Due dilligence check list

Due Diligence Checklist

We recommend that clients request (either through us or
independently) the following information and documentation, before
proceeding with an investment in a business or project in Panama.
Obviously, some items in this list will not always be applicable to all
transactions, but they are intended simply to draw your attention to
things which you should consider. It is always good to indicate to the
project/investment that if compiling any of the requested items would
be unduly burdensome, to let you know so that a less burdensome
alternative can be arranged.

Corporate documents of the Company and its subsidiaries:

1. Articles of Incorporation and any amendments

2. Bylaws/regulations (if applicable) and any amendments thereto
3. Certificate of Good Standing from the Companies Registry,
showing all up-to-date company information
4. Minutes of all Board of Directors, committee and shareholders
meetings and all consents to actions without meeting
(resolutions)
5. Addresses and jurisdictions in which the company is qualified to
do business and where the company has offices, holds property
or conducts business
6. Material information or documents furnished to
shareholders/directors during the last two years (if applicable)

If the Company is Publicly Traded, then you should also request:

1. All applications and permits for issuance/transfer of securities

2. Sample copies of stock certificates, warrants and options
3. Stockholder information, indicating the number of shares held,
dates of issuance, and consideration (price) paid
4. All stock options, stock purchase and other employee benefit
plans and forms of agreements
5. List of any outstanding stock options and warrants
6. Any registration rights or pre-emptive rights agreements
7. Convertible debt instruments
8. Proxies
9. Any voting trust agreements, buy/sell agreements, stockholder
agreements, warrant agreements, proxies or right of first refusal
agreements
 10.Any other contracts, arrangements or public/private documents
or commitments relating to the shares of the Company
11.Any special debt arrangements, guarantees or indemnification
between officers, directors or the shareholder(s) and the
Company

Material Contracts and Agreements

1. List of banks or other lenders with whom the Company has a

financial relationship (make sure that this list briefly describes
the nature of the relationship, whether there are any lines of
credit, equipment leases, encumbrances, etc.)
2. Credit agreements, debt instruments, security agreements,
mortgages, financial or performance guarantees,
indemnifications, liens, equipment leases or other agreements
evidencing outstanding loans to which the Company is or was a
party within the past 3 years
3. If the Company is required to present any compliance reports to
lenders, or other material correspondence to lenders, the reports
submitted by the Company or its accountants
4. Any other material contracts which the Company may have
which affect its obligations/indebtedness

Litigation

1. Is the Company currently involved or threatened by any

litigation?
2. Summary of disputes which it may have with its suppliers,
competitors or customers
3. Correspondence with the auditor/accountant regarding
threatened or pending litigation/assessments/claims
4. Copies of any pleadings (complaints/answers/motions) or
correspondence for pending or prior lawsuits involving the
Company or its Principals (shareholders/directors/officers)
5. Decrees, orders or judgements from courts or governmental
agencies
6. Settlement documentation

Financial Information

1. Audited financial statements since inception (where available,

otherwise financial statements)
2. Tax returns for the previous 3 periods
3. Quarterly income statements for the last 2 years and the current
year (to date)
 4. Cash flow projections or operating budgets
5. Business plan and other documents describing the current and/or
expected business of the Company, including all material
marketing studies, consulting studies or reports prepared by the
Company
6. If there has been any changes in the accounting methods or
principles used during the last 3 fiscal periods - a description of
these changes
7. Copies of management letters or special reports by auditors and
any responses to these for the last 3 fiscal periods
8. Copies of letters to counsel of the Company delivered to auditors
for the last 3 fiscal periods
9. Any documents relating to material write-downs or write-offs
other than in the ordinary course of business
10.Description of all contingent liabilities (in Panama, this should
include employment liquidations)
11.Aging schedules for accounts receivable for the last two years

Taxation

1. Evidence that the Company is current on income, sales, social

security, education and any other tax payments (Paz y Salvo)
2. Any notice of assessment, tax reports, etc. from local authorities

Property

1. List of real and material personal property owned by the

Company
2. Title and mortgage documents and security agreements
pertaining to such property
3. Any outstanding leases with an original term greater than one
year for real and personal property to which the Company is the
lessor or lessee
4. Where the Company has proprietary technology which was
developed/owned by the Company, documents relating tot he
ownership and copyright/patent/trademark filings

Employees and Related Parties

1. A management organisation chart and biographical information

on principals
2. Summary of any labour disputes
3. Correspondence or notes concerning any pending or threatened
labour strikes
 4. Collective bargaining agreements and negotiations undertaken
for this
5. Employment and consulting agreements for officers, directors,
key employees and any other principals. If they have loan
agreements or any other transactions with the Company, then
documentation relating to these
6. Schedule of all salaries and compensation paid to directors,
officers and key employees for the 2 most recent fiscal years,
itemising salary, bonuses and fringe benefits (use of cars,
property, etc.)
7. Summary of employee benefits and copies of any pension, profit
sharing, deferred compensation and retirement plans
8. Summary of management incentive or bonus plans which fall
outside of the above, as well as any other fringe benefits
9. Copies of confidentiality agreements (if applicable)

Insurance and Liability

1. Schedule of any insurance policies in force for "key men" or

"director indemnification" policies
2. Schedule or copies of all material insurance policies of the
company covering property, liabilities and operations, including
product liability.
3. Any other relevant documents pertaining to the Company's
exposure, including special reserve funds and accounts

Acquisitions, Partnership or Joint Venture Agreements

1. If the company is undertaking or has undertaken any

acquisitions, partnerships or joint ventures, you should obtain
copies of any contracts or agreements
2. Review any documentation pertaining to potential acquisitions or
alliances

Government Regulations & Filings

1. Review the Company's ANAM or licensing files - commercial

license, local municipal licenses, social security filings, etc. and
ensure that the company is completely compliant with each of
the government agencies which regulate the activities which it
undertakes