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A Due Diligence Policy sets out the systematic steps and procedures an organization follows to evaluate potential business deals, investments, or partnerships. In the Indian context, it helps companies comply with key regulations like the Companies Act 2013 and SEBI guidelines while protecting themselves from risks and liabilities.

The policy typically covers financial audits, legal compliance checks, market analysis, and reputation assessments. It guides teams through critical verification processes, from examining financial statements and ownership structures to checking regulatory clearances and pending litigation. This framework proves especially vital for mergers, acquisitions, and major contracts in India's dynamic business landscape.

Companies need a Due Diligence Policy before entering any major business transaction in India's complex market. This includes mergers and acquisitions, joint ventures, significant investments, or when onboarding high-value vendors and partners. The policy becomes essential when dealing with cross-border transactions or companies operating in heavily regulated sectors like banking, insurance, or pharmaceuticals.

It's particularly crucial during pre-IPO preparations, real estate purchases, or when investing in privately held companies where public information is limited. Indian regulators expect thorough due diligence documentation for foreign investments under FEMA guidelines, making this policy vital for international deals and regulatory compliance.

• Financial Due Diligence Policy: Focuses on examining financial statements, tax compliance, and cash flow patterns - essential for mergers and acquisitions in India
• Legal Due Diligence Policy: Covers regulatory compliance, litigation history, and contractual obligations under Indian law
• Operational Due Diligence Policy: Evaluates business processes, IT systems, and operational risks specific to Indian market conditions
• Environmental Due Diligence Policy: Addresses environmental compliance, particularly important for manufacturing and real estate sectors under Indian environmental regulations
• Vendor Due Diligence Policy: Specializes in evaluating suppliers and business partners, ensuring compliance with Indian procurement and anti-corruption laws

• Corporate Legal Teams: Draft and update the Due Diligence Policy, ensuring it aligns with Indian regulations and company objectives
• Board of Directors: Review and approve the policy, oversee its implementation, and ensure adequate resources for due diligence activities
• Compliance Officers: Implement the policy daily, coordinate investigations, and maintain documentation for regulatory requirements
• Investment Teams: Follow policy guidelines when evaluating potential deals, partnerships, or acquisitions in India
• External Advisors: Help conduct specialized due diligence, including chartered accountants, lawyers, and industry experts
• Department Heads: Ensure their teams follow policy requirements during vendor selection and partnership evaluations

• Industry Analysis: Identify sector-specific regulations and compliance requirements under Indian law that your policy must address
• Risk Assessment: Map potential business risks, legal exposures, and regulatory obligations unique to your organization
• Scope Definition: Outline which transactions require due diligence and set clear monetary thresholds
• Process Mapping: Document step-by-step procedures, timelines, and responsible departments for each type of due diligence
• Documentation Requirements: List essential documents, checklists, and reporting formats needed for different scenarios
• Review Mechanism: Establish how findings will be evaluated and what approval processes apply
• Platform Usage: Utilize our platform to generate a customized, legally-sound Due Diligence Policy template

• Purpose and Scope: Clear definition of policy objectives and transactions covered under Indian regulatory framework
• Legal Framework: References to Companies Act 2013, SEBI guidelines, and other relevant Indian regulations
• Investigation Protocols: Detailed procedures for financial, legal, operational, and compliance investigations
• Documentation Requirements: Specific checklists and forms for different types of due diligence exercises
• Reporting Structure: Clear hierarchy for approvals and escalation procedures
• Confidentiality Provisions: Data protection measures aligned with Indian privacy laws
• Review Mechanism: Periodic policy review requirements and update procedures
• Compliance Statement: Declaration of adherence to Indian regulatory requirements

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 India's corporate governance framework.

• Purpose and Scope: The policy establishes broad guidelines and procedures for conducting due diligence across all transactions, while the checklist is a specific tool used to execute individual investigations
• Legal Standing: The policy is a binding corporate document that sets organizational standards and accountability, whereas the checklist serves as a operational tool without independent legal force
• Content Structure: Policies outline principles, responsibilities, and compliance requirements, while checklists provide detailed item-by-item verification points
• Update Frequency: Policies require formal review and board approval for changes, but checklists can be modified as needed to address specific transaction requirements