Company Law

Format of Due Diligence report by Chartered Accountant for Bank

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DUE DILIGENCE REPORT
For [ABC Pri­vate Lim­it­ed]
Con­duct­ed by: [    ], Char­tered Accoun­tants
Date of Report: [Insert Date]
Peri­od Cov­ered: [Insert peri­od, e.g., FY 2022–23 to FY 2024–25]

1. INTRODUCTION

This Due Dili­gence Report (“Report”) has been pre­pared by [Firm Name], Char­tered Accoun­tants, pur­suant to the engage­ment by [Client Name] for the lim­it­ed pur­pose of eval­u­at­ing the finan­cial, tax, legal, and reg­u­la­to­ry stand­ing of [ABC Pri­vate Lim­it­ed], a com­pa­ny incor­po­rat­ed under the Com­pa­nies Act, 2013 bear­ing CIN: [Insert CIN], hav­ing its reg­is­tered office at [Insert Address], with a view to assess its eli­gi­bil­i­ty for [pro­posed investment/acquisition/strategic alliance/etc.].

The scope of this due dili­gence includes exam­i­na­tion of finan­cial state­ments, tax com­pli­ances, cor­po­rate records, oper­a­tional mat­ters, reg­u­la­to­ry fil­ings, and poten­tial con­tin­gen­cies as detailed herein.

2. SCOPE OF WORK

The scope of our work included:

  • Review of audit­ed and unau­dit­ed finan­cial statements
  • Review of statu­to­ry and tax com­pli­ances (Income Tax, GST, ROC fil­ings, etc.)
  • Ver­i­fi­ca­tion of cor­po­rate doc­u­ments and sec­re­tar­i­al records
  • Review of key con­tracts, licens­es, and reg­u­la­to­ry approvals
  • Iden­ti­fi­ca­tion of con­tin­gen­cies or off-bal­ance sheet liabilities
  • Analy­sis of relat­ed par­ty trans­ac­tions and cap­i­tal structure

3. CORPORATE INFORMATION

  • Name: ABC Pri­vate Limited
  • CIN: [Insert CIN]
  • Date of Incor­po­ra­tion: [Insert Date]
  • Reg­is­tered Office: [Insert Address]
  • Autho­rised Share Cap­i­tal: ₹ [Amount]
  • Paid-up Share Cap­i­tal: ₹ [Amount]
  • Direc­tors:
    • Mr. X (DIN: ___)
    • Ms. Y (DIN: ___)
  • Statu­to­ry Audi­tors: [Insert name and FRN]
  • Sec­re­tar­i­al Audi­tor: [Insert name if any]
  • Bankers: [List of banks]

4. FINANCIAL DUE DILIGENCE

a. Finan­cial State­ments Reviewed

  • Audit­ed finan­cial state­ments for FY [2022–23, 2021–22, 2020–21]
  • Man­age­ment accounts for FY [2024–25] (unau­dit­ed)

b. Key Observations

  • Rev­enue growth trend: [e.g., CAGR of 12% over 3 years]
  • Prof­itabil­i­ty: [Net Prof­it Mar­gin, EBITDA trends]
  • Work­ing cap­i­tal cycle: [Days Receiv­ables, Inven­to­ry, Payables]
  • Sig­nif­i­cant con­tin­gent lia­bil­i­ties not­ed: [Details if any]

c. Cap­i­tal Structure

  • Equi­ty share­hold­ing pattern
  • Details of pref­er­ence shares / con­vert­ible instruments
  • Secured and unse­cured bor­row­ings with terms

5. TAX DUE DILIGENCE

a. Income Tax

  • PAN: [Insert PAN]
  • Return fil­ing sta­tus: [Filed till AY 2024–25]
  • Any pend­ing demands or notices: [Yes/No, details if yes]
  • TDS com­pli­ance: [Quar­ter­ly com­pli­ance status]

b. GST

  • GSTIN: [Insert GSTINs]
  • Return fil­ing sta­tus: [Filed till [Month/Year]]
  • Rec­on­cil­i­a­tion with books (GSTR-2B vs ITC claimed): [Com­pli­ant / Not Compliant]
  • Notices under Sec­tion 61/73/74/122: [Details if any]

c. Oth­er Taxes

  • Pro­fes­sion­al Tax, ESI, PF, etc. com­pli­ance reviewed
  • No mate­r­i­al non-com­pli­ance observed / [Insert excep­tions if any]

6. LEGAL & SECRETARIAL DUE DILIGENCE

  • Mem­o­ran­dum and Arti­cles of Asso­ci­a­tion: Ver­i­fied
  • Board Min­utes and AGM pro­ceed­ings: Up-to-date
  • ROC fil­ings: Annu­al Returns and Finan­cial State­ments filed up to [FY]
  • Charges Reg­is­tered: [Details of secured loans and charges with dates]
  • Lit­i­ga­tion: No major pend­ing legal dis­putes / [Details of ongo­ing cases]

7. OPERATIONAL & COMMERCIAL REVIEW

  • Key Cus­tomers & Sup­pli­ers: Con­cen­tra­tion risk observed in [top 3 cus­tomers con­tribut­ing X% revenue]
  • Contracts/Agreements: Reviewed major con­tracts for: 
    • Lease agree­ments
    • Ven­dor and cus­tomer contracts
    • NDAs, MoUs, dis­tri­b­u­tion licenses
  • Human Resources:
    • Num­ber of employ­ees: [X]
    • Employ­ment agree­ments and statu­to­ry com­pli­ances reviewed

8. INTELLECTUAL PROPERTY & ASSETS

  • Reg­is­tered trade­marks: [Details, if any]
  • Own­er­ship of domain, soft­ware licens­es: Verified
  • Phys­i­cal asset reg­is­ter and depre­ci­a­tion sched­ule matched with FA register

9. REGULATORY COMPLIANCE

  • Reg­is­tered with MCA, GST, Income Tax
  • MSME Reg­is­tra­tion: [Yes/No]
  • FSSAI/Factory License/Other sec­toral licens­es: [Men­tion sta­tus and validity]
  • No mate­r­i­al defaults or penal­ties noticed in com­pli­ance areas

10. RELATED PARTY TRANSACTIONS

  • Com­pli­ant with Sec­tion 188 of the Com­pa­nies Act
  • All trans­ac­tions dis­closed and approved in board meetings
  • No adverse obser­va­tions on arms-length pricing

11. KEY FINDINGS & RISKS

  • Pend­ing GST notice under Sec­tion 73 (FY 2021–22) amount­ing to ₹ X lakhs
  • One relat­ed par­ty trans­ac­tion not backed by for­mal agreement
  • Income tax refund claim pend­ing for AY 2023–24
  • All statu­to­ry reg­is­ters and res­o­lu­tions are gen­er­al­ly in order

12. RECOMMENDATIONS

  • Rec­ti­fy pro­ce­dur­al laps­es in TDS fil­ing (Form 26Q)
  • For­mal­ize all relat­ed par­ty trans­ac­tions via agreements
  • Com­ply with CARO 2020 report­ing expectations
  • Con­sid­er apply­ing for ISO or oth­er sec­toral certifications

13. CONCLUSION

Based on the exam­i­na­tion con­duct­ed and doc­u­ments reviewed, ABC Pri­vate Lim­it­ed is gen­er­al­ly com­pli­ant with applic­a­ble finan­cial, tax, and legal pro­vi­sions. While no mate­r­i­al fraud, default, or sig­nif­i­cant mis­state­ment has been detect­ed, cer­tain areas such as indi­rect tax com­pli­ance and relat­ed par­ty doc­u­men­ta­tion require cor­rec­tive actions. Sub­ject to the lim­i­ta­tions out­lined, the Com­pa­ny appears to be a going con­cern and suit­able for [investment/acquisition] sub­ject to com­mer­cial nego­ti­a­tions and legal finalization.

14. DISCLAIMER

This report is strict­ly con­fi­den­tial and is pre­pared sole­ly for the use of [Client Name]. Our respon­si­bil­i­ty is lim­it­ed to the scope defined and infor­ma­tion made avail­able to us. We do not pro­vide assur­ance or audit opin­ion under this engagement.

For [Firm Name]
Char­tered Accoun­tants
[Firm Reg­is­tra­tion No.]
(Sig­na­ture & Seal)
CA [Name], FCA
Mem­ber­ship No. [XXXXXX]
Date: [Insert Date]
Place: [Insert Place]

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