Information required for Preliminary Due Diligence

S.No Information Required
1 Global Organization Holding Structure (Holding company, subsidiaries) and their shareholding pattern
2 Board of Directors (BODs) and their Credentials
3 Civil and Criminal cases against Shareholders and Directors
4 Credit Rating(s) of Organization (across rating agencies)
5 Credit Score(s) of Promoting Shareholders
6 Political connections of BODs and Shareholders
7 Amount of Funds to be Raised
8 Instruments of raising Funds (if there is a point of view on this)
9 Application of Funds to be Raised (How you intend to use the funds to be raised)
10 Corporate Presentation
11 Business Plan / Expansion Plan / Project Report (if available)
12 Unique Selling Proposition (USP) i.e. Differentiators
13 Is a Virtual Data Room (VDR) already maintained?
14 Last 3 Financial Years (as available)

  • Audited Cash Flow Statements
  • Audited Profit and Loss Accounts
  • Audited Balance Sheets
15 Current Financial Year

  • Provisional Cash Flow Statements
  • Provisional Profit and Loss Accounts
  • Provisional Balance Sheets
16 Next 3 Financial Years (as available)

  • Projected Cash Flow Statements
  • Projected Profit and Loss Accounts
  • Projected Balance Sheets
17 Are promoters open for arranging the following for security:

  • Personal Guarantee
  • Collateral security
  • Hypothecating company shares
  • Increasing Equity investment
  • Debt contribution
  • Shifting the corporate headquarters to a different country
18 Key Organizational risks, mitigation and contingency plans

Questions to answered for Preliminary Due Diligence

Regarding Bank Transactions

  • What financing facilities have been sanctioned from banks, from when, and in which regions? What is the current outstanding?
  • What securities have been hypothecated to the banks for providing these facilities?
  • In the last 36 months, have there been any defaults in the repayment of financing facilities obtained? Please provide details of number of instalments overdue
    • Have there been any rescheduling of financing facilities sanctioned
  • In the last 36 months, has there been any debt restructuring done?
  • Is the organization classified as a Non-Performing Asset (NPA)? If yes, what is the status (Possession Notice, One-time Settlement (OTS), Appeal in Debt Recovery Tribunal / NCLT, Auction of Company)? Please provide details

Secretarial Assessment

  • Has a secretarial audit been conducted in the last 36 months? If yes, please share details
  • What laws are specifically applicable for your organization?
  • What is your compliance against these applicable laws?
  • Have you raised any deposits from public? If yes, please provide details

Statutory Assessment

  • Has there been a change in the accounting policies followed by the company in the last 36 months? If yes, what is effect of the same on the financial statements?
  • Which accounting standards are applicable? (IND-AS / GAAP)
  • What are the related party transactions in the last 36 months?
  • What inter-corporate deposits / loans have been given? Have any loans been given to key-managerial persons?

Regarding Income Tax (including Transfer Pricing), Goods and Service Tax (GST), VAT

  • In the last 12 months, did you receive any notices from any of the above authorities?
  • In the last 12 months, have there been any penalties levied on the late / non-payment of any kind of taxes?
  • In the last 12 months, have there been any interest paid levied on the late / non-payment of any kind of taxes?
  • What is the outstanding tax to be paid as on today, and this is related to which month?
  • Are there any pending cases with any taxation authorities?

Regarding Labour Department, Employee State Insurance (ESI), Provident Fund (PF), Professional Tax, Gratuity, Bonus and Leave Wages

  • In the last 12 months, did you receive any notices from any of the above authorities?
  • In the last 12 months, have there been any penalties levied on the above items?
  • In the last 12 months, have there been any interest paid levied on the late / non-payment of any of the above?
  • What is the outstanding tax, ESI, PF to be paid as on today, and this is related to which month?
  • Are there any pending cases with any of the above authorities?

Regarding Reserve Bank of India (RBI), Foreign Exchange Management Act (FEMA), Registrar of Companies (at a central level), SEBI and Shops and Establishments Act

  • In the last 12 months, did you receive any notices from any of the above authorities?
  • In the last 12 months, have there been any penalties levied by any of the above authorities?
  • Are there any pending cases by any of the above authorities on:
    • The company
    • Any of the Board of Directors
    • Any of the Shareholders

Pollution Board

  • In the last 12 months, did you receive any notices from any of the above authorities?
  • In the last 12 months, have there been any penalties levied on the above items?
  • Are there any pending cases with any of the above authorities?

Fire Department

  • In the last 12 months, did you receive any notices from any of the above authorities?
  • In the last 12 months, have there been any penalties levied on the above items?
  • Are there any pending cases with any of the above authorities?

Insurance and Claims

  • What Insurances have been taken by the company thus far?
  • In the last 12 months, how many insurance claims have been raised and for what amount?

Legal litigations and Jurisdictions

  • How many legal mediations, arbitrations and litigations are outstanding and what is the status?
  • Where are these legal mediations, arbitrations and litigations being pursued?

Contingent Liabilities

  • Have you made any provisions for Contingent Liabilities?

Other

  • Have any other notices of non-compliance been received from any other regulatory agencies in the last 12 months? If yes, what is their status as on date?

Forensic disclosures; are there any:

  • Inflation of revenues
  • Potential diversion of funds
    • As consultancy and agency fee
  • Noncore investments
  • Existence of accommodation transactions
  • Non-existent vendors/customers
  • Issues of conflict of interest
  • Anomalies in related party transactions
    • Focus on procurement process
  • Undisclosed related parties
  • Revenue streams and supplies that may be predicated on bribery
  • Bribes paid or received
    • Including corruption charges and cases
  • Anti corruption compliance programs, including areas such as culture, policies, training, implementation and compliance
  • Financial statement irregularities
  • Inter-company trades, loans, receivables, Transfer Pricing
  • Sexual-Harassment and Discrimination Cases
  • Tracing shareholder acquisitions to the beneficiary, source of funds and accounting treatment
  • Fraud cases identified in the organization in the last 12 months
  • Restrictions on trade and export
  • Non-compete clauses signed with other parties
  • Exclusivity clauses signed with other parties
  • Liability, Limitation of Liability, Guarantee, Warrantee clauses signed with other parties
  • Personal travel, gift and entertainment expenses for Directors / Shareholders
  • Cash Transactions for personal use
  • Political and Charitable donations
  • Transactions that may give rise to potential exposure to criminal persecution, regulatory fines and civil litigations
  • Physically non-existent employees
  • Obtaining, analysing and assessing findings of the audit committee investigations
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