M&A Due Diligence: Shareholders' Deed Review Checklist for Target Companies
Conducting due diligence on a target company's shareholders' deed? Our comprehensive checklist streamlines your review process for M&A transactions. Learn how to assess key provisions, including share transfer restrictions, voting rights, board composition, and exit mechanisms. Uncover potential deal obstacles and opportunities that impact acquisition strategy. Essential resource for M&A lawyers, investment bankers, and corporate development teams evaluating target companies and structuring successful acquisitions.
1. Parties:
- Identify all the shareholders listed as parties to the agreement.
- Determine if the buyer or any of its affiliates is already a party to the agreement.
2. Governance and Board Representation:
- Note the shareholders who have the right to appoint directors to the board.
- Check the number of directors each shareholder can appoint.
- Assess if the buyer will have adequate representation on the board after the acquisition.
4. Share Transfer Restrictions:
- Carefully review the restrictions on transferring, disposing, or dealing with shares in the company.
- Identify if the proposed acquisition will trigger any of these restrictions.
- Understand the exceptions to the restrictions, if any.
- Evaluate the impact of these restrictions on the buyer's ability to acquire the desired stake.
5. Decision-making:
- Review the provisions related to decision-making processes within the company.
- Determine if certain decisions require unanimous shareholder approval or special majorities.
- Assess if the buyer will have sufficient voting rights or control to make critical decisions after the acquisition.
6. Miscellaneous:
- Note the governing law of the agreement.
- Check for any other relevant provisions, such as dispute resolution mechanisms, confidentiality clauses, or termination clauses.
7. Effective Date and Expiration:
- Verify the effective date of the agreement.i>
- Check if the agreement has an expiration date or a term.
- Confirm that the agreement is currently in force and legally binding.
8. Amendments or Modifications:
- Identify if the agreement has been amended or modified since its execution.
- Review any amendments or modifications to understand their impact.
9. Consistency with Other Documents:
- Cross-check the information and provisions in the Shareholders' Deed with other relevant documents, such as the company's articles of association or bylaws.
- Ensure consistency and identify any potential conflicts or discrepancies.
10. Impact on the Proposed Acquisition:
- Assess the overall impact of the Shareholders' Deed on the proposed acquisition.
- Identify any potential roadblocks, risks, or issues that may need to be addressed or negotiated.
- Determine if any provisions need to be amended or renegotiated to facilitate the acquisition.
Remember, this checklist is a starting point. During the actual review process, you may need to adapt or expand the checklist to address any additional considerations or specific requirements of the proposed acquisition.