PROFORMA - DUE DILIGENCE

1.

Certifications

Date of Incorporation, name under which incorporated, type of corporation

(companies limited by shares, company limited by guarantees, with share capital,
company limited by guarantee without share capital unlimited companies private
and public companies) and file number.
Place of registration, location of head office, whether shifted subsequently
Tax Residence Certificate Issue date with reference.
Any changes in name, place or type of corporation subsequent to incorporating
via special resolution with dates.
All regulatory approvals required taking into account type of corporation

2.

Memorandum and Articles or Association

Whether in accordance with standard form regularly used by companies registered

in the area.
Any amendments to the model/standard articles, such as conversion from one type
of corporation to another, or
If beneficial ownership has changed but articles do not reflect it.
Any other

3.

Registered office

Name and address if changed with Details

4.
Name

Secretary
Address

Date of appointment

Date of resignation

Fill in the above table

5.

Authorised share capital:

Authorised share capital at time of Incorporation in Rupee figures

Number and classes of shares into which divided
Rs. Denomination of each share
Any alterations that have been made to authorised share company to date

6.

Issue share capital

Shareholder

No.

of
Shar
es
Allo
tted

No. of Shares Date

Transferred
__________
In
Out

Total
considera-tion

Bal

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|
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Fill in above table

Insert ? for information not available
Names and addresses of shareholders in same order as appears in table.
In cases where consideration for transfer of shares has not been mentioned in the
share transfer forms, confirm such information from company secretary

7.

Liabilities/Charges

Any material undisclosed liabilities claims or mortgages against company

Actual and contingent liabilities
Any litigation against company include relevant dates
Materials contracts and labor issues. Whether any pending suits or litigation
Guarantees and indemnities issued by the company
Insurance coverage. Period of coverage with dates. Amount of coverage in
Rupee terms. What all coverage includes e.g. fire, theft, etc.

8.

Registrar of Companies, registration of documents and filling returns;

Check whether following documents filed with R.O.C.

Annual accounts
Passing of special resolution by general meeting of members
Appointment and resignation of directors
Creation of charges on assets of company, give date on which charge created and
particulars of charge.

9.

Statutory Registers: Check if all the following statutory registers are being
maintained.

Register of investment held in the name of another person.

Register of deposits
Share transfer register and debenture transfer register

Register of renewed and duplicate certificates

File containing instruments of charges
Register of charges
Register of members and index
Register of debenture holders and index
File regarding copies of annual returns.
Minutes of all meetings of B.O.D committee of directors and general meetings.
Dividend register and list of unclaimed dividends
Register of directors
Register of directors shareholding
Register of loans
Register of investments

10.

Auditors

Name of auditor

Date of appointment

Date of resignation

Fill in above table

Minutes of meeting to confirm ratification of listed auditors

11.

Directors

Name

12.

Residential
Address

Date
appointed

Date resigned

Notes

Fill in above table

Number of directors in accordance with articles.
Any alteration in number of directors to be via ordinary resolution at general
meeting, within limits fixed by articles. Check that number of directors not in
breach of articles.
Bank Account

Name of bank/banks
Name under which account opened
Account number
Date on which opened
Signing instructions e.g. any one of the authorised signatories, Two signatures
required on checks above certain sums or limits to checks written above certain
sums.
Authorised signatories. Fill in the table below.

Name

Date of appointment

Date of removal

13.

Financial Year End

Date
Whether members have approved accounts for each of the past 5 years

14.

Financial position

15.

16.

Brief synopses of current and historical financial position, based on annual returns.
Investment Check the following:
Register of investments held in the name of another person
Register of investments
Comment on any irregularities
All immovable properties occupied by the company
Addresses of the properties
Leased or owned by the company
List of all documents of title and all documents contracts, performance guarantees in
relation to all real estate properties which the company has any right, title, claim or
interest or from which the company derives any benefit. Agreement, and
Memorandum of Understanding or records of negotiations in relation to all real estate
properties which the Company seeks to obtain or relinquish any right, title, claim, or
interest or from which the company derives any benefit.
Municipal taxes, and local tax compliance
Mortgages/charges on such properties. Check if the properties are mortgaged by
the deed to financial institutions or banks as security for loans advanced by such

institutions or banks. Also, check whether fixed asses of the company, such as
stocks or receivables are charged to banks or financial institutions to secure term
loans, and other funded and non-funded liabilities. Examples of non-funded
liabilities are a) Bank Guarantees given by/on behalf of the company b) Any
letter of credit opened by bank on behalf of the company c) Bills discounted with
banks.
All the information above may be available on the balance sheet. Check whether any
interest is being claimed on the above liabilities that are outstanding.
17.

18.

19.

RBI/FERA Compliance
FERA/RBI and other statutory registration details
Check compliance with foreign exchange regulations
List of all foreign trade contracts joint ventures including any contracts for technical
assistance or services with any foreign company or individual
Long term contracts entered into by the company
Nature of contract
Date entered into
Termination date
Financial liabilities placed on company via contract such as guarantee to purchase
specified quantity for specified period.
Litigation involving the company
Suits filed against company
Petitions for winding up of company filed in court
Suits for recovery filed against company
Civil suits filed against company for mandatory injunctions
Suits filed by suppliers of goods, materials, services, labor against company
Suits filed by parties to which company has supplied inferior, defective goods

Comment: Whether above suits are likely to result in any significant liability on the
company. Opinion must be based on conclusive documentary evidence.
20,

Disputes relating to transfer of shares

Serial number

Name of case

Court

21.

22.

Industrial disputes
By employees. Give details.
By labour suppliers to company for which wages not paid. Give details.
Compliance with labor laws

Employees strength. Whether number of employees makes it necessary for the company
to file returns with various authorities and maintain records and make contributions.
Various labour laws that the company may require with list below:

Employees Provident Fund Scheme 1952: Give details as to whether company has
fulfilled compliance requirement, with last date of filing. Also check if provident
fund records have been inspected form time to time by relevant authority and last
date of inspection. Check whether form 2A, 3A, 5A, 6A and 9 have been filed.

Employees State Insurance Act, 1948 Whether company has in past paid
contributions under Act and date of last contribution. Whether per Reg 32 form 7 a
register giving details of contributions is being maintained by the company. As per
Reg. 13 form 3 office declarations forms stating that all employees receiving above
certain remunerations have been covered for ESI are required to be filed. Have such
forms been filed with appropriate office and last period for which filed. Have such
forms been filed with appropriate office and last period for which filed. Regarding 26
Form 6 requires return of contributions along with receipt copies of challans to be
filed on half yearly basis. Gives date of last such filing whether company is in
compliance. Reg. 88 Form 15 requires every employee to maintain an accident
record book with particulars. Is such an up to date book maintained.

Payment of Bonus Act, 1965. Rule 4 of the Act requires every employer to prepare
and maintain the following 3 registers ) a register showing the computation of the
allocable surplus defined under Section 2(iv) in Form-A, b) a register showing the
said computation of the allocable surplus under Section 15 in Form-B c) a register
showing details of bonus due to each of the employees, their deduction therefrom and
amounts due to each of the employees, their deduction therefrom and amounts
actually disbursed in Form-C. Are such up to date registers being maintained.

Factories Act, 1948 The Factories Act and the Rules framed thereunder require every
employer to maintain a number of books namely a) book of Accidents and Dangerous
occurrences is required to be maintained in prescribed Form No.23 b) An inspection
book recording details and particulars of the regular inspections by Assistant Director
of Factories c) A book recording the lime washing and painting of the factory
premises as per Form No. 7 d) overtime register e) Daily attendance register as
prescribed in Form No..12. Are such up to date books being maintained.
Under the Factories Act every employer is to file annual returns before the 15 th of
January each calendar year relating t the

1)
2)
3)
4)
5)
6)
7)

average number of workers employed daily and normal hours worked per week.
Leave with wages
Compensatory holidays
Accident
Canteens in case of factories employing more than 250workers.
Creches in case of factories wherein more than 50 women workers are employed
Shelters, restrooms and lunch rooks in case of factories wherein more than 150
workers are employed.
8) Welfare office in case of factories wherein 500 or more workers are ordinary
employed.
9) Has the company filed the aid returns regularly.
Every employer is also to file a half yearly return giving details of the name of the
factory, name of occupier, nature of industry. Is the company filing such returns.

23.

24.

Payment of Wages Act Is company maintaining a book of fines prescribed in Form-9.

Minimum Wages Act Copy of a certificate certifying that the company is paying
more than minimum wages to every employee. Also, is the company maintaining a
book recording reduction in wages as prescribed in Form-11.
Industrial Employment (Standing Orders) Act, 1946
. Check that company has
complied with Section 3 of said Act by furnishing to the certified officer under the
Act a copy of the Standing Orders drafted by them.
Maternity Benefit Act, 1961 Check for compliance with Sec 20 of Act whereby
every employer is to prepare and maintain such registers, records and muster rolls as
prescribed.
Payment of Gratuity Act, 1972 Whether company has rules framed for payment of
gratuity and on what basis payment is made, i.e., cash etc
Child Labor (Prohibition and Regulation) Act, 1988 Does the company employ child
labour? If yes, whether the company is in compliance with Section 3 of the Act
prohibiting employment of children in certain occupation and processes listed in Part
A or Part B of the schedule. Also, if children are being employed by the company
maintenance of details of child employee as per section 11.
.The Contract Labor (Regulation and Abolition) Act, 1970 Has the company
employed contract labor? If yes, the establishment employing this labour must be
registered under Section 7 of Act. Further check that such employment is not banned
under Section 10. Proper license has been issued by licensing authority as required
under Sec. 12. .
Income Tax
With details of returns and assessments
With details of all disputes and status with respect thereto
Excise & other Duties

With details of returns and assessments

With details of all disputes and status with respect thereto

25.

Sales Tax

With details of all returns and assessments

With details of all disputes and pending status
26.

27.

28,

Assets taken on lease by the company

A list giving details of all such leased assets
Stipulation of any loans, debentures or other financial instruments (from financial
institutions, outsiders) for conversion of outstanding loan into equity
Give details of any such stipulation separately for each loan, and the conditions under
which such stipulation will kick in.
Fixed Deposits

29.

Whether company is filing Annual Return of deposits as required under Sec

58A of the Companies Act, 1956.

Contingent liabilities of the company

Give details of the contingent liabilities such as those listed below with dates from which
liability became outstanding. This list is not exhaustive.
Income tax demand dispute
Claims for deduction disallowed by Income Tax Commissioner
Bank Guarantee outstanding
Letter of credit outstanding
Payments due against bills discounted outstanding
Disputed sales tax demand
Penalty levied by any State Electricity Board or any other penalty/fine levied upon
the company by a Governmental institution.
Future obligations for lease rentals outstanding
Any liability regarding gratuity payments
30.

Stock Exchange Compliance

Name all Stock Exchanges company is listed with

31.

32.

33.

Whether all listing fees are up to date

Any delistings that company has applied for
Whether company is complying with conditions laid down by he Sock Exchanges in
respect of publication of audited and unaudited records, notices regarding book
closures, holding of Annual General Meeting and Extraordinary General Meetings.
Compliance with environmental laws
Whether the companys operations have been certified by the concerned Pollution
Control Board s complying with water and air pollution norms.
Whether other relevant anti pollution laws have been complied with.
Insurance coverage
Period of coverage with dates. Amount of coverage in Rupee terms. What all
coverage includes e.g. fire, theft, etc.
List of insurance policies in force concerning the company
List of all current unsettled claims.
Any other specific matters required