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A Due Diligence Policy outlines the systematic steps an organization takes to evaluate risks and verify facts before making important business decisions. It guides teams through essential checks and investigations, helping them meet their legal obligations under Canadian corporate and securities laws.

These policies typically cover areas like financial reviews, compliance checks, and risk assessments. They protect companies and their directors from liability by showing they took reasonable care in decision-making - a key defense under Canadian business judgment rules. Well-designed policies help organizations spot potential issues early, document their review process, and maintain consistent standards across different departments or locations.

Organizations need a Due Diligence Policy when they're planning major business moves like mergers, acquisitions, or significant investments. It's especially important before signing contracts with new suppliers, entering joint ventures, or expanding into new markets across Canadian provinces.

The policy becomes essential during corporate restructuring, when bringing on key executives, or launching products that face regulatory scrutiny. Canadian companies often activate their due diligence processes when exploring real estate purchases, considering environmental impacts, or evaluating potential business partners. Having this framework ready before these situations arise helps teams move quickly while managing legal and financial risks.

• Basic Corporate Due Diligence: Sets standard review procedures for regular business transactions and partnerships
• M&A Due Diligence: Covers detailed investigations for mergers, acquisitions, and corporate restructuring
• Environmental Due Diligence: Focuses on environmental risks and compliance with Canadian environmental protection laws
• Financial Due Diligence: Outlines procedures for reviewing financial statements, tax compliance, and monetary risks
• Vendor Due Diligence: Guides the evaluation of suppliers, contractors, and business partners under Canadian procurement standards

• Corporate Legal Teams: Draft and maintain Due Diligence Policies, ensuring they align with Canadian regulations and company needs
• Board Members: Review and approve policies, oversee implementation, and ensure proper risk management protocols
• Compliance Officers: Implement and monitor adherence to the policy across departments and locations
• Department Managers: Apply policy requirements in day-to-day operations and vendor relationships
• External Auditors: Review policy implementation and effectiveness during regular audits
• Investment Teams: Follow policy guidelines when evaluating potential business opportunities and partnerships

• Identify Scope: Define which business activities and departments the Due Diligence Policy will cover
• Review Regulations: Gather relevant Canadian laws, industry standards, and regulatory requirements
• Map Processes: Document existing review procedures and identify gaps in current practices
• Set Standards: Establish clear criteria for evaluating risks, partnerships, and investments
• Create Templates: Develop standardized forms and checklists for consistent documentation
• Define Roles: Clarify responsibilities for policy implementation and oversight
• Draft Policy: Use our platform to generate a comprehensive, legally-sound document that meets all requirements

• Purpose Statement: Clear objectives and scope of the due diligence process
• Roles and Authority: Detailed responsibilities of key personnel and approval chains
• Risk Assessment Framework: Specific criteria for evaluating business risks and opportunities
• Documentation Requirements: Standards for record-keeping and evidence collection
• Compliance Standards: References to relevant Canadian laws and regulatory requirements
• Review Procedures: Step-by-step processes for conducting due diligence investigations
• Reporting Protocol: Guidelines for summarizing findings and making recommendations
• Confidentiality Provisions: Rules for handling sensitive information during reviews

A Due Diligence Policy differs significantly from a Due Diligence Checklist in both scope and function. While they work together, each serves a distinct purpose in risk management and compliance.

• Framework vs. Tool: The policy establishes overarching principles and procedures, while the checklist is a practical tool for implementing those procedures
• Permanence: Policies remain relatively stable and require formal updates, while checklists can be modified for specific transactions or scenarios
• Authority Level: Policies need board or executive approval and set organizational standards, while checklists are operational documents used by staff
• Scope of Content: The policy explains why and how due diligence happens, while checklists detail specific items to verify during the process
• Legal Weight: Policies serve as evidence of corporate governance standards, while checklists document actual completion of required steps