Due diligence requirements
What due diligence is necessary for buyers?
As part of the transaction process, due diligence is usually carried out in areas adapted to the nature of the business conducted by the acquired company. Standard due diligence studies include legal examination, tax, financial and accounting examination, environmental research, technical examination, IT security and GDPR compliance audit, and logistic audit. Depending on the specific conditions of the transaction or the specific area of the market in which the entity operates, the scope of each test and the areas of examination may change.
What information is available to buyers?
In private company sale transactions (other than public companies listed on the stock exchange), the scope of information available to buyers varies depending on the type of transaction and the nature of the buyer. The range of information provided as part of an individual sale transaction conducted with an individual interested buyer is different from the case of an organised competitive process. Similarly, the scope of information provided will differ when the potential buyer is a financial investor from when it is an industry investor, which significantly increases the potential risk of unauthorised use. Usually, the information is made available on the basis of the questionnaire prepared by the buyer's advisers and contains all key areas to enable an assessment of the terms of the transaction and its structure on the one hand, and the risks associated with the transaction on the other.
What information can and cannot be disclosed when dealing with a public company?
The scope of information available from public companies listed on the stock exchange is usually much broader than that from private companies. This is due to the principle of transparency and the obligation to inform shareholders about the condition of the company. Transparency is governed by the Act on Public Offering, Conditions Governing the Introduction of Financial Instruments to Organised Trading and Public Companies; pursuant to these provisions, each public company publishes information about the company's financial standing, company condition reports and management announcements.
How is stakebuilding regulated?
The increase of ownership packages in companies is subject to the Code of Commercial Companies, which requires companies to notify subsidiaries of the formation of a dominant relationship with the parent entity. The acquisition of control over a company through the acquisition of a significant block of shares may in some cases fall under the jurisdiction of the Office of Competition and Consumer Protection and the Financial Supervision Committee. Transactions as a result of which the buyer will acquire an equity packet of shares may result in legal obligations such as the obligatory repurchase of shares from minority shareholders.