Legal contract review checklist
Using a checklist helps to ensure that contract reviews, conclusions and recommendations are reported in a consistent manner. This contract review checklist for use during legal due diligence records the review of contracts provided during the due diligence process.
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When do I use this document?
- as a template for the review of different types of contract provided during due diligence
- to help achieve a consistent approach to the contract review and reporting process
- to enable conclusions and recommendations from contract reviews to be presented in a common format
What are the key features?
- checklist to be completed by the reviewer of a legal contract
- introductory section, requiring completion of forms including:
- name of reviewer
- purpose of review
- document name
- key issues arising
- recommended action(s)
- tabular checklist of contract terms to be reviewed and completed by the reviewer, including comments arising
What else do I need to know?
A legal contract review checklist will help achieve a consistent approach to the due diligence review and reporting process. The investor and its advisers may adapt a common document review checklist for use by the reviewers of documents. The review results and any recommended actions can then be presented in a consistent manner.
Legal due diligence is likely to involve the review of a number of legal agreements or other legal documents relevant to the subject of the transaction.
For an investment transaction, the subject company will have entered into numerous contracts dealing with different topics and activities, including:
- purchase and sale of goods
- acquisition of assets
- provision of services
- leasing of property and equipment
- development/licensing of intellectual property
- loans and other finance
- employment contracts
- agreement with the company’s founders and shareholders
When do I use this document?
- when a shareholder waives their pre-emption rights on the transfer of shares by another shareholder
- when the shareholder agrees to waive its first refusal rights under either the company’s Articles of Association or Shareholders Agreement
What are the key features?
- different forms of waiver, depending on whether the waiving shareholder is an individual or a company
- optional wording based on whether the pre-emption rights arise under either the Articles of Association or Shareholders Agreement
- waiver in the form of a Deed
What else do I need to know?
When do pre-emption rights apply on a share transfer?
Shareholders may have pre-emption rights in relation to the proposed transfer of existing shares in the company by another shareholder.
Pre-emption rights exist and operate as a right of first refusal, allowing non-transferring shareholders to acquire shares in proportion to their existing number of shares for the same cash consideration as the selling shareholder proposes to sell them to a third party and before the shares can be acquired by another party. The buyer could be another current shareholder or someone who is not already a shareholder.
Pre emption rights arise from either the company’s Articles of Association or the company’s Shareholders Agreement (or possibly both). They will not apply if the company does not have a Shareholders Agreement and has adopted, without amendment, the Model Articles for private limited companies. The Companies Act 2006 does not contain a statutory pre-emption right on the transfer of shares. See Articles of Association – pre-emption (share transfer) for pre-emption rights to include in Articles of Association by passing a special resolution.
A non-transferring shareholder can elect not to accept the offer to purchase the shares and instead to waive their pre-emptive rights in relation to a proposed transfer. To do so, the non-transferring shareholder should sign a waiver of pre-emption rights.
What other documents are available?
For a deed of waiver disapplying pre-emption on a proposed allotment of new shares, see
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