THE COST AND REQUIREMENTS FOR FILING FOR A PATENT NIGERIA
FILING FOR A PATENT IN NIGERIA
ONLINE LEGAL SERVICES IN NIGERIA
ONLINE LEGAL SERVICES IN NIGERIA| FIND A LAWYER IN NIGERIA
Show all

LEGAL DUE DILIGENCE IN NIGERIA

LEGAL DUE DILIGENCE IN NIGERIA

DUE DILIGENCE IN NIGERIA

Due Diligence is the level of care or judgment put into a particular circumstance. Legal due diligence in Nigeria is more of a process that involves collecting, understanding and assessing all legal risks, carried out on a target company.

Legal due diligence is necessary when conducting a business transaction, investments, or purchase of landed or commercial properties.  This can be done by proper review, investigation and carrying out a search on places, documents and interviewing employees and to ensure that all the liabilities related to the subject matter are discovered before completion and the subject is beneficial.

Legal Due Diligence in Corporate Matters

Corporate legal refers to the process of investigating companies in advance of joint partnership, sales, mergers and acquisitions by gaining an understanding of the Company. It involves a lot of obligations such as investigating the debs, liabilities and assets of the company; investigating the tax returns and liabilities of the company; investigating and evaluating any pending lawsuit or potential lawsuit against the company among others.

Legal due diligence may also entail investigating the corporate legal status of a targeted company with the Nigerian Corporate Affairs Commission (CAC). In this regard, a manual search, which will reveal the due incorporation of the company, names of directors, names of shareholders and whether any charges are registered on the company will be conducted on the targeted company at the CAC.

Generally, the main purpose of due diligence is to carry out a full assessment of all possible financial and legal risk in relation to assets, company’s corporate status, intellectual property, contracts, land transactions and company’s employment in other to ensure that any investment or purchase is beneficial to the investor.

Benefits of conducting legal due diligence

It is important for investors to conduct legal due diligence on a Nigerian company before involving in any mergers, acquisitions, takeovers or other transactions with any company. The benefits of conducting due diligence on the company includes but limited to the followings:

  • It can help assessing the risk, providing solutions to minimize the risk and potential loss to investors, creditors and shareholders.
  • Conducting legal due diligence can aid in monitoring of a target company, its financial position, corporate status, leases, warranties, contracts, compensations, tax liabilities, long term agreements and ascertain its debts.
  • Due diligence helps in preventing the investors from incurring liabilities and checking the prospect of solvency.
  • It also beneficial in ensuring that complex corporate legal documentation is properly done during the implementation of the transaction structure.
  • Legal due diligence can be used to learn about a target company for the purpose of becoming acquainted to the company for ease of effective communication and understanding.
  • Information obtained in the course of due diligence helps the interested party to a merger fully understands the business, structure and liabilities of a target company, which can help in negotiation.
  • Conducting legal due diligence enables both the investor’s lawyer and the target company’s lawyer to render accurate legal opinions for the merger or acquisition transaction.
  • It helps in prevention of corruption and illegal transactions.

If a company is involved in a significant transaction, such as business combinations, securing any credit facility or public offering of shares, then due diligence is significant to such transaction.

Steps of Corporate Due Diligence

Legal Due Diligence involves but limited to the following steps:

  • Reviewing documents of a target company
  • Carrying out interviews of individuals with knowledge of the company.
  • Carrying out necessary searches at appropriate places
  • Direct visitation
  • Scrutinizing public records of the targeted entity
  • Conducting media and internet search on the targeted entity
  • Evaluating any ongoing lawsuit against the company e.t.c.

Legal due diligence is necessary before corporate transactions with a third party. The idea behind the investigation carried out in the corporate field especially in matters relating to contracts, mergers and acquisition in other to understand if there will be any future legal problems as a result of such transaction. Due diligence is very necessary for a corporate- commercial related fields, as it helps to identify various obstacles, risk and potential solutions.

Finally, it is important to understand that a conventional due diligence involves 3 main levels that cut deeper into the investigation of the targeted entities as it progresses. While level may involve merely conducting a search at necessary places in respect of the targeted company or entity; level 2 involves scrutinizing corporate entity through global and local media; and level 3 involves direct investigation, scrutinizing public records or data coupled together with physical visitation of any necessary and required places.

Written by Corporate & Commercial Law Department at Resolution Law Firm. The Firm has engaged in carrying out due diligence on behalf of various local and foreign companies seeking to do business in Nigeria

Comments are closed.

Chinese (Simplified)EnglishFrenchSpanish
Skip to toolbar