Due Diligence Research Articles

UTILISING WARRANTY AND INDEMNITY INSURANCE TO ADDRESS ASYMMETRIC INFORMATION

Although effective due diligence has been made in acquisitions, many legal problems arise due to the fact that there are inaccuracies and misrepresentations in the statements made by the seller after the closing due to asymmetric information. The paper mainly analyzes the importance of the spread of declaration and guarantee insurance as a solution to these problems. Merger and acquisition initiatives are gaining more and more intensity at the national and international level. Compensation responsibilities arising from the violation of declarations and warranties, which are frequently encountered in this process, are among the issues that buyers and sellers fear most. In this context, it is thought that the dissemination of declaration and guarantee insurance is one of the most effective ways to neutralize this risk. Declaration and guarantee insurance acts as a bridge between the protection demands of the buyers and the aims of the sellers to provide a clean exit. Especially in the case of mergers and acquisitions, it helps the contracting parties to minimize their risks by indemnifying the financial losse that may arise due to the declarations and warranties presented regarding the relevant share and the target company by the insurer. With the transfer of the indemnity responsibility arising from the declaration and warranty violation of the seller after the closing to the insurance company, the parties have placed the sales process on a more secure basis. While the buyer has access to the assurance of indemnifying the financial losses arising from the violation of the declarations and commitments presented to him about the share subject to the sale and the target company from the insurance company, the seller will have the opportunity to transfer his portfolio risk-free by transferring his post-sale responsibilities to the insurer. For this reason, declaration and guarantee insurance are frequently preferred by strategic investors, especially hedge funds.

Crowdfunding using Blockchain

Abstract: Our project aims to build a decentralised crowdfunding platform utilising blockchain technology, removing middlemen for improved efficiency and trust. Transparency allows backers to follow contributions in real-time, reducing fraud, and smart contracts automate crowdfunding rules, maintaining integrity. This study offers recommendations for practical application, redesigning crowdfunding for inclusive and safe support of creative ventures. Future goals include expanding investment options, assisting research projects, integrating support for many cryptocurrencies, and putting decentralised governance and due diligence systems in place. We picture a revolutionary platform that empowers global creators and backers.

Climate Protection and Supply Chain Civil Liability

Abstract This article explores two issues raised by the EU legislative project of a Corporate Sustainability Due Diligence Directive (“csddd”), that of climate change and civil liability. It focuses on environmental issues – and leaves workers´ protection aside. The comparison of the various draft texts of the EU Commission of 23 February 2022, the position of the ep´s Committee on Legal Affairs of 8 November 2022, the Council´s joint statement of 1 December 2022, and the ep´s statement of 1 June 2023 reveals that climate abatement has become an important pillar, next to workers´ protection. The analysis shows how contested the instrument of civil liability in the context of climate change abatement has become. It is most likely that civil liability for the violation of climate change related due diligence obligations will become central to the final package of compromises, and once enacted it may neither be frequent, nor an important legal tool. However, for the understanding of the political momentum, it is important to understand the background of some delegations standpoints, in this case the fierce opposition of the German delegation against civil liability as a tool, and the counter arguments. The analysis also reveals some interesting novelties: Liability would, if causation could be established, extend to ecological damages. The concept of due diligence changes some basic requirements of civil liability, such as the violation of a duty, the addressee of a claim and the procedural set-up. The limitation to large firms is consistent with this concept, and does not appear non-equitable.

Balancing Contracts: The Crucial Role of Pre-contractual Disclosure in Technical Assistance Agreements

This study rigorously delineates the imperative of pre-contractual disclosure in technical assistance contracts, spotlighting the legal necessity for suppliers to provide indispensable technical information vital for efficient recipient resource utilization. Emphasizing informed consent and mutual satisfaction, this pre-contractual mandate, rooted in the principle of good faith, addresses negotiation power imbalances. It clarifies that meeting this obligation differs from mere due diligence, demanding a specific outcome prior to contract formation. It asserts that debtors must be apprised of negotiated data unbeknownst to the creditor, justifiably. The ramifications are dual: rectifying power differentials and ensuring parity in knowledge among contracting parties. The study aims to enrich legislative frameworks for party protection, utilizing qualitative methods for definition and analysis. Results shed light on the nuanced aspects of pre-contractual disclosure, impacting contractual rebalancing and knowledge equality. This research advocates global attention to legislative actions promoting transparency and fairness in technical assistance agreements.
 Highlights :
 
 Clarifies the Legal Imperative: The study meticulously defines the legal obligation for suppliers to disclose crucial technical information in technical assistance contracts, ensuring informed consent.
 Addresses Power Imbalances: Emphasizes the role of the principle of good faith in rectifying negotiation power imbalances, contributing to more equitable contractual relationships.
 Global Advocacy for Legislative Measures: Calls for international attention to legislative actions fostering transparency and fairness in technical assistance agreements.
 
 Keywords : Pre-contractual Disclosure, Technical Assistance Contracts, Informed Consent, Good Faith, Legislative Regulation

Projecting Potential Impact of European Union Deforestation Regulation on Indonesian Palm Oil Industry

As a commitment to realizing the Green Deal which aims to reduce greenhouse gas emissions, the European Union has issued new regulations, namely the European Union Deforestation Regulation (EUDR) which focuses on eradicating products related to deforestation and forest degradation. Several provisions are implemented ranging from due diligence requirements to state assessments based on a three-level system. Based on the international trade conflict that occurred previously between the European Union and Indonesia regarding palm oil commodities, the author uses a qualitative approach to analyze tendencies in the EUDR as a continuation of the European Union's new protectionism against Indonesian palm oil commodities through administrative barriers. Several potential impacts are also visible, ranging from disputes at the WTO to losses in the Indonesian economy and development.

Fraud from a CPA named Laws: missed red flags and conflict of interest

Research methodology The case uses primary source documents, such as the court cases brought forth by the SEC and US District Attorney, for the specifics about the fraud and secondary sources for further background information about the town and industry. The individuals in the case are not disguised. The authors have no connection to the case. Case overview/synopsis Thomas Laws was a CPA, a registered investment advisor and a real estate broker. Laws made a poor business investment. Instead of taking the financial hit, Laws orchestrated a complex Ponzi scheme using clients from his CPA practice and embezzling money from an employer, Santa Fe Gold Corporation. Laws’ scheme continued until his employer confronted him about missing funds. Frank Mueller, the CFO of Santa Fe, did not exercise the due diligence necessary until it was too late. Rest’s framework for ethical decision making is used to frame the ethical decisions Mueller can make. The case examines the conflict-of-interest guidance issued by the American Institute of Certified Public Accountants (AICPA) and allows students to examine the due diligence and controls needed by employers and prospective investors. Complexity academic level This case is designed for undergraduate accounting students taking Intermediate Accounting I, ACCT 0312 at the authors’ institution, typically junior-level students. It would be appropriate whenever you introduce the AICPA Code of Professional Conduct during an ethics discussion.

Some issues of due diligence in choosing a counterparty

The article includes certain aspects of the manifestation of due diligence by participants in civil law when choosing a counterparty to enter into contractual legal relations. It is revealed that the concept of “due diligence” is used in various areas of legal activity. For the purposes of the article, the author reveals the content of due diligence in tax and civil law in the context of choosing a counterparty in contractual legal relations. Based on data from judicial practice and legislative regulation, due diligence standards are differentiated depending on type of person’s activity (entrepreneurial or not), as well as on the complexity, duration and significance of the planned subject of the transaction for a particular person.

Buyer collaboration in managing supplier responsibility with ESG due diligence effort spillover and fairness concerns

Propelled by climate change and social injustice, environmental, social, and governance (ESG) disclosure is popularizing and drives for building a more transparent and responsible supply chain. As many unsustainable and unethical activities are hidden in the upstream supply chain, it demands ESG reporting on suppliers. Against this background, buyers conduct due diligence (DD) to assess, manage, and report the ESG practices of the upstream suppliers. We consider two buyers with different responsible awareness competing for consumers in the end market (referred to as a strong buyer and a weak buyer). Competing buyers can share a common supplier and cooperate in implementing ESG DD to strengthen consumer trust, nevertheless, such cooperation gives the weak buyer an opportunity to free ride on the strong buyer’s ESG effort (i.e., ESG effort spillover). We find that only a significantly low spillover effect can induce a fair-neutral strong buyer to adopt buyer collaboration. Interestingly, with the consideration of fairness concerns, the competitor can be treated as a friend in collaboratively managing the ESG practices of the common supplier even facing a great threat of ESG DD effort spillover. Our results also reveal that fairness concerns have a non-monotone impact on the possibility of realizing a win–win outcome between the two buyers. Our findings shed light on how the optimal supplier ESG DD strategy in a competing market differs when incorporating fairness concerns.

The Global Strategy of Coca Cola

This report evaluates the global strategy for Coca-Cola, a multinational carbonated drinks brand. Coca-Cola faces competition from major players like PepsiCo, Nestle, and Red Bull. To expand its presence internationally, Coca-Cola primarily utilises licensing and joint ventures as entry modes. The company employs a combination of global and local marketing strategies to enhance its global integration and local responsiveness. However, the report recommends that to mitigate IP theft in a licensing agreement, Coca-Cola needs to conduct thorough due diligence among potential partners. Secondly, it suggests a transition towards offering healthier beverage options to align with changing consumer preferences. Lastly, the report advises Coca-Cola to adopt a transnational strategy that focuses on both global integration and local responsiveness, optimizing market opportunities while catering to specific market needs. The implementation of these recommendations will enable Coca-Cola to maintain its competitive edge, safeguard its intellectual property, tap into the growing demand for healthier drinks, and effectively navigate the complexities of diverse markets, ensuring sustained growth and success.

Liliana Lemaître’s technological race: innovate or fall behind

Learning outcomes Upon completion of this case study, students will be able to analyze the interplay between small business growth and innovation in sustainable entrepreneurial success; evaluate factors influencing the adoption of technological innovations within startups; and decide on the optimal technological innovation for achieving sustainable growth in a startup. Case overview/synopsis This case study is about Liliana, a young Colombian entrepreneur. She had to decide how to innovate in her process of providing regulatory compliance and due diligence consulting services. According to Law 1778 of 2016, compliance and due diligence services became mandatory for companies with international operations in Colombia. Lemaître, Liliana’s venture, provided this service in an artisanal way. However, her market required the incorporation of technologies. Liliana must choose what to automate in her process and what to keep traditional. Not innovating meant Lemaître would be unable to grow, causing the sustainability of the business would to be at risk. Complexity academic level This case study is suitable for use for master of business administration students and in executive education short courses. Supplementary materials Teaching notes are available for educators only. Subject code CSS 3: Entrepreneurship.

Enterprise Content Management system implementation: Insights from the National Library and Archives of UAE

This study aims to elucidate the key elements that contribute to the successful execution of an Enterprise Content Management (ECM) system. The insights provided are based on the experiences of professionals at the National Library and Archives of the United Arab Emirates (UAE) during their ECM implementation. An interpretive philosophical model, along with qualitative methodologies such as interviews and focus group discussions were employed for data collection. The participants included professionals from the UAE's National Library and Archives who played a significant role in the ECM system's implementation. A thorough review of relevant literature was also carried out to validate and reinforce the viewpoints obtained from the interviewees and focus group participants. The study discovered that comprehensive business needs assessment, detailed research, system compatibility, clarity of policies, and effective change management are vital for the successful roll-out of an ECM system. However, it's worth noting that the proposed implementation model offered in this study may not be all-encompassing. The insights shared are limited to the experiences of one archival institution, and the literature consulted may not cover all existing viewpoints. Despite these limitations, this research provides essential guidance, particularly to national archival institutions contemplating the adoption of ECM systems. It underlines the importance of ECM in effectively managing an organization's structured and unstructured data and emphasizes the need for due diligence during ECM implementation. Further research is recommended to explore the advantages arising from the successful implementation of an ECM system.

36 Disparities in General Mental Status Between Lower and Higher SES Ethnically Diverse Older Adults

Objective:To investigate differences in performance on a widely used cognitive screener between community-dwelling older adults from two disparate socioeconomic groups.Participants and Methods:Participants were part of a larger study of cognitive screening in healthy older adults. The total sample (N=79, 69.6% female, 19% White/Caucasian, 12.7% Asian, 43% Latino/a, 25.3% Black/African-American) consisted of community-dwelling adults (Mage=73.1 years [SD=7.2] and Meducation=14.3 years [SD=2.6]) who were initially recruited via social media, flyers, and general community announcements. A lack of ethnic minority participants resulted in a two-year commitment to reach communities of color via visits and provision of health literacy to local religious and community programs. Continuous contact with leaders/gatekeepers helped establish research study credibility and forge a stronger sense of trust among ethnically diverse participants in the greater Houston, TX, area. Testing was initially conducted at the clinical study site. Due to low participation rates among people of color, greater effort was placed on tailored strategies to overcome economic and time constraints (i.e., schedule/time conflicts, lack of transportation, inability to pay for parking). To fit the priorities and needs of the participants, testing was also conducted at their homes (25.3%) and nearby religious and community centers (22.8%). Participants identifying as Latino/a or Black were predominantly recruited and tested at their local community center (as requested by gatekeepers/participants) to increase access to the study, in contrast to Caucasian participants. Median income estimates were used to stratify participants by socioeconomic status (SES) based on zip codes into low SES (L-SES) or high SES (H-SES) groups.Results:Participants from the L-SES group had significantly lower total scores on the MoCA than their H-SES counterparts, t(77J=2.837, p=0.003, g=0.696. The average MoCA total score for participants from the L-SES group was 2.64 points lower. The observed differences in MoCA total score when stratifying by ethnicity may be attributable to differences in education level and SES, which are known risk factors for cognitive impairment and will be further examined upon recruitment completion.Conclusions:Studies have found that ethnically diverse older adults not only encounter more barriers to accessing quality health care but also experience disparities in brain health research. Communities of color comprise a sizeable portion of our older adults but have been traditionally underrepresented in clinical research, limiting the generalizability of research findings to clinical treatment. Socioeconomic deprivation has been identified as one of several barriers to research engagement for people of color, placing ethnic communities at increased risk for under- or misdiagnosis and limited access to medical intervention. Preliminary findings have implications for the recruitment of ethnically diverse groups in clinical research. Given the growing racial and ethnic diversity among the United States population, we must do our due diligence to increase understanding of participation and recruitment barriers for racial/ethnic individuals. Tailored community outreach and engagement strategies may be effective in improving the inclusion of ethnically diverse populations and facilitating recruitment and retention in clinical research studies.

Role of Due Diligence in Combating Money Laundering in Lens of ESG: A Concept

This study focuses on the implementation of Customer Due Diligence (CDD) requirements under Section 16 of the Anti-Money Laundering Act (AMLA) in Reporting Institutions (RIs). While RIs have established policies and procedures to comply with AMLA and mitigate risks associated with money laundering, there needs to be more emphasis on gathering information to address Environmental, Social, and Governance (ESG) Factors. ESG concerns have become increasingly important in the financial sector, but many institutions need help integrating ESG considerations into their due diligence processes. This study explores the incorporation of ESG due diligence within CDD practices, as it is crucial for long-term value creation, investor returns, and mitigating ESG risks that might be exposed to money laundering. This research aims to identify and propose practical strategies for integrating ESG factors into the customer evaluation process of RIs OR investigate factors that influence the role of due diligence in combating money laundering through the lens of ESG. This paper examines factors that influence the function of due diligence in tackling money laundering through the lens of ESG.

Development of E-module Based on Guided Inquiry in Chemical Bonding Topic for Class X Student Learning Materials

The lack of teaching materials that are able to explain the formation of chemical bonds causes students difficulties in learning. Therefore, this study focused on developing guided inquiry-based e-module of chemical bonding. This study aims to determine the feasibility and students response to guided inquiry-based e-module of chemical bonding. This study employs research and development (RD) using ADDIE model which is limited to development stage. The due diligence was carried out by material, media and language experts. The respondents involved were 31 students of class XI MAN 2 Pontianak. The research instruments were the feasibility sheets, media, language, and response questionnaires. The results of the feasibility of e-module test is k=1 (very high validity) and student response tests k=0.85 (very interesting). Those findings indicate that the E-module is very feasible to use

Pengembangan Multimedia Pembelajaran Computer Based Instruction (CBI) Menggunakan Adobe Flash Di SMK Negeri 10 Medan

The development of Computer Based Instruction (CBI) Interactive Learning Multimedia using the Adobe Flash application aims to determine the feasibility of this media as learning that is applied to Multimedia subjects for class XI SMK Negeri 10 Medan. This research is a type of development research (RD) using the ADDIE development model which has Analysis, Design, Development, Implementation, Evaluation stages. The feasibility test that will be carried out involves 2 media validators, 2 material validators and all class XI students of SMK Negeri 10 Medan. The feasibility validation instrument to be used in this study was adapted from Sriadhi's research instrument which consisted of 3 validation instruments, namely: material instruments, media instruments, and user instruments. Based on the results of the due diligence study obtained from media experts of 4.15 "decent", material experts 4.33 "very feasible", users (students) 4.21 "very feasible" this indicates that the development of Computer Based Instruction-based learning media ( CBI) using the Adobe Flash application is very feasible to apply to Multimedia subjects in class XI at SMK Negeri 10 Medan.

Look before you leap: states’ prevention and anticipation duties under the right to science

ABSTRACT States have under the right to science an obligation to prevent or mitigate harm of scientific progress and its applications. This obligation is derived from the right to be protected against the harmful effects of scientific progress and its applications, a dimension of the right to science. However, preventing the harmful effects of scientific progress and its applications can sometimes conflict with other human rights or with scientific freedom, which is also part of the right to science. In such cases, limitations on one right might be required to protect another, whereby the different interests need to be properly balanced. While the duty to prevent harm is well established in international human rights law, it is yet obscure if the anticipation of potential harms to come is possible under the existing framework of international law. While not a legal concept, entry points for anticipation are already covered under the current international law and can be drawn together by a cross-fertilisation of the obligation to prevent, the precautionary principle and due diligence. The precautionary principle and due diligence can provide guidance on when and under what circumstances situations for anticipation are triggered and conducted. Both concepts involve a necessity and proportionality test, which is also inherent to limitations under international human rights law.

Protection of the Rights of the Owner When Pledging Property

Property turnover is a rather complex phenomenon, for which actions related to the violation of rights and legal interests, the abuse of the right are not an exception. In particular, situations arise when property is pledged by an unauthorized person, which creates a situation in which the interests of the owner and the pledgee are opposed. The complexity of resolving these disputes is due to the fact that the legislator uses rather abstract categories that do not have a clear content and are interpreted ambiguously in science and law enforcement practice. The purpose of the article is to form a theoretically substantiated approach to resolving disputes related to the protection of the owner’s rights when property is pledged by an unauthorized person. Achieving the purpose of the article is carried out by solving the following tasks: determining the signs indicating the disposal of property from the owner’s possession against his will, determining the approach in assessing the due diligence of the pledgee when concluding a pledge agreement. The article was prepared using general scientific methods (systemic, logical) and special legal methods (comparative legal, formal legal). The author comes to the conclusion that when property is pledged by an unauthorized person, first of all, the circumstances related to the disposal of the subject of pledge from the owner»s possession are subject to assessment, in the event that the property has retired against the will of the owner, the pledge is terminated, if the property has retired due to will of the owner, then due diligence on the part of the pledgee is subject to assessment, and depending on this fact, the issue of maintaining the pledge is decided. When assessing due diligence in relation to citizens, the author proposes to adhere to a single standard, while for business entities it should be differentiated depending on the field of activity, i. e. for an entity carrying out business activities in a certain area, an increased standard of due diligence is assumed if the assessment of due diligence is related to the activities carried out.

Autonomous Weapon Systems, Errors and Breaches of International Humanitarian Law

Abstract An error in the operation of an autonomous weapon system (AWS) results in civilians or civilian objects being attacked. In such situations, have civilians or civilian objects been ‘made the object of attack’, such that there is a breach of the rule prohibiting attacks against civilians or civilian objects? This question — which is important because of the high probability of such errors — forms the subject of this article. It argues that the rule prohibiting attacks against civilians or civilian objects requires due diligence — contextually reasonable efforts — across the targeting process, to ensure that civilians or civilian objects are not attacked. This implies that AWS errors breach this rule if the errors are unreasonable, i.e., if they originate in a failure of due diligence at any point in the process of development and deployment of AWS. Moreover, the risk-sensitivity of due diligence obligations suggests that the higher degree of risk involved in the development and use of an AWS leads to a corresponding increase in what constitutes contextually reasonable efforts to ensure that civilians or civilian objects are not attacked.

Anticipation under the human right to science (HRS): sketching the public institutional framework. The example of scientific responses to the appearance of SARS-CoV-2

ABSTRACT This contribution sketches the domestic and international institutional framework that states shall set up to implement their anticipation duties flowing from the HRS and, at the same time, enable international organisations to comply with their anticipation responsibilities for the HRS. Building on the understanding of science as a communal and open-ended endeavour of knowledge seeking in which everyone has an equal right to participate, to benefit from and to be protected against harm arising from it, it elaborates on states’ duties under the HRS to anticipate both the (opportunities for) benefits and the (risks of) harm of science, and to promote the former and protect against the latter with due diligence. It then argues that the HRS requires domestic and international institutions working along egalitarian lines and allowing for broad participation to (co-)specify domestic anticipation duties and coordinate their implementation in context. This is essential due to the global nature of many harms and benefits of science and its communal character. The example of the scientific response to SARS-CoV-2 is used to highlight that the current domestic and international institutional framework has, however, serious shortcomings.

Does the Directive of the European Union on disclosure of non-financial and diversity information improve reporting?

PurposeWhile in the past companies have voluntarily disclosed information beyond the financial bottom line, there is now a trend toward mandatory reporting in many countries. With the adoption of Directive 2014/95/EU, the European Union has taken a decisive step in this direction. However, research on the effects of these obligations is still at an early stage, particularly regarding Directive 2014/95/EU. Therefore, this paper aims to pursue the question of whether the directive has led to an improvement in reporting.Design/methodology/approachThe authors analyzed the reporting of the EURO STOXX 50 companies before and after the directive entered into force. To evaluate the improvement, the authors assigned the individual Global Reporting Initiative indicators to the different information requirements of the directive.FindingsOverall, the authors’ study revealed an improvement in reporting. However, this does not apply to all information categories. A significant improvement can be seen regarding the information on policies and due diligence, principal risk and non-financial key performance indicators. Institutional theory suggests that the observed improvements among these reporting-experienced companies can be understood as the result of coercive pressure triggered by the directive’s requirements.Originality/valueThe authors’ study contributes to the debate on the impact of non-financial reporting obligations by providing empirical insights into the effects of Directive 2014/95/EU. These insights can inform political and managerial decision-making, particularly in view of increasing reporting obligations.