Due diligence and disclosure

Scope 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?

In Sudan, purchasers tend to undertake a full due diligence on the target company, where the lawyers examine the operations of the company from a legal standpoint including, inter alia, required licensing, full review of the constitutional documents to assess if there are any restrictions and any third-party consents required pertaining to the material agreements concluded by the target company and an assessment of the employees’ rights and general compliance of the target company with Sudanese laws. In addition to the legal due diligence, a financial due diligence is also exercised simultaneous to the legal one to assess the financial status of the target company.

Vendors’ due diligence is not common in Sudan and purchasers do not tend to rely on such reports unless the transaction documentation provides warranties and limitations covering the same.

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?

Where a misleading statement is made to a public official, a penalty of imprisonment may apply under article 97 of the Criminal Code of 1991, which states: ‘A person who provides a public official with a statement, knowing it is a false statement, intended to mislead that official or to induce him to commit a specific act, shall be punished by imprisonment for a period no longer than one year or by a fine or by both penalties.’ In the event of submitting a false statement to a person (other than a public official), article 138 of the Civil Transaction Act of 1984 shall apply. It states: ‘A person who commits any act that causes damages to third party shall be liable for compensation, even if the person is undistinguished.’ This will be subject to the discretionary power of the competent court. It is our view that such liability cannot be excluded by agreement between the parties since it is related to public order.

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 company’s file in the general commercial register is available, otherwise it would be difficult to collect further information. Any major lawsuit is usually published in the newspapers or news websites, which are usually reviewed by buyers prior to any agreement.

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?

Subject to the provisions of the Sudanese Civil Code and subject to the terms of the share purchase agreement, actual or constructive knowledge could potentially limit the buyer’s recourse in connection with the representation and warranties provided by the seller, subject to the court’s discretion unless the buyer proves that the seller provided assurances for the absence of defects, or intentionally and fraudulently concealed defects.