Legal Due Diligence
help management make better investment decision in Vietnam
Mergers and Acquisitions (M&A) has become popular in
Vietnam as the country develops and more investors are eager to invest and gain
control of the business enough to engage in, decide important business matters
through partial or full ownership of an enterprise. A successful M&A
mean the parties achieve their financial and commercial goals (increasing
capital, raising management capacity, branding, etc) and ensuring safety and
restraint the risk at the lowest level, though legal due diligence undertaken
by law firm in
Vietnam.
The Importance of Legal Due Diligence of Enterprise in
M&A activities
Legal due diligence of
enterprises focuses on full and detailed assessment of legal issues relating to
the legal entity, capital contribution status, shareholder status, legal rights
and obligations. From the investigation information, the parties can anticipate
legal risks, assess opportunities to come up with alternatives. In addition,
legal assessments help parties evaluate the reliability of their counterparts
as well as understand their advantages and constraints for the negotiation
process.
What Legal Due Diligence in M&A Activities Entail?
- Evaluate
the factors related to the legal status and capacity of the target
enterprise: Review the legitimacy of the establishment, operation,
possession of enterprise; ensure that the enterprise is not subject to
procedures for dissolution or bankruptcy and compliance with the law of
the enterprise in the course of operation. The information to be checked
includes: dossiers, certificate of enterprise establishment,
operation licenses, practice certificates, professional liability
insurance, company charter, agreement between the company owner on rights
of shareholders, capital contributors, minutes of meetings,
member/shareholder register, certificate of capital contribution.
- Evaluate
the factors related to the business and financial activities of the target
enterprise: Review the system of customers and partners of the enterprise;
the documents on economic contracts (with customers, suppliers, etc);
dossier of investment, construction, land, project; information on
guarantee, mortgage (if any), debt and credit agreement, M&A,
financial leasing contract, exclusive contract, franchise, etc, in terms of
value, legality, validity, progress to evaluate legal risks in the future.
Review the financial statements on the accuracy of the financial status of
the business.
- Verify
the factors related to labor: Review labor contracts, labor agreements,
internal labor regulations to determine the enterprise’s financial
obligations to employees, compliance Labor law and reception of labor
after the purchase or sale.
- Verify the factors related to intellectual property:
Review intellectual property rights of
enterprises including: trademarks, trade names, industrial designs, layout
designs, business secrets, etc; the property has granted the patent/license.
Review matters of infringement of intellectual property rights of other
organizations, individuals or legal persons in order to anticipate the
risks of being sued or claiming damages.
In addition, in an
M&A deal, the acquirer should ensure that participation in capital
contribution or acquisition of the target enterprise is permitted, the form of
M&A implementation is in accordance with the law and the M&A deal was
approved by the competent authority of each party. After that, the factors
related to M&A transaction procedures and constraints and restrictions of
law (if any) must be evaluated.
Our lawyers in Vietnam
constantly follow up with changes of law to provide the client with update for
better decision making process.
Source: ANTLawyers.vn
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