Due Diligence in Guernsey Island

Sometimes it is much easier to buy a ready-made business abroad than to register a new company and develop from scratch. An established business has advantages, which, under a certain set of circumstances, can also become disadvantages. Buying a ready-made business, you get not only a legal entity with a package of documents, but also property, premises (or the right to lease for it), communications with contractors, customers.

Along with all this, there is a risk to buy his debts, problems, and losses, which the owner will do his best to hide, demonstrating the success of his company. No one admits that he is selling the business because of problems; the seller will most likely refer to a move or a desire to try himself in another business. How not to buy a cat in a poke?

For this, a party wishing to acquire a company or company assets abroad is simply obliged to conduct a comprehensive due diligence examination of the company before signing any agreements. Conducting a comprehensive legal review of a foreign company will remove potential risks and issues that may affect the transaction.

In this article, we will analyze the rules for conducting due diligence on Guernsey regarding potential transactions that may be entered into between companies.

Due diligence is a comprehensive analysis conducted by legal and/or financial consultants with respect to the target company. The procedure is carried out in order to avoid misunderstanding and eliminate risks at an early stage of the process of buying a foreign company or investing. Even before the conclusion of the purchase and sale transaction of a foreign company, the buyer gets a good opportunity to weigh everything and decide whether he should buy or not.

Comprehensive legal due diligence of a company before its purchase covers:

• ownership of assets (which may include the legal status of real estate and intellectual property and investment);
• intellectual property;
•  tax issues;
• company structure and other specific issues (for example, human resources, environmental issues, etc.).

In cases where conducting due diligence on Guernsey involves investment-related issues, it is most likely that the process will focus on the structure of the company. An analysis of the financial condition and prospects of the business will also be carried out.

How is due diligence on Guernsey carried out?

The process of conducting a comprehensive legal review of a company on the island of Guernsey often begins with the buyer/investor sending the seller a list of requests for documents and information that is relevant to the relevant company.

Documentation is currently being reviewed online. In real-time, you can track all the changes and check all the information about the company. Access to such documents is provided through cloud data storage.

In the process of conducting a comprehensive due diligence audit on Guernsey, the buyer/investor may request the following corporate structure documentation for consideration:

• statutory documents of the company (namely, certificate of registration) and constituent documents (memorandum and charter);
• links to company registries;
• minutes and decisions of directors and shareholders;
• contracts indicating the expenses and income of the company.

During the audit, special attention is paid to the search for possible court cases in which the company is involved. This information is available in the database of arbitration courts. Often they also make a request to paid databases or to the resources of the bailiff service in order to check whether there is information about the enforcement proceedings regarding the acquired company.

Based on the foregoing, it can be concluded that conducting due diligence on Guernsey gives the buyer of the company the confidence that the transaction is safe and will not entail any unforeseen consequences since it is possible to identify risks before the transaction is concluded.