Mr. Picharn Sukparangsee · technical due diligence Due Diligence . Due Diligence ... of the documents be recorded in a legal due diligence report ? Should any presumption of a true

Legal Due Diligence

presented by

Mr. Picharn Sukparangsee

Due Diligence may be divided into:

• Legal due diligence

• Financial due diligence

• Audit due diligence

• Technical due diligence

• Overlapping between financial due diligence ,

accounting due diligence , legal due diligence and

technical due diligence

Due Diligence

Due Diligence

Legal due diligence or LDD is part of all due diligence.

LDD for M&A and

JV transactions

Documents and information for LDD include

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Corporate matter

• Affidavit

• Memorandum of association

• Articles of association

• List of shareholders

• Minutes of the board of directors meeting

Documents and information for LDD include

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Corporate matter

• Minutes of the general meeting of shareholders

• Share register

• Share certificate book

• Financial statements and their notes

• Employee securities ownership plan

Documents and information for LDD include

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License

• Foreign business license

• Investment promotion certificate

• Factory license

• Building construction permit

• Building use permit

• Work permit

Documents and information for LDD include

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Agreement

• Memorandum of understanding

• Term sheet

• Head of agreement

• Shareholders agreement

• Joint venture agreement

• Sale agreement

• Advisory agreement

• Share sale and purchase agreement

• Asset sale and purchase agreement

• Lease agreement

• Service agreement

• Loan agreement

Documents and information for LDD include

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Agreement

• Syndicated loan agreement

• Security documents

• ISDA Master Agreement

• Underwriting agreement

• Franchise agreement

• Licensing agreement

• Know-how agreement

• Technical assistance agreement

• Debt restructuring agreement

Documents and information for LDD include

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Employment

• Management agreement

• Employment agreement

• Secondment agreement

• Work rules

• Social security fund

• Provident fund

• Worker compensation fund

• ESOP

Documents and information for LDD include

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IP

• Trade marks

• Copyright

• Patent

Documents and information for LDD include

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Insurance

• all risk insurance

• some risk insurance

• re-insurance

• fire , flooding, theft, riot, terrorism, force majeure

Documents and information for LDD include

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Land Documents

• Land title deed, land possession documents, condominium title deeds

• Building without a building construction permit

Documents and information for LDD include

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Environment

• Environmental impact assessment report (“EIA Report”)

• Approval for a project

Documents and information for LDD include

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Governing law

Arbitration

• Arbitration proceedings

• Recognition and enforcement of

an arbitration award

Litigation

• Court proceedings

• Enforcement of a judgment

• Pending or threatened legal disputes

Documents and information for LDD include

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Legal agreements and taxes

• Withholding tax

• Corporate income tax

• Value added tax

• Specific business tax

• Stamp duty

• Related parties agreements

• Transfer pricing issues

• E-commerce transactions

• Digital service tax

Documents and information for LDD include

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Other material documents and information

• Representations and warranties

• Letter of representations

• Management Discussion and Analysis

NAME OR LOGO

Board of Investment (“BOI”)

• Material matters

Frequently asked questions

Red flag issues

Shareholding structure

Share transfer restrictions

Right of first refusal

Tag along provisions

Drag along provisions

Call options and put options

NAME OR LOGO

Board of Investment (“BOI”)

• Material matters

Share buy back provisions

Transfer of shares and liabilities

Transfer of properties and tax liabilities

Change of directors

Change of the management

Conditions of a license

Initial mortgage, and subsequent mortgage

Pledge of shares

NAME OR LOGO

Board of Investment (“BOI”)

• Material matters

Registration of business collateral

Outright assignment and conditional assignment

Land documents illegally issued

Disclosure of information

Connected transactions

Acquisitions and disposition of assets

Reporting requirement

Tender offer requirement

NAME OR LOGO

Board of Investment (“BOI”)

• Material matters

Hidden liabilities

Reserve matters

Personal data protection provisions

Consent and revocation of consent

Change of purchase orders

Change of scope of services

Issues on services and know-how

Franchise rights on exclusive and non-exclusive basis

NAME OR LOGO

Board of Investment (“BOI”)

• Material matters

Actual event of default

Potential event of default

Material adverse change

A force majeure event

Enforcement of agreement

Termination of agreement

NAME OR LOGO

Board of Investment (“BOI”)

• Material matters

Claim for damages

Actual damages

Special damages

Liquidated damages

Punitive damages

Public interest

National interest

Issues

NAME OR LOGO

Issues

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○ Red-flag issues should be pointed out.

○ Solutions to red-flag issues should be provided.

NAME OR LOGO

Issues

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○ Should either all provisions of the documents or only important matters

of the documents be recorded in a legal due diligence report ?

○ Should any presumption of a true and correct copy of documents be

stated in a legal due diligence report ?

NAME OR LOGO

Issues

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○ Should a threshold amount of money of any agreement be set ?

○ Should financial statements for a certain number of years be clearly set

forth ?

○ Can proxy or grant of power be cancelled ?

NAME OR LOGO

Issues

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○ Is an agreement legal , valid and enforceable ?

○ Is it tenable that an agreement is unfair ?

○ Can an agreement be unilateral terminated ?

NAME OR LOGO

Issues

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○ How are actual damages and special damages determined ?

○ Are laws and regulations strictly complied with ?

○ Is any provision of any agreement breached ?

NAME OR LOGO

Issues

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○ Can a defaulting party opt for litigation if it is required to submit a

dispute under an agreement to arbitration ?

○ Will amendment to laws and regulations affect transactions ?

Case study

Chart on sale of assets Chart on LDD and matters

Chart on sale of assets Chart on Group of Companies

Picharn Sukparangsee

(66)2 -252-5895 / (66)81-7353160

Picharn@bgloballaw.com,

www.bgloballaw.com

BANGKOK GLOBAL LAW OFFICES LIMITED540, Unit 1705, 17th Floor, Mercury Tower,Ploenchit Road, Lumpini , Pathumwan , Bangkok 10330 Thailand

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