Due diligence and disclosureScope of due diligence
What is the typical scope of due diligence in your jurisdiction? Do sellers usually provide due diligence reports to prospective buyers? Can buyers usually rely on due diligence reports produced for the seller?
Legal and financial due diligence is usually conducted by the buyer, allowing the buyer to evaluate any contingencies of the seller and evaluate its overall position. The scope of the due diligence proceedings, including whether or not a seller will provide the buyer with a due diligence report or the buyer will conduct due diligence itself, can be decided in the execution of a preliminary agreement. Typically, the buyer will evaluate the target companies financial and legal positions and contingencies. It is always advisable to independently assess due diligence reports received from sellers.Liability for statements
Can a seller be liable for pre-contractual or misleading statements? Can any such liability be excluded by agreement between the parties?
Sellers can be held liable for pre-contractual or misleading statements, but in general it is recommended that the seller’s potential liability must be expressly stated in an agreement between the parties. The expressed liability of the seller can be limited by the contracting parties. For instance, the seller could limit its liability by stating its representations are accurate to the best of its knowledge.Publicly available information
What information is publicly available on private companies and their assets? What searches of such information might a buyer customarily carry out before entering into an agreement?
The National Registry or the notary publics protocol books keep for the public registry the articles of incorporation, all the registered changes to a private company, and the information regarding its proxy holders, board of directors, social domicile, capital, amount of stock, managers, and other officials. In regards to real estate and registered movable assets like vehicles, the information is also publicly available through the National Registry office.Impact of deemed or actual knowledge
What impact might a buyer’s actual or deemed knowledge have on claims it may seek to bring against a seller relating to a transaction?
Knowledge of a particular situation might reduce the possibility of a buyer bringing a successful claim against its seller.