Showing posts with label E-Legal Due Diligence In India. Show all posts
Showing posts with label E-Legal Due Diligence In India. Show all posts

Monday, January 16, 2012

Corruption And Technology Related Due Diligences In India

The recent spate of corruption related disclosures in India has sent a strong message to Indian and foreign companies to ensure that their business are strictly in compliance with Indian and foreign laws. Naturally, companies that have entered into merger and acquisitions (M&A) in the past are now looking forward to ensure that nothing fishy happened during such M & A transactions.

These Indian and foreign companies are worried about the potential legal and tax liabilities arising out of various scams and corporate frauds and they are engaging law firms to do a due diligence analysis on the M&As or foreign direct investments (FDIs) they’ve made in India. Law firms are carrying out legal due diligence exercises to detect any loopholes that could result in liabilities on behalf of their clients to avoid litigation possibilities arising out of deals done in the past.

Some multinational companies are also doing legal due diligence to ensure that the Indian subsidiaries and companies they are about to invest or have already invested in are complying with the foreign laws like Foreign Corrupt Practices Act (FCPA) 1977 of the US and the UK Bribery Act 2010.

Even companies that are now exploring the possibility of M&A are taking precautions before entering into such partnerships. While there is no particular department for dealing with all the aspects of corporate business at a single place (Ministry of Corporate Affairs deals with corporate matters) yet department of information technology (DIT) is the chief department that deals with technology related issues. These include cyber law, cyber security, e-commerce, e-governance, spectrum allocation, telecom licensing, etc.

However, till now companies were not very cautious in their dealings in cyberspace and technology related fields. The information technology act 2000 (IT Act 2000) is the cyber law of India that prescribes various cyber law due diligence in India for areas like e-commerce, e-governance, Internet intermediary liability in India, social media due diligence in India, etc.

However, companies are in controversy these days in India. For instance, doubts have been raised regarding the manner in which Reliance and Airtel blocked websites in India. Similarly, some have even suggested that DIT must investigate the case of blocking of websites in India by Reliance, Airtel and other Internet service providers (ISPs).

Similarly, companies like Google, Facebook, etc are already in cyber law legal tangle in India. Indian government is claiming that these companies failed to comply with Indian laws, including cyber law of India. While the guilt or innocence of these companies is still to be established yet this episode has shown the importance of cyber due diligence for Indian companies.

Cyber crimes at social media websites in India are increasing and these social media platforms cannot ignore the same especially once they are made aware of the same. The social media websites investigation in India is going to increase and more and more e-discovery for social media in India would be conducted. Even cyber law due diligence for banks in India is going to increase.

Another area that requires a special mention is the contemporary practice known as e-legal due diligence in India. This requires domain specific techno legal expertise and a sound knowledge of both technical and legal aspects. It is an advanced and improved form of traditional legal due diligence in India that is done in an offline environment. With companies now shifting their data and information to data centers and virtual data rooms (VDRs), e-legal due diligence in India and abroad would be the norm.

Perry4Law and Perry4Law Techno Legal Base (PTLB) strongly recommend that Indian and foreign companies must conduct a thorough corruption and technology related due diligence analysis in India as soon as possible.

Monday, January 2, 2012

Electronic Legal Due Diligence In India

Legal due diligence in India is not a new concept. Legal due diligence involves assessing the suitability, efficiency and viability of a company or organisation. Legal due diligence may be required to meet statutory and regulatory requirements or it may be necessary when a company wishes to invest in another company.

A contemporary form of legal due diligence, especially for companies and individuals engaged in information and communication technology (ICT) related services, is known as cyber due diligence. Cyber law due diligence in India has become mandatory due to the stringent nature of cyber law of India. In fact, cyber due diligence for companies in India and cyber due diligence for banks in India has already been prescribed. Similarly, cyber security due diligence in India is also becoming a must to have requirement.

Securities and Exchange Board of India (SEBI) is planning to use electronic initial public offer (IPO) in India. Foreign investments in pharmaceutical in India has been liberalised by Reserve Bank of India. Similarly, foreign direct investment (FDI) in India has also been liberalised in many crucial areas. Naturally, lots of investments, IPOs, private equity funds exchange and many more collaborative and cooperative activities would take place in India in the year 2012.

These developments would also make legal due diligence necessary. However, the traditional legal due diligence procedure relies heavily upon paper based documents and transaction. A better option is to engage in electronic legal due diligence in India (e-legal due diligence in India). The e-legal due diligence in India is cost effective, timely and efficient. It also can provide the best possible results for legal due diligence purposes.

Even legal frameworks are in the process of being established to accommodate these contemporary changes. For instance, the electronic delivery of services bill 2011 (EDS Bill 2011) has been proposed by Indian government that would make electronic delivery of services in India an acceptable norm.

Similarly, existing legal frameworks also facilitates digital preservation in India, e-governance, e-commerce, etc that would also require e-legal due diligence in India. The public records keeping framework of India requires keeping of public records that very few organisations in India are doing. Of course, public records keeping framework of RBI is an exception in this regard. Public records are also required to be maintained by the information technology act 2000 and right to information act 2005 of India.

All these requirements of public records keeping and e-legal due diligence in India can be managed by establishing virtual data rooms (VDRs). Many leading companies are already using VDRs to ensure legal due diligence in a smooth and efficient manner. With VDRs thousands of pages of content can be made available in just 24hrs or less. VDRs provide a secure and highly efficient method for sharing critical business information for electronic due diligence in merger and acquisition (M&A) advisory, IPO and secondary offerings, asset purchases, venture capital due diligence, bio tech licensing, commercial and corporate real estate ventures, financial restructuring, preparing for exit strategies, and many other transactions that require large amounts of document sharing.

Further, e-legal due diligence in India would also ensure that electronic discovery (e-discovery) requirements in India are duly met whenever needed. E-discovery services in India would be required in near future in India and e-legal due diligence can greatly facilitate the same. Individuals and companies must start exploring using e-legal due diligence as soon as possible for greater benefits of their own.