Snapshots Legal Due Diligence

One of the significant part of a business ventures who desires to enter into a partnership or equity sharing in a company, is that such business investor must firstly conduct legal due diligence upon the company who they intend to participate in equity.For instance if a company is interested to  acquire shares in a Company such business investor needs to be certain that the company they are intending to acquire or participate in equity sharing is  a legitimate company who has the proper licenses to conduct and operate its business in Indonesia. 

The company must also be a company who is being approved by the relevant authority in establishing its company. For instance if the company is a Limited Liability Company or PT is there an approval from the Department of Law and Human Rights ?  For such purposes the business investor must hire a Business Lawyer to check all the proper approvals and licenses that are required by the Indonesian Laws and regulations regulating the establishment of such PT Limited Liability Company.   The Business Lawyer shall conduct the Legal Due Diligence to check all the legal aspects relating to the Company that the business investor desires to acquire or participate equity in such Company.

The land where the Company is located should also be checked whether such land is being owned or leased by the Company and if yes for how long is such Land Title right to use or lease is available. Furthermore in conducting the Legal Due Diligence the Business Lawyer must also assist the Business Investor to check upon the Corporation Documents of such Company, including checking who are the shareholders of such Company, the major shareholder, the Board Directors as well as the member of the Board of Commissioner.  

Besides the corporation documents, the Business Lawyer must also check whether there are loans and collateral  made by the Company, and how long is the Loan Agreements Period, as well as the Outstanding Loans and what kind of restrictions are there imposed by the Bankers against the Company in the capacity as the Debtor. The numbers of Manpower including the Employment Agreements and the Collective Labor Agreement ( CLA) are also an important element that have to be checked by the Business Laywer for the interest of the Business Investors who desires to acquire some shares of the Company running such business operations.

In addtition to the above the Legal Due Diligence must also cover whether there is a potential material litigation case or arbitration, commercial court case, employment case pending during the period such Business Investor desires to participate as Equity Sharing, which might interrupt or disturb the business operations and companies assets of the Company.

Well, those are some of the elements which may be looked upon by the Business Investors who desires to acquire some shares of a company which shall be conducted by the Business Lawyer who shall be enggaged by the Business Investors in pursuing the above business desires through conducting Legal Due Diligence.