Full Legal Due Diligence Pack

Use when orchestrating a full legal due diligence exercise for an M&A transaction, private equity investment, or acquisition financing. Covers ten parallel workstreams (corporate, commercial contracts, employment, IP, real estate, litigation, regulatory, tax, data privacy, financial), with MENA-specific flags for change-of-control, foreign ownership restrictions, PDPL readiness, and open-source IP compliance. Produces a structured DD report with green/amber/red workstream ratings.

Full Legal Due Diligence Pack

Purpose

This workflow orchestrates a complete legal due diligence exercise for acquisitions, equity investments, and financing transactions. It produces a structured DD report with per-workstream risk ratings, a critical findings memo, and a recommended list of actions (reps & warranties scope, specific indemnities, escrow requirements, and required pre-closing remediation).

Inputs

Input	Required	Notes
Target company name + jurisdiction	Yes	Drives applicable law for each workstream
Transaction type	Yes	Acquisition / equity investment / debt financing — affects scope
Materiality threshold	Yes	Tie to deal size: e.g., findings >$50k flagged; >$500k red
Data room access	Yes	All documents must be accessible before commencing
Deal timeline	Yes	Drives workstream prioritization and depth
Buyer's side priorities	Yes	Any specific areas of concern from acquirer
Exclusivity terms	Recommended	Know how much time is available

Logic — Workstream Overview

All ten workstreams run in parallel. Each produces: RAG rating (Green / Amber / Red) + list of findings + recommended actions.

RAG Rating Criteria

Rating	Meaning	Response
Green	No material issues found	Confirm in rep
Amber	Issues present but manageable	Targeted indemnity or escrow; disclosure schedule note
Red	Material issue requiring action	Pre-closing remediation OR price adjustment OR walk-away

Workstream 1 — Corporate

Scope: legal existence and authority of the target

Checklist:

Certificate of incorporation / trade license (current and valid)
Memorandum and Articles of Association (current, consolidated version)
Cap table — fully diluted; all share classes, options, warrants, convertible instruments
Shareholder register — confirms legal ownership
Board minutes — last 3 years; resolutions for major decisions; authorization trail
Related-party transactions — arms-length? properly approved?
Foreign ownership compliance — is the ownership structure compliant with the jurisdiction's FDI/foreign ownership rules?
UBO (Ultimate Beneficial Ownership) disclosures — AML/regulatory requirement in UAE, KSA, DIFC
Corporate group structure — any subsidiaries, JVs, branches?

MENA-specific flags:

UAE mainland: foreign ownership restrictions still apply in certain sectors (check the Positive List under FDI Law); verify local partner arrangements
KSA: foreign investment license required (MISA license); verify it is current and covers the actual business activity
DIFC/ADGM: more flexible foreign ownership; verify regulated activity licenses (DFSA/FSRA) if applicable

Workstream 2 — Commercial Contracts

Scope: material contracts that drive revenue or create obligations

Checklist:

Top 20 contracts by revenue — check for change-of-control provisions (do they require consent on acquisition?)
Assignability — can contracts be transferred to the acquirer without consent?
Key customer contracts — concentration risk; auto-renewal vs. renegotiation risk
Key supplier contracts — critical dependency? exclusivity?
Exclusivity clauses — does the target have exclusivity obligations that restrict the acquirer's other business?
Most-favored-nation (MFN) or pricing commitments
Termination-for-convenience clauses — can customers exit quickly?
Force majeure coverage — COVID/pandemic clauses; war clauses (relevant for MENA)
Government contracts — procurement rules; anti-assignment; local content requirements

Red flags:

Revenue concentration (>30% from a single customer who can terminate)
Change-of-control provisions requiring third-party consent that may not be obtainable
Unusual exclusivity or non-compete obligations that bind the acquirer

Workstream 3 — Employment

Scope: material employment obligations and key personnel risk

Checklist:

Top 10 employees + key contractors — contract review; severance exposure; garden leave
Restrictive covenants — non-compete, non-solicit enforceability in the jurisdiction
Equity / incentive plans — vesting schedules; change-of-control acceleration provisions
Employment classification — are contractors correctly classified? Misclassification creates statutory employment liability
Government registrations current? (Qiwa/GOSI in KSA; MOHRE/WPS in UAE; NSSF in LB)
Pending or threatened employment claims
EOSG/EOSA accruals — are they fully provisioned in the accounts?
Collective agreements or employee representation — consultation obligations on acquisition

Workstream 4 — Intellectual Property

Scope: IP assets and ownership clarity

Checklist:

IP ownership — is all material IP owned by the company or properly licensed in?
IP created by founders — was it assigned formally? (see [[draft-ip-assignment]])
IP created by employees — employment agreements contain IP assignment provisions?
IP created by contractors — work-for-hire or assignment clause in contractor agreements?
Registered IP portfolio — trademarks, patents, domain names: current, valid, renewed?
Open-source software — list all OSS used in the product; identify any copyleft licenses (GPL, LGPL, AGPL) that impose licensing obligations
Trade secrets — are NDAs in place for employees and contractors with access?
License agreements (in) — any material IP licensed in? assignable on transaction?
License agreements (out) — any IP licensed to third parties? exclusivity?

Run [[review-ip-ownership-clarity]] as part of this workstream.

Workstream 5 — Real Estate

Scope: premises and property obligations

Checklist:

Leases — all locations; term, rent, break clauses, renewal options, assignment on change of control
Owned property — title, encumbrances, mortgage/charge (registered?)
Dilapidations exposure at lease end
Planning / zoning compliance
Statutory registration current? (Ejari in Dubai; Tawtheeq in Abu Dhabi; Ejar in KSA)

Workstream 6 — Litigation

Scope: pending and contingent legal liability

Checklist:

Pending litigation — court and arbitration proceedings; amounts at stake
Threatened claims — received demand letters or pre-action notices
Settled claims in last 5 years — what was the issue and amount?
Regulatory investigations or enforcement actions
Dispute resolution clauses in material contracts — arbitration? forum?

Red flags: material pending claims; pattern of commercial disputes; regulatory investigations

Workstream 7 — Regulatory / Licensing

Scope: licenses, permits, and regulatory compliance

Checklist:

All operating licenses current and valid for the actual business activities
Financial services licenses (if applicable) — DFSA, FSRA, SAMA, CBUAE authorization
Data protection filings / DPO appointment where required
Sector-specific compliance: healthcare, education, legal, financial services all have bespoke licensing
Foreign direct investment restrictions — approvals required on change of control?
Trade sanctions compliance — no dealings with sanctioned parties (OFAC, EU, UN)

Run [[review-compliance-gap-analysis]] and [[research-licensing-requirements-lookup]] as part of this workstream.

Workstream 8 — Tax

Scope: tax compliance and open liabilities

Checklist:

Corporate tax filings current (UAE CT applies from June 2023; KSA 20% on foreign shareholder profits; LB various)
VAT registration and filings — UAE 5%; KSA 15%; others
Withholding tax on dividends / interest / royalties — applicable in KSA, LB; UAE 0% for most
Transfer pricing — intercompany transactions at arm's length? documentation adequate?
Open tax assessments or disputes
Tax losses carried forward — available to acquirer?
Employee payroll tax compliance

Workstream 9 — Data Privacy

Scope: personal data compliance posture

Checklist:

Data inventory — what personal data is collected, processed, stored?
Privacy notice / policy — current, accurate, accessible?
Consent mechanisms — valid legal basis for each processing activity?
Third-party data processors — DPAs in place? (see GDPR Art. 28 and PDPL equivalents)
International data transfers — SCCs or equivalent for transfers outside adequate jurisdictions?
Breach history — any notified or unnotified breaches?
UAE PDPL compliance posture (Federal Decree-Law 45/2021)
KSA PDPL compliance posture (Saudi PDPL, effective September 2023)
GDPR compliance if serving EU data subjects

Workstream 10 — Financial / Disclosure Schedule

Scope: reconcile legal DD findings with financial statements

Checklist:

EOSG provisions — are they correctly calculated and fully provisioned?
Litigation reserves — do the accounts reflect pending claims?
Lease liabilities — IFRS 16 / ASC 842 right-of-use assets vs. actual lease obligations
Contingent liabilities — guarantees, letters of credit, off-balance sheet arrangements
Revenue recognition — does it match the contractual basis?
Related-party transactions — arms-length and disclosed?

Output — Due Diligence Report Structure

Report Sections

Executive Summary (1 page)
- Transaction overview
- Overall DD verdict (Green / Amber / Red at portfolio level)
- Top 3–5 critical findings requiring buyer attention
Critical Findings (3 pages)
- Each material issue: workstream, description, quantum, recommended action
Workstream Sections (5–10 pages each)
- Per-workstream: RAG rating, findings list, recommended actions (indemnity / specific rep / escrow / pre-closing fix)
Disclosure Schedule Recommendations
- Which items to flag for negotiation; what the seller needs to disclose against which reps
Reps & Warranties Scoping
- Based on DD findings, areas where reps should be strengthened or where buyer should seek specific indemnities
Post-Closing Actions Calendar
- Remediation items; filing deadlines; integration milestones

Why This Matters

Legal due diligence converts transaction risk from unknown to quantified. Each workstream finding becomes an input to the deal structure: price adjustments, specific indemnities, escrow sizing, and earn-out conditions are all driven by DD output. A thorough DD also protects the buyer: knowledge of a defect at DD prevents it from ripening into a rep & warranty claim later.