A company due diligence constitutes a part of the legal due diligence given a purchase of property owned, and offered by, a company or other legal entity. The legal due diligence is a document intended to establish the ownership titles, burdens and third party rights over a property subject to a sale and purchase agreement. This analysis is usually complemented by a technical due diligence, a document completed by examining the building and studying its plans, certificates and registry. As a whole these two documents, the technical and legal due diligence, are meant to give the potential buyer an exhaustive understanding of the real estate unit, its status and features. As such, clearly, the full document drawn up is the result of the joint work of lawyers, accountants, engineers and surveyors.

A company due diligence in the case of a purchase of a real estate property enables the buyer to avoid any potential future revocation actions through better realizing the financial status quo of the seller company. Pursuant to article 2901 of the Italian Civil Code, a creditor may in some specific cases issue a claim, known as revocation action, at court regarding any deeds for deprivation (including sales and/or donations) of the assets of a debtor company. Such a deed of deprivation might include the sale of a property owned by the company in question.

The issuance of a revocation action can be realized through a judicial procedure, whereby the creditor’s notification thereon shall be submitted within five years as of public disclosure of the deed of deprivation. Any property subject to such an action becomes secure once the five-years period has passed. In the case of a deprivation through sale (that is, with the parties’ pecuniary interests involved), the creditor shall prove at court that the property buyer was aware as regards the damage caused to the creditor. Proof herein is usually difficult to provide and realized through indirect indications, such as an extremely low selling price, lack of payment, parental or marital relationship between the parties, etc. Pursuant to an enforced court decision the property may be blocked, and thus, its sale  may be endangered. That is why completing a company due diligence on a property, owned by a company, is a vital step for closing a successful purchase deal.

The content of a company due diligence generally includes basic information about the company, such as its address, year of establishment, area of work, and management structure. It also, furthermore, involves an analysis of the company’s solvency, shareholders’ rights, assets and liabilities. These investigations are used, primarily, to determine the company’s ownership and ascertain whether there are any parties that might have rights over the given property. Depending on the company’s structure it may be subject to distinct ways of transfer of shareholders’ rights, and different means for acquiring and selling company assets and/or managing any liabilities. Any recent trends in the flow of the present assets and liabilities, as well as the reasoning behind these trends, shall also serve to indicate the company’s positioning on the market. These matters, together with all the specific company information relevant to the given case and subject to public disclosure in the respective registries, needs to be carefully analysed and presented within the due diligence report.

Additionally, the company’s recent balance sheets and income statements shall also be studied, hence, providing information on the  corporate capitalization, reliability and solvency index of the company, as well as any fluctuations in the regarded costs and revenues. These documents are once again publicly disclosed and aim to establish the company’s solvency status. Thus, any interested party, be it a creditor, or a contractor, can analyse the financial capacity of the company in question and choose whether to enter into any contractual agreements with it. 

An action, which can furthermore expand the analysis of the company’s solvency status, would be carrying out a survey at the Register of Complaints (set up pursuant to Decree No. 316 of August 9th, 2000), whereby all unrealized payments on natural persons and companies are registered . The service provides a complete and updated report on all unrealized payments of a legal or natural person, as resulted from the failed takings of bank checks, money orders and bills.