Legal Due Diligence in Cameroon

Legal Due Diligence in Cameroon

Due Diligence is the level of care or judgement put into a particular circumstance. Legal due diligence in Cameroon is more of a process that involves collecting, understanding, and assessing all legal risks, carried out on a target company. We have a team of best lawyers in Cameroon that can assist in all legal due diligence in Cameroon .
Legal due diligence is necessary when conducting a business transaction, investments, or purchase of landed or commercial properties.  This can be done by proper review, investigation, and carrying out a search on places, documents, and interviewing employees and ensuring that all the liabilities related to the subject matter are discovered before completion and the subject is beneficial.

Corporate legal refers to the process of investigating companies in advance of joint partnership, sales, mergers, and acquisitions by gaining an understanding of the Company. It involves a lot of obligations such as investigating the debs, liabilities, and assets of the company; investigating the tax returns and liabilities of the company; investigating and evaluating any pending lawsuit or potential lawsuit against the company among others.
Legal due diligence may also entail investigating the corporate legal status of a targeted company with the Cameroon. In this regard, a manual search, which will reveal the due incorporation of the company, names of directors, names of shareholders, and whether any charges are registered on the company will be conducted on the targeted company at the CAC.
Generally, the main purpose of due diligence is to carry out a full assessment of all possible financial and legal risk in relation to assets, company’s corporate status, intellectual property, contracts, land transactions, and company’s employment in other to ensure that any investment or purchase is beneficial to the investor.

It is important for investors to conduct legal due diligence on a Cameroonian company before involving in any mergers, acquisitions, takeovers, or other transactions with any company. The benefits of conducting due diligence on the company include but limited to the followings:

  • It can help to assess the risk, providing solutions to minimize the risk and potential loss to investors, creditors, and shareholders.
  • Conducting legal due diligence can aid in the monitoring of a target company, its financial position, corporate status, leases, warranties, contracts, compensations, tax liabilities, long-term agreements and ascertain its debts.
  • Due diligence helps in preventing the investors from incurring liabilities and checking the prospect of solvency.
  • It is also beneficial in ensuring that complex corporate legal documentation is properly done during the implementation of the transaction structure.
  • Legal due diligence can be used to learn about a target company for the purpose of becoming acquainted with the company for ease of effective communication and understanding.
  • Information obtained in the course of due diligence in cameroon helps the interested party to a merger fully understand the business, structure, and liabilities of a target company, which can help in negotiation.
  • Conducting legal due diligence enables both the investor’s lawyer and the target company’s lawyer to render accurate legal opinions for the merger or acquisition transaction.
  • It helps in the prevention of corruption and illegal transactions.
  • If a company is involved in a significant transaction, such as business combinations, securing any credit facility or public offering of shares, then due diligence is significant to such transaction.

Steps of Corporate Due Diligence in Cameroon

Legal Due Diligence involves but limited to the following steps:

  • Reviewing documents of a target company
  • Carrying out interviews of individuals with knowledge of the company.
  • Carrying out necessary searches at appropriate places in Cameroon.
  • Direct visitation of the company in Cameroon.
  • Scrutinizing public records of the targeted entity.
  • Conducting media and internet search on the targeted entity
  • Evaluating any ongoing lawsuit against the company e.t.c.

Legal due diligence is necessary before corporate transactions with a third party. The idea behind the investigation carried out in the corporate field especially in matters relating to contracts, mergers, and acquisition in other to understand if there will be any future legal problems as a result of such transaction. Due diligence is very necessary for a corporate- commercial related fields, as it helps to identify various obstacles, risk, and potential solutions.

Finally, it is important to understand that conventional due diligence involves 3 main levels that cut deeper into the investigation of the targeted entities as it progresses. While level may involve merely conducting a search at necessary places in respect of the targeted company or entity; level 2 involves scrutinizing corporate entity through global and local media; and level 3 involves direct investigation, scrutinizing public records or data coupled together with the physical visitation of any necessary and required places.

This article is brought to you by the Corporate & Commercial Law Team at PRIME TIME LAW OFFICES . The Firm has engaged in carrying out due diligence on behalf of various local and foreign companies seeking to do business in Cameroon.

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