IMPORTANCE OF DUE DELIGANCE REPORT
"Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention."
- The proviso under various sections of the Indian Constitution
INTRODUCTION
Due diligence is an investigation of potential investments to validate all facts, like reviewing financial records and anything else considered material. Due diligence in general sense refers to the care that must be taken by a person before entering into a contract or any form of financial transaction with another party.
Due diligence is performed by studying the annual reports, Exchange commission
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While it is a legal obligation, at times it is also performed voluntary by investigators. Due diligence though used in various contexts has its main use is in the business field i.e., in acquisitions, mergers, project finances, joint ventures etc. The objective behind performing due diligence is that the conclusion obtained from this research will give a clear picture and help in the decision making by aggrandizing the quality and quantity of the available information to the investigators and by making sure that this information is used congruously to proof the cost, benefits and risks.
Due diligence has now become a necessary and sinuous process on which most of the business decisions depend. It relates with the necessary precautions that a company must take by studying the other company and understanding their assets and drawbacks before a contract is made.
The legal importance of due diligence in India is now being unveiled by the constitution in the form of statutes. Mandatory steps are being taken to govern the conduct of due diligence as per the regulations of Securities and Exchange Board of India, 1996 and the foreign securities American or Global Depository Receipts.
The success of any investigation in order to make a well-planned proposition lies in a well-planned and coordinated enquiry