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.
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.
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.
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.
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.
Miscellaneous:
Note the governing law of the agreement.
Check for any other relevant provisions, such as dispute resolution mechanisms, confidentiality clauses, or termination clauses.
Effective Date and Expiration:
Verify the effective date of the agreement.
Check if the agreement has an expiration date or a term.
Confirm that the agreement is currently in force and legally binding.
Amendments or Modifications:
Identify if the agreement has been amended or modified since its execution.
Review any amendments or modifications to understand their impact.
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.
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.
