Due Diligence Request

The form of due diligence request set out in this annexure is suitable for use by a purchaser in
connection with its legal due diligence and is applicable (with modification) for both share purchases
and business transfers.

The due diligence request is an indicative draft only and has been drafted from the purchaser’s
perspective. The precedent should be tailored to suit the particular circumstances of the target
company/business and to avoid duplication with any other due diligence requests made by the
purchaser and/or its other advisors.

Warning:

All precedents can be dangerous. There are major risks in using this precedent without competent
legal advice. It is unlikely that any precedent will be able to be used in any transaction without
considerable modification.
 [COMPANY NAME]

Request for Information

Proposed acquisition of the [entire issued share capital] [business and assets of] [•] Limited (the
“Company”)

This request for information is being made as part of the purchaser’s evaluation of the Company and
the business carried on by it (the “Business”). We have tried to ensure that this request does not
duplicate similar requests made by the purchaser or its other advisors.

References in this request to the “Company” are to the Company and each of its subsidiary
undertakings.

This request for information is not exhaustive and supplemental requests for information may be
made. We suggest that you retain photocopies of any documents sent to us, so that in due course
they can be incorporated, where applicable, in any formal disclosure letter.

Please supply the following copy documents and information in relation to the Company and
the Business and identify replies by using the same numerical reference system. Where a full
understanding of the position cannot be obtained from the copy documents alone please also
provide an explanation. We suggest that you supply responses as and when the information is
available rather than waiting until all the information has been collected.

1. Constitution

1.1 Certificate of Incorporation and any Certificate of Incorporation on Change of Name.

1.2 Memorandum and articles of association, together with relevant resolutions and agreements.

1.3 Written confirmation of:

(a) authorised share capital (including classes and denominations);

(b) issued and paid up share capital (including classes and denominations);

(c) changes in the issued share capital in the last six years;

(d) name and address of each shareholder together with the number and class of shares
held by each of them. Where shares are held on trust, please give the name and
address of the beneficial owner and supply a copy of the declaration of trust;

(e) names and addresses of the directors and secretary;

(f) accounting reference date; and

 (g) where and when the statutory and minute books may be inspected.

1.4 Shareholders’ or similar agreements that would require third party consent or otherwise affect
the proposed acquisition.

1.5 Agreements granting options over or the right to call for the issue of any share or loan capital
of the Company.

1.6 Details of all other corporate bodies in which the Company holds or owns any shares or other
securities or loan stock or other forms of debentures or where the Company has entered into
any agreement relating to the same. Please supply copies of all documentation that relate to
any such bodies corporate to which the Company is party.

1.7 Details of when dormant subsidiaries last traded.

2. Business

2.1 Description of the business carried on by the Company or, if it is dormant, details of when (if at
all) it last traded.

2.2 Details of any change in the nature of the Business within the last two years.

2.3 Copies of any corporate brochures, trade pamphlets and any other marketing or promotional
literature produced by the Company.

2.4 Details of any contract at risk as a result of negotiations leading to the change in ownership of
the Company.

2.5 Details of all business opportunities open to the Company including negotiations in relation to
them.

3. The Seller and Connected Persons

3.1 In relation to each company which carries on the Business or owns assets employed in the
Business (the “Seller”):

(a) details of:

(i) the name and address of each shareholder together with the number and
class of shares held by each of them; and

(ii) the names and addresses of the directors and secretary; and

(b) a copy of:

(i) its memorandum and articles of association; and

 (ii) any shareholders or similar agreements which would require third party
consent to, or otherwise affect, the proposed acquisition.

3.2 Where the assets employed in the Business are owned by more than one company:

(b) a legal structure chart of the companies in the group which carry on the Business or
own assets employed in the Business; and

(c) an organisational chart showing activities carried on, location, facilities, management,
structure and reporting responsibilities, naming key individuals and summarising their
roles.

3.3 Details of any contracts or arrangements relating to the Company or Business in which any of
the shareholders or directors of the Seller(s) or persons related to or otherwise connected with
them are or have been interested, whether directly or indirectly.

3.4 Details of all business activities or interests of each Seller and their shareholders and directors
(any persons related to or otherwise connected with them) where these compete with or are
material to the Business.

4. Accounts

4.1 Audited accounts for the last three years.

4.2 Management accounts since the last audited accounts.

4.3 The current business plans and to the extent they are not contained in the current business
plan, current budgets and forecasts and the underlying assumptions.

5. Finance

Details of:

(a) the Company’s bank accounts (including name and address of bank branch) and
copies of all facility and loan arrangements with the Company’s bankers or other
financiers;

(b) all debenture stocks, loan stocks, loan notes or other debt instruments issued by the
Company and copies of all relevant documents;

(c) debt factoring and similar arrangements and copies of all relevant documents;

(d) customer deposits;

(e) consultants’ commissions;

 (f) any mortgages, charges or debentures over the Company’s undertaking, assets or
share capital and supply copies of the charging documents;

(g) any guarantees, indemnities, or counter-indemnities given by the Company and

supply copies of the relevant documents;

(h) all grants and allowances made to the Company during the past six years;

(i) any current, proposed or projected capital commitments;

(j) any hire-purchase, lease, rental, conditional sale or other similar credit agreements;

(k) any contingent liabilities;

(l) any debts owed to or from any group company;

(m) an aged list of debtors showing debts considered bad or doubtful; and

(n) any credit arrangements in favour of a customer giving unusually long or otherwise
beneficial terms for payment.

6. Taxation

6.1 Details of the status of tax computations and assessments for all completed accounting
periods, including details of matters unresolved with the Comptroller of Income Tax or other
taxation authorities.

6.2 Details of all VAT arrangements (if any), including details of any VAT group of which the
Company is a member (if any).

6.3 Details of tax losses.

6.4 Details of Social Security returns and of any potential liabilities.

7. Premises

7.1 A list of all premises owned, leased, occupied or in which any other interest is held by the
Company or used in connection with the Business and in relation to all such premises:

(a) the full postal address, a full description of its use and the tenure held;

(b) a plan;

(c) office copy entries or an abstract of title in relation to any freehold or long leasehold
titles forming part of the proposed acquisition;
 (d) copies of all leases and sub-leases, tenancies and licences under which the premises
are held or sub-let to third parties;

(e) copies of all licences to assign, sub-let, for alterations, change of user, assignments,
side letters, deeds of variation, rent review memorandum, guarantees or warrantees
relating to any of the documents revealed in (d) above;

(f) a list of all the occupiers of the premises;

(g) copies of all planning permissions, building regulations approvals and fire certificates
relating to the premises;

(h) copies of any valuations of the premises which have been made within the last three
years;

(i) full details of any development carried out by the Company or the Sellers together
with copies of all planning permissions obtained;

(j) full details of any notices served by any local or other authority in respect of the
premises;

(k) full details of any disputes concerning such premises or their use;

(l) particulars of all rents, service charges and other outgoings accrued due but not yet
paid or received; and

(m) full details of any covenants, restrictions, licences, easements, agreements or

encumbrances to which such premises are subject insofar as not covered above.

7.2 List of any properties previously leased, occupied or used by the Company and/or in respect
of which the Company is or may be liable.

8. Fixed Assets

8.1 List of all fixed assets owned or used [by the Company in carrying on its Business, giving
acquisition costs, written down value and estimated realisable value.

8.2 Details of:

(a) all fixed assets used by the Company in carrying on its Business owned by third
parties;

(b) all fixed assets used by the Company in carrying on its Business shared with third
parties;
 (c) major items of capital equipment purchased in the last two years or contracted for or
otherwise proposed to be purchased; and

(d) significant repairs required for plant and equipment in the last two years.

9. Patents and Registered Designs

9.1 List all UK and foreign patents and registered designs which are owned by the Company or
used in the Business together with all pending patent applications.

9.2 Describe the significance of the patents and registered designs owned by the Company or
used in the Business and state whether additional patents or registered designs are necessary
or desirable.

9.3 In relation to the patents and patent applications owned by the Company or used in the
Business:

(a) what was the date on which the relevant inventions in their first form were made?

(b) in each case, who is the true and first inventor?

(c) is the Company aware of any claim or basis for claiming that the inventions (or any of
them) may not be patentable or the subject of valid patents? If so provide details not
limiting the answer to matters arising in the UK;

(d) has the Company or its predecessor in title or any of them disclosed information on
the inventions whether in confidence or otherwise to any person? If so, provide details
with names and addresses of the recipients.

9.4 In relation to any registered designs or applications for registered designs owned by the
Company or used in the Business, is the Company or the Seller aware of any claim or basis
for claiming that the relevant designs (or any of them) may not be registrable or the subject of
valid registrations? If so provide details not limiting the answer to matters arising in the UK.

10. Trademarks and Brands

10.1 List all UK and foreign registered trademarks, together with all pending trademark applications
owned by the Company or used in the Business.

10.2 List all business/trading names and proprietary brands used by the Company in the Business.

10.3 List all licences to and from third parties in relation to trade marks and proprietary brands.

10.4 List all internet domain names owned by or used in the operation of the Business.
10.5 In relation to any registered trade marks owned by the Company or used in the Business, is
the Company or the Seller aware of any claim or basis for claiming that the relevant
registrations (or any of them) may be invalid or susceptible to revocation? If so, provide
details, not limiting the answer to matters arising in the UK.

11. Know-How and Confidential Information

11.1 Provide details of any secret technical information or other know-how (“Know-How”) that
forms part of or supplements the Company’s intellectual property rights or is used in the
Business.

11.2 In relation to the Know-How please provide:

(a) details of the key personnel responsible for or in possession of the relevant
information or skills including their full name and address, country of residence and
job title;

(b) a copy of their current employment contract.

11.3 Supply details of any Know-How used under licence from third parties, providing copies of any
written licence agreements.

11.4 Describe the significance of Know-How used by the Company in the Business.

11.5 Describe and supply details of arrangements for the disclosure of confidential information
either by or to the business.

12. Copyright and Unregistered Design Rights

12.1 List all copyright works or unregistered design rights which record or embody intellectual
property rights (“IPR”) owned by the Company or used in the Business, together with their
dates of creation and names of creators.

12.2 List all licences to and from third parties in relation to such works.

12.3 Please provide a copy of the standard copyright assignment used by the Company in the
Business.

13. Information Technology

13.1 Hardware

(a) Specify all elements of hardware used by the Company together with their location;
 (b) (except low value peripherals) is the Company the absolute owner of the hardware?
Where it is not, please supply details of the leases, hire purchase, credit or other
arrangements relating to such hardware.

13.2 Communications

Confirm whether or not all cabling is owned by the Company. If not, give details.

13.3 Services

(a) Is a disaster recovery service used in connection of the Business? If so, please
provide a copy of the relevant agreement.

(b) Is part or all of the management and operational responsibility for the computer
system used in connection of the Business delegated to an external supplier either
under a facilities management agreement or other arrangement? If so, please provide
a copy of the relevant agreement.

(c) Does the Company have the benefit of maintenance services for the hardware? If so,
give details.

13.4 Software

(a) Please list the software used by the Company and indicate that software owned by
the Company, that jointly owned, that developed using consultants and that licensed
to the Company.

(b) In relation to any software developed in whole or in part by third party consultants,
please confirm whether such consultants have assigned their rights in the work to the
Company together with copies of the agreement between the Company and the
consultants.

13.5 Euro compliance

(a) Details of any investigation by the Company into the effect of the introduction of a
single European currency on its services, products, suppliers, customers and
insurance polices and copies of all reports resulting from such investigations.

(b) Details of any problems with software that may be due to matters related to the
introduction of a single European currency.

13.6 Data protection

(a) Has the Company begun any processing, as defined by the Data Protection law, since
[date], and if so has it registered such processing with the Data Protection Registrar?
 (b) Does the Company hold any personal data for marketing purposes, and does the
company conform with the Data Protection law?

(c) Does the Company transfer personal data to countries outside the European Union?

14. Trading Matters

14.1 Details of, together with copies of all related documentation:

(a) any long term, unusual, non-routine, onerous or other material contracts or
commitments and any current tender which, if accepted, would create such a contract
or commitment;

(b) all licences, permissions, authorisations and consents necessary or which will be
necessary for the carrying on of the Business;

(c) all standard terms and conditions of business;

(d) contracts made with major customers (ie those accounting for more than 5% of
turnover) and value of sales attributable to them in each of the last three financial
years;

(e) any major customer lost in the last three financial years, together with the reasons for
such loss;

(f) contracts made with major suppliers (ie those accounting for more than 5% of goods
or services supplied) and value of purchases from them in each of the last three
years;

(g) contracts made with any third parties with whom the Company contracts concerning
the supply of its products or services to customers;

(h) contracts made with any third parties concerning the research and development of the
Company’s products or services;

(i) complaints by or disputes with (either current or in the past years) any major supplier
or customer;

(j) any major competitor;

(k) any intra-group trading;

(l) any sales agency, distributorship, licence, franchise and other similar agreements or
arrangements to which it is party;
 (m) any partnership, joint venture, profit sharing or other similar form of agreement or
arrangement to which it is party;

(n) current insurance cover, specifying the nature and amount of cover, annual premiums
and next renewal date together with details of significant claims made during the last
12 months;

(o) any obsolete stock; and

(p) any agreements or arrangements with competitors, whether written or oral and
regardless of their legal enforceability, which relate to the prices or conditions of sale
under which any products, goods or services of the Company are to be sold, supplied
or acquired.

14.2 Details of agreements or arrangements to which the Company is a party or relating to the
Business which may be terminated, varied or otherwise affected as a result of a change of
control of the relevant Company or ownership of the Business.

15. Litigation

15.1 Details (including pleadings) of any significant litigation.

15.2 Details of any arbitration, expert reference or other quasi-judicial or non-judicial dispute
resolution procedure in which the Company is involved and which may have a material affect
on the Company or the Business.

15.3 Details of any argument, dispute, claim or other facts or circumstances which might give rise
to any significant litigation or other dispute resolution procedures which may have a material
affect on the Company or the Business.

15.4 Details of any notices or communications received by the Company which indicates any
material liability or potential material liability on the part of the Company or any obligation or
restriction being placed on the Company which may have a materially adverse affect on its
business.

15.5 Details of any investigation, finding or decision of any competent court or regulatory authority
or body in relation to the Company.

16. Employees

16.1 An up to date list of all persons currently employed by the Company (the “Employees”)
showing:

(a) name;
 (b) date of birth;

(c) date of commencement of employment;

(d) job title;

(e) normal working hours;

(f) current annual salary (including date of last review and details of any proposed review
or increase);

(g) commission and bonus arrangements;

(h) benefits;

(i) notice period;

(j) grade of employee;

(k) disciplinary action taken during the last three years; and

(l) job status temporary, permanent, (full time or part time).

16.2 Copies of:

(a) all service agreements, contracts for services and consultancy agreements with
directors and senior employees;

(b) all standard terms of employment;

(c) all terms and conditions of employment where they differ from the standard terms;

(d) all staff handbooks;

(e) disciplinary rules and procedures;

(f) equal opportunities policies;

(g) harassment (sex and race) policies; and

(h) all relevant agreements.

16.3 Details of:

(a) any share option or profit sharing schemes or other employee incentive schemes;

(b) all agreements or arrangements with trade unions or other such bodies;
 (c) any redundancy/rationalisation (whether or not notified to those concerned);

(d) all disputes, negotiations or claims in respect of any past or present director, officer or
employee of the Company or any trade union or other similar body;

(e) any consultation with trade unions and/or Employees or their representatives relating
to the potential sale;

(f) any complaint or grievance about discrimination raised by any past or present
employee within the last six months;

(g) any suspension of any Employee and an outline of the surrounding circumstances;

(h) any enhanced redundancy entitlement under the terms and conditions of employment
or under collective agreements or other incorporated documents;

(i) the maternity/paternity policy relating to Employees;

(j) any Employees or consultants seconded or transferred temporarily to the Company;

(k) personal commitments given to (or agreements reached with) individual Employees
which depart from or vary standard terms of employment; and

(l) all persons entitled or required to occupy a company flat and details of any service
occupancy.

16.4 Details of all pension or retirement benefit schemes or similar arrangements to which the
Company is a party or in which the Company participates or is otherwise involved or is
operated in relation to employees engaged in the Business, whether such scheme is legally
enforceable or ex gratia.

16.5 In relation to each such scheme, the names and address of:

(a) the trustees;

(b) the actuary;

(c) members;

(d) deferred pensioners; and

(e) pensioners.

16.6 Whether the scheme:

(a) is established on interim or definitive documentation;

 (b) is exempt, approved or awaiting such approval or unapproved;

(c) is funded or unfunded;

(d) is contracted-in or contracted-out of SERPS and if contracted-out whether it is

contracted-out on a GMP basis or on a protected rights basis;

(e) is a final salary scheme or money purchase scheme or a group personal pension
plan;

(f) is an insured or self administered scheme;

(g) is a small self administered scheme;

(h) is contributory or non-contributory;

(i) is a single employer scheme or a group scheme. If the latter please give the name of
the principal employer if it is not the Company;

(j) provides fully equalised benefits in accordance with the principles established in
Barber v GRE; and

(k) provides separately insured death benefits.

16.7 In relation to each such scheme, copies of:

(a) all interim and definitive trust deeds and rules, any relevant board or trustee
resolutions, all supplementary deeds of adherence, appointment, retirement,
amendment or otherwise and all relevant announcements to members and scheme
booklets;

(b) any relevant letter of approval from the Comptroller of Income Tax;

(c) any relevant contracting-out certificate;

(d) the most recent actuarial report;

(e) the most recent scheme accounts;

(f) a schedule of all members giving names, ages, sex, current salaries, and details of all
employees, and employers, contributions;

(g) all relevant insurance policies; and

(h) confirmation that all employers’ contributions and all contributions accrued due from
each member have been duly paid.
17. Environmental Matters

17.1 Details of any:

(a) trade effluent or waste substances discharged or disposed of;

(b) hazardous substances handled or kept; and

(c) pollution discharged into the atmosphere, water or land

by the Company or arising as a result of carrying on the Business.

17.2 Copies of:

(a) all consents, approvals or licences obtained in connection with water abstraction,
waste disposal, hazardous substances or any other environmental matters relating to
the Business; and

(b) any notices or correspondence received from a local authority or government

department threatening any environmental enquiry, investigation or enforcement
against the Company.

17.3 Details of:

(a) any complaint from members of the public, adjoining landowners or pressure groups
or organisations concerning environmental matters;

(b) any claim or prosecution concerning environmental matters or product liability;

(c) claims under any policy of insurance for any product liability or environmental matter;

(d) internal environmental audit procedures and any environmental audits, surveys,
reports or investigations;

(e) capital expenditure or increased operating expenditure known or likely to be required

over the next three years in relation or anticipated to environmental matters;

(f) any known, notified or suspected contamination in, on or under any of the properties
owned, leased, occupied or used by the Company;

(g) previous uses of any of the properties owned, leased, occupied or used by the
Company; and

(h) any properties disposed of by the Company which were known, notified or suspected
of being contaminated, with details of that contamination.
18. Health and Safety

18.1 Copies of:

(a) the written statement of health and safety policy applied by the Company;

(b) the organisation and arrangements for carrying out the said policy including but not
limited to all documented arrangements, practices or procedures relating to:

(i) the health and safety management structure of the Company;

(ii) individual responsibilities including all job descriptions which include health
and safety duties;

(iii) safety committees, trade union safety representatives and representatives of

employee safety;

(iv) health and safety rules;

(v) reporting, recording and investigating accidents and incidents;

(vi) risk assessments;

(vii) manual handling operations;

(viii) personal protective equipment;

(ix) noise;

(x) electricity supply and use;

(xi) gas supply and use;

(xii) hazardous substances/preparations supply and use;

(xiii) provision of information and training to both employees and non-employees

(such as but not limited to lawful visitors, self employed people, cleaners,
contractors, etc);

(xiv) first aid;

(xv) fire and other serious and imminent dangers;

(xvi) monitoring and auditing health and safety arrangements;

(xvii) operations for which the Company has adopted a ‘permit to work’ system;
 (xviii) health surveillance; and

(xix) insurance of employers’ and public liability risks.

18.2 Copies of:

(a) the Company’s Accident Book entries for the last three years; and

(b) any forms, notices or correspondence sent to or received from a local authority,
government department or the Health & Social Security Department concerning health
and safety matters arising as a result of carrying on the Business.

18.3 Details of:

(a) any claim or prosecution relating to the Company or the Business concerning health
and safety matters;

(b) any complaint from any person, group or body (not being or representing any
employee of the Company) threatening any health and safety enquiry, investigation or
enforcement in connection with the Company or the Business;

(c) claims under any policy of insurance for health and safety matters;

(d) any health and safety audits, surveys, reports or investigations; and

(e) agreements or arrangements with trade unions or other bodies relevant to health and
safety matters.

18.4 Details of any of the following hazardous substances/hazards (not already disclosed under the
above requests) handled, kept or present at the Company’s premises:

(a) asbestos;

(b) lead;

(c) ionising radiation;

(d) highly flammable liquids and liquified petroleum gases;

(e) biological agents; or

(f) micro-organisms.

Advocates
[date]