The Dutch translation of due diligence is ‘with due care’. Unlike in the Netherlands, you as a buyer have no legal obligation to investigate in India. Nevertheless, it is crucial to thoroughly screen the background of the Indian party before engaging with your business partner. For example, you perform thorough due diligence of an Indian company (Private Limited).
Due diligence in India
Due diligence is typically performed prior to the purchase of a business or investment in a business. It is carried out by the acquirer or investor. In fact, it is sometimes referred to as an audit. However, a good due diligence process goes beyond just checking the financial statements. Due diligence helps make the right decision and mitigate the risks associated with the business transaction. Both parties typically enter into a nondisclosure agreement before initiating a business investigation. This is because sensitive, financial, operational, legal and regulatory information is revealed during the due diligence process.