Overseas Financing and Acquisitions: The Increasing Importance of Anti-Corruption Due Diligence
The recent commitment of the Canadian government to the enforcement of the Corruption of Foreign Public Officials Act marks a new period in foreign investment transactions and necessitates a re-evaluation of the legal due diligence strategies employed by financiers and prospective acquirers alike, as well as by issuers and other companies operating in foreign jurisdictions in general.
Corrupt practices can result in criminal charges, unlimited monetary penalties, reputational consequences, derivative shareholder claims and class actions, and may even undermine the rights and benefits to which a company is entitled in a foreign jurisdiction.
Due diligence conducted in advance of foreign investment transactions should therefore incorporate strategies designed to mitigate these risks. This includes: (i) general due diligence review of the prospective issuer or target’s operations and assets; (ii) specific due diligence inquiries into the prospective issuer or target’s policies and procedures, corporate records, contractual arrangements and business partners; and (iii) due diligence inquiries into the potential effects of corrupt practices on the prospective issuer or target’s foreign assets, operations and rights.
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acquisition Corruption of Foreign Public Officials Act due diligence foreign assets foreign investment strategy