A Study On Legal Issues Of Due Diligence For Corporate Acquisitions

Due diligence for corporate acquisitions has become the basic process of M&A. Due diligence for corporate acquisitions is mainly a creation of legal practice and not that of theory. Although it is not statutory obligations, but why have the parties of the M&A contract original intent to do this time-consuming job? This dissertation starts from the basic concept of due diligence for corporate acquisitions, discusses the director's duty during due diligence for corporate acquisitions, the impacting of due diligence to the parties of the M&A contract, and the due diligence obligation of the intermediaries, and then studies on the legal issue of due diligence from the perspective of the obligation of the parties during due diligence. Based on the above, the paper gives some suggestions about how to perfect the relevant provisions in the Chinese M&A law. Besides preface and conclusion, this dissertation is divided into four chapters as follows:Chapter 1 introduces the meaning, types and the legal status of due diligence, then discusses due diligence for corporate acquisitions, points the significance and the functions of due diligence for corporate acquisitions.Chapter 2 describes that due diligence for corporate acquisitions is the request of director's fiduciary duty. This chapter discusses the relationship between directors and the Company, which is the foundation of the duty of directors, the content of a director's fiduciary duty, and the criterion of identify the obligations of director's due diligence and the responsibilities with breaching of these obligations.In chapter 3, two types of informed obligation born by the parties to the M&A contract by the contract and by statutory are discussed. Due diligence is a active means to remedy the deficiencies of the statutory obligation and identify agreement obligations of the parties to the M&A contract. To both parties to the M&A contract, the concept of subjective default are recognized in law makes them conduct actively due diligence during the process of M&A. Chapter 4 is divided into three subchapters, the foundation of due diligence obligation to intermediaries, the contents of due diligence of intermediary, and the contents of due diligence of intermediary, the liability of intermediaries of breaching the due diligence obligation are discussed.