT returns
• Payment for GST, service tax &VAT payments
• TDS returns, payment & calculations

Assessment of Legal Aspects

A legal audit must be performed by a legal practitioner to confirm that there is no pending or incomplete legal actions, legal suits by or against the company and liability in each. The following aspects should be checked:

• Legal due diligence for every real estate property of the company.
• No objection to the transfer of company by a secured creditor.
• Verified court documents and court filings(if any)

Assessment of Operational Aspects

The review of operational aspects must include all the site visits and interview of employees. Following aspects must be covered and documented:

• Business model
• Employee count
• Count of customers
• Information about a product, vendor, and machinery
• Utilities

Why choose Venture Support?

• Customer satisfaction
• Transparent policies

With our team of experienced and skilled professionals, our interest is customer oriented, to serve the best in the industry. We keep absolute clarity and the entire process is kept transparent. With our own software and apps, we provide you a hassle free accounting and managing of every business transactions.

Our dedicated team of experts is just a phone call away to assist you answering every query.