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Due Diligence Engagement Letter

Due Diligence Engagement Letter Template for South Africa

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Key Requirements PROMPT example:

Due Diligence Engagement Letter

"I need a Due Diligence Engagement Letter for my accounting firm to investigate a potential acquisition target in the South African mining sector, with a comprehensive scope including financial, operational, and regulatory compliance review, targeting completion by March 2025."

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Document background
The Due Diligence Engagement Letter is a crucial document used in South African business transactions when a professional firm is appointed to conduct detailed investigations into a business, asset, or investment opportunity. This document is essential in mergers and acquisitions, investments, or significant business transactions where thorough examination of a target entity is required. The letter must comply with South African legislation, including the Companies Act, POPIA, and professional services regulations. It typically precedes major corporate transactions and outlines the scope, methodology, timelines, and deliverables of the due diligence process, while establishing clear responsibilities and expectations between the professional firm and the client.
Suggested Sections

1. Letterhead and Date: Professional firm's letterhead, including registration numbers and regulatory licenses, with current date

2. Client Details: Full registered name and address of the client entity

3. Subject Line: Clear identification of the document as a Due Diligence Engagement Letter

4. Introduction: Opening paragraph identifying the parties and confirming the engagement request

5. Scope of Services: Detailed description of the due diligence services to be performed, including specific areas of investigation

6. Approach and Methodology: Overview of how the due diligence will be conducted, including key steps and processes

7. Timeline and Deliverables: Expected duration of the engagement and specific deliverables to be provided

8. Professional Fees: Fee structure, payment terms, and any additional costs or expenses

9. Team Structure: Key team members, their roles, and responsibilities

10. Confidentiality: Confidentiality obligations and data protection commitments in line with POPIA

11. Client Responsibilities: Clear outline of what is expected from the client, including information access and cooperation

12. Limitations of Scope: Clear statements about what is not included in the due diligence

13. Signature Block: Space for acceptance signatures from both parties

Optional Sections

1. Conflict Check Disclosure: Section to be included when there are potential conflicts of interest to be disclosed

2. International Considerations: Include when the due diligence involves cross-border elements or international jurisdictions

3. Regulatory Compliance: Specific section when the due diligence involves regulated industries or specific regulatory requirements

4. Specialized Expertise: Section describing additional specialist expertise when required for specific industry or technical areas

5. Third Party Service Providers: Include when external specialists or service providers will be involved in the due diligence

6. Force Majeure: Include when there are specific circumstances that might affect the timeline or delivery

7. Insurance Coverage: Details of professional indemnity insurance when specifically requested by the client

Suggested Schedules

1. Schedule A - Scope Details: Detailed breakdown of specific areas to be covered in the due diligence investigation

2. Schedule B - Fee Structure: Detailed breakdown of fees, including hourly rates and estimated hours per work stream

3. Schedule C - Information Requirements: List of documents and information required from the client

4. Schedule D - Timeline: Detailed project timeline with key milestones and deadlines

5. Appendix 1 - Team Profiles: Professional profiles of key team members assigned to the engagement

6. Appendix 2 - Standard Terms: Firm's standard terms and conditions applicable to due diligence engagements

7. Appendix 3 - Compliance Requirements: Specific regulatory and compliance requirements applicable to the engagement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Services
Engagement
Deliverables
Confidential Information
Due Diligence Period
Professional Fees
Target
Client
Engagement Team
Working Papers
Report
Personal Information
Authorized Representatives
Business Day
Effective Date
Force Majeure Event
Intellectual Property Rights
Material Adverse Change
Professional Standards
Scope of Work
Third Party Service Providers
Data Room
Engagement Letter
Information
Project Team
Relevant Period
Terms and Conditions
Transaction
POPIA
Applicable Laws
Completion Date
Due Diligence Findings
Personnel
Professional Indemnity Insurance
Signing Date
Standard Terms
Clauses
Scope of Services
Engagement Terms
Professional Fees
Payment Terms
Confidentiality
Data Protection
Intellectual Property
Professional Standards
Team Composition
Client Obligations
Deliverables
Timeline
Termination
Limitation of Liability
Force Majeure
Governing Law
Dispute Resolution
Information Access
Document Retention
Professional Indemnity
Conflicts of Interest
Non-Solicitation
Sub-Contracting
Warranties
Assignment
Notices
Entire Agreement
Severability
Third Party Rights
Insurance
Compliance with Laws
Anti-Corruption
Amendment
Waiver
Counterparts
Relevant Industries

Financial Services

Mining

Manufacturing

Technology

Retail

Healthcare

Energy

Telecommunications

Real Estate

Agriculture

Professional Services

Private Equity

Venture Capital

Insurance

Banking

Relevant Teams

Legal

Finance

Corporate Development

Mergers & Acquisitions

Risk Management

Compliance

Corporate Finance

Investment

Due Diligence

Advisory

Transaction Services

Executive Management

Company Secretariat

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Corporate Finance Director

Investment Director

Due Diligence Manager

Transaction Advisory Partner

Managing Partner

Compliance Officer

Risk Manager

Finance Director

Company Secretary

Mergers & Acquisitions Director

Investment Manager

Private Equity Partner

Corporate Development Manager

Industries
Companies Act 71 of 2008: Governs corporate entities in South Africa and contains provisions about access to company information, corporate governance requirements, and disclosure obligations during due diligence processes
Protection of Personal Information Act (POPIA) 2013: Regulates the processing of personal information and ensures data protection during the due diligence process, including requirements for handling, storing, and transferring personal information
Financial Advisory and Intermediary Services (FAIS) Act 37 of 2002: Regulates financial service providers and may apply if the due diligence involves financial advice or assessments
Auditing Profession Act 26 of 2005: Relevant when the due diligence involves auditing services or is conducted by registered auditors, setting professional standards and requirements
Financial Intelligence Centre Act (FICA) 38 of 2001: Addresses anti-money laundering requirements and customer due diligence obligations, particularly relevant for financial investigations
Electronic Communications and Transactions Act 25 of 2002: Governs electronic communications and digital signatures, relevant for electronic document sharing and virtual due diligence processes
Promotion of Access to Information Act (PAIA) 2 of 2000: Regulates access to information and may be relevant when requesting or handling company information during due diligence
Consumer Protection Act 68 of 2008: May be applicable if the due diligence services are provided to individuals or entities qualifying as consumers under the Act
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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