Posted by Bicara Hukum on Kamis, 06 Desember 2018
As nature,
Legal Due Diligence (LDD) known as a legal audit. Audit means to data verification, rechecked, or data examination. In the further, legal audit desires to extend the audit scope, thus, the terms of LDD has been used. “Due” is in accord with right or appropriate, then “diligence” is persevering determination to perform a task. In this point, LDD not only aims to cover data verification, but also the critical examination with continuing efforts to dig in the important information in the light of conformity data. The examination itself should be following through.
Black’s Law Dictionary defines LDD as:
Such a measure of prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent man under the particular circumstances; not measured by any absolute standard, but depending on the relative facts of the special case.
In acquisition, LDD has the main role in connection with, first, the decision whether to buy the target company with the in-depth examination through the relevant tools on LDD. After we assure to buy, second, in how much price we reasonably buy it. In other words, more quality the company belongs, more expensive its price.
Prior to acquisition has been made, we have to consider the existence of the company in the register of Minister of law and Human Rights. Besides, many related requirements and regulations with the specified company’s business activities necessary to comply. For instance, The Law No. 40/2007 concerning Limited Liability Company and The Law No 8/1995 concerning the capital market for the public company.
Furthermore, in connection with licenses and permits, we shall be aware that company comprises into green vile company and brown vile company. The green vile company holds licenses and permits but has not carried out business activity yet. Not same with Green vile company, the vile brown company provides licenses and permits and its activity has been run.
In a targeted company, we shall acknowledge its assets. Gathering all information from the audited financial statement is one method to examine the assets. However, we will not only attain the assets, but also the liabilities, such as either liability rose from a contract (consensual liability) of liability rose from the law (Statutory liability).