Which incorporation documents to submit during due diligence?

Due diligence is a legal and financial evaluation of a business as an object of future investment. So, what are the stages of the process, and which documents are needed for examination?

Basic documentation in the due diligence procedure

Reasonable control over the activities of business entities is an integral element of the process of state regulation of relations in the economic sphere of any country. But today with the help of digital technologies it is much easier to provide control. Every year, developers are improving software technologies, and, according to the assurances of experts, cloud technologies are on the list of trends in the development of information products for business.

Due diligence is a detailed study of the company’s documentation and operations over some time. The company’s due diligence begins with the collection of documents required for analysis – their lists depending on the purposes of due diligence and on what kind it is conducted, the widest possible list of complex due diligence.

The procedure is carried out in the form of a complex procedure, including legal, corporate, tax, and financial analysis. After all the incorporation documents are collected, or at least most of them, their in-depth analysis begins, which reveals all the violations committed by the company over the years, all current and potential lawsuits, debts, problem areas, compliance with the law when buying and selling real estate, tax optimization schemes, etc.

Incorporation documents are documents based on which a company operates. Usually, the articles of association of a company are recognized as constituent documents, but for a full partnership there is no charter and such a document will be the memorandum of association.

The composition of the constituent documents of a legal entity depends on its organizational and legal form, and the current legislation provides for the presence of certain documents as mandatory.

Virtual Data Room to process business documentation

Virtual Data Room is a cloud-based solution, that helps to store large arrays of business documents. And due diligence is not an exception. Various reports can be generated based on the data stored in the system. Working with reports in the tips to setting up a data room is built in two stages: selection of data for the report; viewing and printing the received reporting form.

Data Room software provides the following advantages in the due diligence process:

  • Security measures

Thanks to the Data Room remote destruction, the rights to access encrypted data are carefully controlled.Their main purpose of security settings is to regulate and control the use of data and system resources following established access rights.

  • Centralized database

The advantage lies in the fact that general government classifiers, lists of counterparties, the nomenclature of non-financial assets, expense items, etc. are used. All accounting is standardized and unified, however, flexibility remains in the program, for example, reporting can be generated both separately and consolidated for the entire group of institutions;

  • Data Room index setting

 To make the files quickly accessible, organize the documents using the automatic document index. At this stage, you can also name your documents to simplify the administrative process. Additional functions associated with the systematic structure also offer instructions with specific notices and notifications;

  • Cost-saving

Centralization in this case also implies a decrease in operating costs, since the specialists of the head office set up a high-performance server, and all other workplaces are formed remotely.