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Diligence

How to do Due Diligence, properly.

Courtesy of Glovers, “a leading firm of solicitors based in Central London”, here is Due Diligence for Dummies. This is the rigmarole that Thanet District Council (and indeed, any public body) should go through before entering into a commercial contractual relationship with any organisation.

Specimen Due Diligence Checklist

1. CORPORATE DATA AND GROUP STRUCTURE

  • Copies of all board minutes and shareholders resolutions
  • Memorandum and Articles of Association
  • Annual Returns
  • Shareholder or director loans to the Company
  • Details of subsidiary companies
  • Details of branches, agencies or places of business
  • Copies of statutory books
  • Details of any insolvency-related events (e.g. an outstanding winding up petition)

2. FINANCE

  • Loan agreements with third parties
  • Intra-group loans
  • Audited Accounts for the previous 5 years
  • Material changes in accounting policy
  • Material changes in the business or prospects (e.g. an unusual change in stock levels or a material reduction in orders from a major customer)
  • Latest Management Accounts
  • Details of any foreign exchange exposure
  • Aged debtors list

3. CORPORATE AND COMMERCIAL AGREEMENTS

  • Details of all material contracts
  • Standard terms and conditions of business
  • Details of all credit arrangements with customers
  • Details of any material negotiations, quotations or tenders currently in progress

4. BUSINESS ASSETS

  • Asset Register
  • Details of current stock
  • Details of leased assets

5. REAL PROPERTY

  • Details of all real property owned or leased
  • Details of any mortgages or other charges over property

6. EMPLOYEES AND WORKERS

  • Details of all employees, including age, date of commencement, salary and other benefits
  • Directors’ Service Agreements
  • Employee handbook and/or policies
  • Employee share schemes
  • Health and safety at work policy
  • Bribery Act Policy
  • Details of any ongoing, pending or potential claims by current or former employees
  • Details of any pension scheme operated

7. INTELLECTUAL PROPERTY

  • Details of all trade marks (already obtained) and any other intellectual property owned or created
  • Licences granted to third parties in relation intellectual property
  • Licensed rights from third parties

8. COMPUTER SYSTEMS

  • Details of all hardware and software used by the Company
  • Copies of all licences for the use of software
  • Copies of maintenance agreements

9. LITIGATION

  • Ongoing or potential litigation
  • Existing or pending judgements against the Company
  • Details of any investigation into or proceedings against the Company by any governmental, administrative or regulatory body

10. INSURANCE

  • Copies of all insurance policies
  • Details of actual or potential insurance claims by the Company

11. CONSENTS

  • Details of any consents, licences, approvals or registrations required to carry on the business
  • Details of any change of control clauses in relation to such licences, approvals or registrations

12. TAX

  • Copies of tax computations for the previous 6 years
  • Details of any PAYE or VAT inspections carried out in relation to the Company
  • Copies of all material correspondence with HM Revenue & Customs

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One comment

  1. Dennis Franklin

    One criteria for a CPO is that there must be a "Compelling Public Interest" this can be challenged in court, as public interest must be "reasonable", which is a minefield! Anyway, my guess is TDC are going for a CPO because its politically expedient, that is, they have to be seen to be doing something as we are in an election year! The problem is, they just might find they have become self defeating if they obtain a CPO by default, and have a bunch of American cowboys as partners!What I am trying to find out is, if TDC do manage to obtain a CPO,worth millions of pounds, who repays the money? Is it the Council Tax payers of Thanet, and if so how do we repay it, will it be loaded onto our Council Tax?