What Tasks Does the Legal Due Diligence Checklist Include
ITEMS IN GENERAL LEGAL DUE DILIGENCE INCLUDE:
- Copies of agreements or instruments that place restrictions or encumbrances on assets.
- Contracts that restrict the target's right to conduct its business.
- Contracts with obligations such as covenants and indemnification.
- Summary of the target's compliance program and copies of all policies, procedures and other related documentation.
- Confirm that the firm is not restricted from doing business under OFAC regulations or similar.
- Confirm whether the target has any direct or indirect presence and/or other engagements.
- Summary of regulations applicable and/or its business, and anticipated changes
- Copies of any letters with any regulatory agencies or authorities.
- List of states and countries in which the target has operations.
- Good-standing certificates or qualification to do business from state of incorporation and states where qualified.
- Schedule of any significant U.S. import or export restrictions that relate to the target's operations.
ITEMS IN ORGANIZATION/OWNERSHIP DUE DILIGENCE INCLUDE:
- List of current shareholders detailing the amount of shares each owns.
- List of stock transfer records.
- List of stock broker contracts and agreements.
- Evidence that outstanding stock is paid in full.
- Identify issues associated with transfering equity.
ITEMS IN LITIGATION DUE DILIGENCE INCLUDE:
- List of all threatened, pending, current, and closed litigations from the past five years.
- List of arbitrational procedings from the past five years.
- Summaries of current and closed governmental investigations and proceedings on the target, directors, and executives from the past five years.
- Responses from the company regarding audit inquires.
- List of all statutory orders, decrees, and rulings to which the company be subject.
ITEMS IN PRODUCT/SERVICE DUE DILIGENCE INCLUDE:
- Detailed list of all products and services.
- Verify compliance with FDA, CPSC, OSHA, and FLSA regulations for products, services, and operations.
- Copies of all product warranties.
- Summary of all material warranty claims brought.
- Summary of all product recalls.
- Identify potential liabilities associated with products/services.
ITEMS IN CONTACTS/OBLIGATIONS DUE DILIGENCE INCLUDE:
- Copies of service contracts.
- Copies of vendor contacts.
- Copies of customer contracts and obligations.
- Copies of outstanding contracts to purchase machinery or real estate.
- Copies of contracts for construction, architectural or engineering services for any buildings or improvements.
- Copies of operating contracts.
- Copies of employee contracts and retirement agreements.
- Change of control regulations.
- Copies of material contracts that are terminable upon a change of control or other corporate transaction.
- Copies of all joint venture, partnership, and franchise agreements.
- Identify any contracts or provisions that may be out of the ordinary course of business.
ITEMS IN PERMITS/LICENSES DUE DILIGENCE INCLUDE:
- Summary of permits, licenses, and other authorizations including any required export control and pertinent governmental licenses.
- Summary of icense, sublicense, royalty and franchise agreements.
- Schedule of permit and license renewals and associated fees.
- Copies of automobile registrations.
ITEMS IN INTELLECTUAL PROPERTY DUE DILIGENCE INCLUDE:
- List of all patents, trademarks, trade-names, service marks and copyrights held or applied for.
- List of the creator(s) for each IP component.
- List of all patents, trademarks, and copyrights held by an employee, shareholder, director or any other affliated that are used by the target.
- Summary of material trade secrets.
ITEMS IN HR/OPERATIONS DUE DILIGENCE INCLUDE:
- List of all employees including those covered by any disability legislature in the company.
- List of OSHA citations, employee health issues related to the target, and any other adverse environmental or occupational safety or health condition or concerns.
- History of all sexual harassments accusations, charges, and convictions from the past five years.
- Copies of all current employment applications, interview guides, and hiring procedures.
- Verify compliance with equal employment opportunity and anti-discrimination legislature.
- Summaries of disciplinary and termination procedures and all involuntary employee terminations from the past five years.
- History of Unemployment and Worker’s Compensation claims.
- Verify compliance with Fair Labor Standards Act, i.e. minimum wage, child labor, etc. (if U.S. based).
- Ensure employee personnel files and Form I-9s (if it is United States-based company) are in compliance with legal standards.
- Copies of all SBCs for current benefit plans.
- Copies of all union and labor contracts.
- History of labor-related disputes, grievance procedings, and arbitrations.
ITEMS IN ENVIRONMENTAL DUE DILIGENCE INCLUDE:
- Environmental inspection or review of all facilities.
- Copies of all regulatory notices, complaints, and correspondence.
- Past or current litgations and procedings regarding environmental concerns.
- Survey condition of neighboring areas to the target's facilities.
- Describe waste disposal processes.
- Describe the existence, condition, and handling of controlled or hazardous substances such as asbestos, radioactive materials, and pesticies.
- Verify compliance with governmental regulations.