HowtoWriteaDueDiligenceReport如何写尽职调查报告.docx

HowtoWriteaDueDiligenceReportforInvestmentPurposesTheMostPopularI）ratingModelforMemosandDDReportIntheUnitedStates'legaleducationorpractices,IRACstructureisthemostusedwritingpr<essforeachandeverylegaldocument.Iiisefficient,andveryeasilyIobegrasped.IissueRrulesandcases,backgroundAanalysisC一-conclusionWecancomparethisstructurewithourChinese'sClajiSiCaIwritingmethods:qi（起）,cheng（承），zhuan（传）.andhe（合）.TheInvestmentModelAninternationalinvestorwishestoputsomecapitalmoneyintoadomesticcompany.WCcallitatargetcompany,andafterthetargetcompanycamsenoughprofits,forinstance,thecompanycanmakeanIPOinChinasecuritiesmarket,thenIhCinvestormaywithdrawitinvestment,plusthepremiuminterestsorprofitsfromthecompany,bytransferringthesharesithasinthetargetcompany.1（shouldbenotedthatinthisprocess,theinvestorshalldealwiththeshareholdersofthetargetcompany.AtcurrentChinafinancialmarket,probablyalltheshareholderswishtogotothepublicmarkettoattractmoreinvestment,sodealingwiththeseshareholdersisnotamajorproblem.Themajorproblemishowtoavoidthelegalandthefinancialrisksintheinvcstnwnt.Whatiftheinvestmenthassomelegalobstaclesthatprohibititfromwithdrawal?Thisisthekeyissueand!henoslimportantconcernintheDDRCPor1.DefinitionAduediligencereport,alsocalledDDReport,isawidelyusexilegaldocumentintoday'slegalpractice.Especiallyininternationalinveslnen（activities,DDReportcanhelptheinvestortomaketherightdecisionfbritsinvestmentstrategies.Whati$aDDReport?Wecandefinethelegaldocumentasthekeyandbasicinfo11nationaboutatargetcompany'sfinanceandmanagement.Theinformationcanshowtherisksorthebenefitsfbrtheinvestmerits.BCfbrCtakinganyactions,arationalinvestor,ofcourseincludingalltheexperiencedones,generallywillretainalawfirmoranaccountingfi11nIodothereport.WecancompareaDDReportwithyourpersonaldiary.IwriteallIheacliviiesIdidinonedayintomydiary,andformostoftimes,IonlygiveashortsummaryofIhemostimportantthingsIhadinthisday.Forinstance,IdonotwritewhatIeatinacommondayinnydiary,butIwilldescribeonedishindetailifIattendmyfriend'smarriageceremony,ifthisdishimpressedmesowell.Imeanwhetheritisverydelicious,oritisverybadlytasted.Thereasonissimple,itgivesInesomeunusualexperience,pleasantorunpleasant.ADDRex>rshowsuswhawereadandexaminedinthedocumentscomingfromthetargetcompany.WewriteWhalwesawinthesedocumentsandreportthemourclients,justaswewritewhatweexperienceinonedayibrourdiary.Ofcourse,sincethedocumentsaresobigandwegenerallyhavetomakemostsummariesforourwritings.Occasionally,wejusttranslatesomeofthekeydocumentsfromChineseintoEnglishandputthemintoourreport.Because1amalegalpractitioner.1willexplaintheDDReportfromalegalpointofview.Asaresult,theDDReportformyclientmustshowthen)stimportantinvestmentrisks.StepstoDOthe1)1)ReportGenerally,ifwewishtohaveacompleteDDReport,thefollowingfourstepshavetobefollowed.Andan)derateDDReportusuallywilltakeustwotothreeweekstofinish.SleDOne:CollectAlltheInformationfromtheargetCompanyAtthisstep,wcshallpr<xJccaDocumentationRequest1.istandasktherelevantlegaldocumentsfromthecompany。Igiveyousuchanexampleasanattachmentone.1.etusgothroughthelistveryquickly,1amsurethatafteryouhavefinishedreadingofthislist,youcangetaroughimpressiononatargetcompany'sStnicturc,andmanagementsystem.Step7p:ReviewtheDocumentsandProduceaQuestion1.istAtthisstage,wcshallcarefullyreadwordbyword,numberbynumberdatebydate,figurebyfigure,everyofthedelivereddocumentsfromthecompany,andaskquestionsindetailaboutthelegalityandclearnessforthem.Forexample,ifwcseesomewhereinonedocumentisunclearbecauseoftheprintingprocess,andthenwcshallrequestanotherclearcopyofthisdocument.Theotherexample,ifwcmissonepageofacontract,thenwcshallaskforthemissingonefromthecompany.Anotherexample,ifonecertificateneeds(obeannuallyregistered,andilisnotlc>rthepastyeanIhenweshouldaskwhenthecertificatewillberegisteredorexaminedthisyear.KindlyremindIhecompanytodeliver(hemissingdocumentsinareasonablelime.Thispmcessisverj,time-consuming.Weshallkeepalertoneverysuspiciouspointinthedcumenls.StepThree:OnsiteInterviewWiIhtheOfficersoftheCompanyIfthedocumentsarecompleteandverysound,111an,Iheycananswereveryqueslionorsolvethelegalissuesfortheinveslmenl,thisstepcanbedeleted,orcanbeCondUeledIhrOUghaIelephonecall.Although(hisdoingcansavemuchtimeforus,Ipersonallyandstronglyreconmeuldoingsuchanonsiteinterview.NotOnIylnaywepromoleorjustestablishbeUerconnectionswiththecompanyasafuturePOIElialclientforotherdeals,butwecanpersonallyseethewholeprocessofthep11luctionorthemanagementofthecompany.Andwecangetaroughimpressiononthefixedoroherassetslistedonthedelivereddocuments.Finally,wemayalsoexperiencesomelocalbusinessculture,orjusthaveanewtasteoflocalfoods.StepFour:DraftandPrOdUCBtheDDReportUsuallythefirst(hreestepswilltakeusaboutoneoroneandahalfweektofinish,foracomplexproject,itmaycostan)nth.ormonths.Afterwehavefinishedthepreparationprocess-1callthefirstthreestepstogether-wecanbegintodraftandproducethereport./Mthoughdifferentlawfimshavedifferentformatsfordifferentpfx>jects.thefollowingtableofcontentssummarizesthebasicStmctureoftheDDReportforatypicalinternaiionalinvestment.TabICQfCOntCntSI. INTRODUCTORYREMARKS41 Background42 ScopeofReview43 SourceofInormation4II. EXECUTIVESUMMARY71 Overview72 1.egalForm73 TheIPOPlan74 1.oansandGuarantees85 EnvironmentalCompliance86 Employment97 IntellectualPropertyKights9III. REVIEWANDANA1.YSISIO1 CorporateStatus101.1 1.egalForm101.2 CompanyHistorj'131.3 RegisteredCapitalandShareholdingStnicturc141.4 ArticlesofAssociationandPromotersAgreement151.5 CorporateGovernance152 ShareholdersandAffiliates192.1 Shareholders192.2 TheGroup192.3 OtherShareholders233 MaterialContracts253.1 Overview253.2 SupplierContracts263.3 SalesContracts293.4 ConnectedPartyTransactions323.5 1.oanSContractsandGuarantees333.6 OtherMaterialContracts344 RealProperty344.1 1.andUseRight344.2 Buildings364.3 MortgageStatus385 BusinessAssets385.1 PrOdUCliOnEquipment385.2 Vehicles395.3 OtherFixedAssets396 IntellectualPropertyRights396.1 Trademarks396.2 Technology407 HumanResourcesandEmployment407.1 Employees407.2 1.abourContract417.3 SocialContribution427.4 TradeUnion438 EnvironmentalProtection438.1 PollutantDischargePermit448.2 WasteWaterTreatmentPlan449 1.itigation46JustasIsaidinthebeginningofthislecture,wccandividetheDDReportintofourparts,seethetableofcontents.PartIistheissueandrulepart.PartIIgiveashortversionoftheDDReport,aSUmITKIryOconclusionofallthekeylegalissues.PartIIIistheanalysispart,givingthereportindetail.ProblemsneededtobeNoticedResearchOnIinCor<>n<hsrsourcsPleasebenoted(hatduringthed11ftingPr(KXSs,weshallconducttherelevantlegalresearchon(helegalityofonedocumentorpraciceofthetargetcompany.Takeoneexample,isitlegalthat(hecompanydoesnotnecxlspecialwastewalerPernlilfc>ritsdischargeofthewastewater?ItisIrUCIhaIforajointvenlurecompany,theforeigninvestorshallalleastownsa25%ofthesharesof(hecompany?OPinionv.FaSAvoidtogiveyourpersonalopinionunlessyouhavetodosointheDDReport,thisWcUIdhelpyounottogeltroubleonprofessionalissues.Tryyourbestlowritetherep<>rlasafaci-findingprocess.Don,tnotusesuchtermsas*,Wethink.Iopine,or1amofopinionWeareadvisedIhalIfsomethingmissedinthedocuments,anditisimportantforthereport,forinstance,theremaybeSolneconfidentialinformationthatthecompanydoesnotwishtodisclosetoyou.thenyouuse"weareadvisedbyMr"orjustsaythatthisisaprivateorconfidentialinlbrnaion.ChanSandTableSChartsandtablescandescribethedocumentsVerydirectlyandfiguratively,somakesurethatyouusethemaspossibleasyoucan.Especiallyforthesamekindofinformation,forexample,forallthesalescontracts,orforallfixedassets,theuseoftablescansaveyoualotofIilne.KeYTerms'SummarVForimportantcontracts,especiallysalesorpurchasecontracts,andloanagreement,certainlyincludingtheAOAarticlesofincorporation,weneedtosummarizethekeytermsoftheminthereport.Onemaywonderwhichtermsarethekeyterms.Weneedtoreadthesedocumentsver),carefully,theoreticallytosay.allthetermsthatmaybringthelegalrisktotheinvestoraresuchkeyterms.Igiveyouoneexamplehere.SUmmarVOfanAQAb11cfsummaryofthemajorclausesoftheAOAanditsamendmentsisasfollows:1. Qnurk>ulTEI)-hasanindefiniteoera(nalterm.2. EstablishmentM<)dc-(wasestablishedbywayofpromotion.hcpromotersSUbMrnbCtoallofthesharesthatshouldbeissuedbythecompany.Uponapprovaloftherelevantgovernmentalau(hori(ies1Ihecompanymaybechanged(obeacompanyestablishedbywayofstockfloatation.3. ShdKSMtheCompany-Allsharestobeissuedbyshallberegisteredcommonshares.ThCsharesofthesameclassshallhavethesamerightsandbenefits.4. Sh-reh<M加MeelinR-Tbeshareholders'meetingishehighestauthorityof(hecompany.Theshareholders,nwe(ingsincluckannualmeetingsandinterimmeetings.Theannualmeetingsshallbeconvenedonceayearandshallbeconvenedwithin6monthsafterthelastfiscalyear.Theshareholders'meetingshallexercisethefollowingfunctions:(1) Determining(hecompany,sUPenniOnalguidelinesandinvestmentkns;(2) Electingandchangingthedirectorsanddridingthemattersrelatingtotheirremuneration：(3) ElectingandchangingthesupervisorsassumedbyrepresentativesoftheshareholdersanddecidingIbemattersrelating(otheirremuneration;(4) DeliberatingandapprovingreportsOflheboaxiofdirectors;(5) Deliberatingand叩PrUVingreportsoftheboardofsupervisors;(6) Deliberatingandapprovingannualfinancialbudgetplansandfinalaccountplansofthecompany;(7) Deliberatingandapproving(hecompany'sprofitdistributionplansandlossrecoveryplans;(8) Makingresolutionsabout(heincreaseornxluclionof(hecompanyregisteredCdPiiaI;(9) Makingrcso!utu>nsabouttheissuanceofcorporatebonds：(10) Adoptingresolutionsaboutthemerger,split-up.dissolutionandliquidationofthecompany;(11) Amendingthearticlesofassociationofthecompany:(12) Othermattersthatshouldbedecidedbytheshareholders,meetingpursuanttolawsandregulations.BuardCfDireCIOrSTheComPanyqhaHsetuptheboardofdirec(oni.whichshallberesponsiblefortheshareholders'meeting.hcboardofdirectorsshallbecomposedof9directors,includingachaimunandavice-chairman.Theinitialboardcompositionshallberecommendedbythepromoters.Tbecandidatesfor(helaterb<xrdshallbenominatedbythepreviousboardandelecedanddismissedbytheshareholders,meeting.Thechaimwnandvice-chairnumskillbeetecedaldismissedbyamajorityofalltheboardmembers.Thechairmanoftheboardshallbethelegalrepresentativeofthecompany.Thedirectorsskillserveatermof3yearsandmaybere-appointed.Theboardofdirectorsshallexercisehefollowingfuncion:(1) Conveningtheshareholders,meetingsandreportingthereto;(2) Implementingresolutionsoftheshareholders'meetings;(3) Determiningtheoperationalplansandinvestmenplansof(hecompany;(4) Workingoutthecompany'sannualfinancialbudgetplansandfinalaccountplans;(5) Workingoutthecompany,sprofitdistributionplansandlossrecoveryplans;(6) Workingoutthecompanysplansontheincreaseorreductionofregisteredcapitalandtheissuanceoicorporatebondsandothersecurities,aswellaslistingplans：(7) Workingoutthecompany'splansonsignificantpurchase,purchaseofthecompany'ssharesormerger,splibupOrdiSSoluIiOrK(8) Decidingontheestablishmentofthecompany'sinternalmanagementdepartments;(9) Employingordismissingthecompanysgeneralmanager,and.accordingtothenominationofthegeneralmanger,employingCHrdismissingthecompany,sdeputygeneralmanagers),nancialcontrollerandchiefaccountantanddecidingon(heirrenuneralionUndpunishment;(10) Employingordismissingthesecretaryoftheboardofdirectorsofthecompany;(11) Workingoutthecompany'sbasicmanagementsystem:(12) Workingoutamendntstothearticlesofassociationofthecompany;(13) 1.isiening(o,orkrepo11of(hegeneralmanagerofthecompanyandsupervisehiswork:(14) AppointingdirectorsandotherseniormanagementpersonnelwhichshallbedispatchedbythecompanytoCntCrPrisCStowhichthecompanyisthecontrollingshareholderorashareholder,ortothebranchesofthecompany:(15) Accoixiingtotheneedsofthecompany,(heboardofdirectorsmayauthixizhechairmanofIheboardI。exercisePanOflhepowersoftheboardofdirectorsduringitscloseperiod;(16) Otherfunctionsasspecifiedinthearticlesofassociatx.lawsandregulationsandasauthorizedbytheshareholders,meeting.nelM御UgeIThegeneml11umgerShaHberesponisibleforIbedailyOPCnIIioflof(hecompanyandberesponsiblefor(heboardofdirectors.TbegeneralmanagershallSerVCatermof3yearsandmayberc-appuntcd.Thegeneralmanagershallhavethetbllowingscopeofauthorities:(1) Takingchargeofhemanagememandoperationsof(hecompany,organizingIheimplementationoftheresolutionsoftheboardofdirectors:(2) Organizingtheexecutionofthecompany'sannualoperationalplansandinvestmentplans;(3) DraiUngplansontheestablishmentofthecompany'sinternalmanagementdepartments;(4) Drafting(hecompany'sbasicmanagementsystem;(5) Formulatingthecompany'sconcretebylaws;(6) Proposingtohireordismissthecompany,svicemanagerandpersoninchargeoffinance:(7) DratUngtherulesofthecompanyonemploymentsalaries,benefits,rewardsandpunishments,anddecidingon(heemploymentanddismissalofemployeesofhecompany;(8) RecommendingloIheshareholders,meetingandIheboardofdirecto¼theprofessionaladvisorstobeengagedbythecompany:(9) Proposingtoconvenetheinterimmeetingsoftheboardofdirectors：(10) Otherpowersauthorizedbytheboardofdirectors.7. BlXUp&fSiipervisoniTheCOmPimyshallseiupab<xtrdofNUPerVM电whichShaHbecomposedof(5) supen,is0rs.2supervisorsshallberepresentativesoftheemployeesofthecompany,11cJiUPCrviSorSshallserveatermof3yearsandmaybere-appointed.TheboardofSuPCrViSOrSshallexercisethefollowingfunctions:(6) Tocheckthefinancialaffairsofthecompany:(7) Tosupervisetheactsofthedirectors,managersandotherseniormanagementpersonnelthatarcinviolationofthelaws,regulationsorthearticlesofassociationwhenexecutingtheirduly-relatedacts;(8) ,demandanydirector,managerorotherseniormanagementPenionnCltomakeCornXUOnSifhisacthasinjuredtheinterestsofthecompany,andifnecessary,toreportsuchacttotheSharcholderstnwc(ingor(herelevantgovernmentalauthorityincharge;(9) Toproposetocallinterimshareholden>'meetings;(10) Topresentonthemeetingsoftheboardofdirectors:(11) Otherdutiesassetoutinthearticlesofassociationorauthorizedbytheshareholders'meeting.8. P>fiDi?UribUlien-Afterpaymentofincomelax.the>(sOflhecompanyShRlbediM11bu(edinthefollowingsequence:(1) Tocoverloosescarriedoverfrompreviousyears;(2) Toallocate136asstatutoryCommonreserve;(3) Toallocate5-10%asSlalUIOlywelfarereserve;(4) Toalloc址Cdiscretionarywelfarereserveaccordingtotheresolutionsoftheshareholders'meeting:(5) Todistributecotheshareholders1.iSlAIlDeliveredDoCuInCnlSBesureIomakesuchalistasanimportantattachment,andlettheinvestorknowthatwhichkindofd(umentsyouhavereadandexaminedforIhCreport,andtheymayrequestsomeof(hedocu11>entsfromyouifnecessary.IalsobringtoyouaIonnalDDReport,eachofyoucantakeal()katit,andthengiveitbacktoIneafterclas.ATTACHMENTONEAShortened1)1)ReportforReferenceSTRICT1.YPRlVATE&CONFIDENTIA1.date1.egalDueDiligenceReportCo.,1.td.GloSSarVOfTennSandAbbreViationSIermDefinitio