Conducting due diligence for a US private offering
Conducting due diligence for a US private offering

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Conducting due diligence for a US private offering
  • Why conduct due diligence in a securities offering?
  • Due diligence in private offerings
  • How to conduct due diligence?
  • Participants in due diligence
  • The due diligence process
  • Documenting due diligence

This Practice Note provides practical guidance as to how offering participants can conduct the due diligence process in the context of a US private offering. Produced in partnership with Patrick J. Simpson, counsel at Perkins Coie's Business Group, with assistance from John R. Thomas, a partner in Perkins Coie's Business Group.

Why conduct due diligence in a securities offering?

The concept of due diligence in securities offerings has its roots in sections 11 and 12 of the Securities Act 1933, as amended (Securities Act). The Securities Act, s 11(a) includes a civil liability offences in relation to registration statements that contain an untrue statement of a material fact or an omission of a material fact. The Securities Act, s 11(b)(3) provides an affirmative defence to a person (other than the issuer) who would otherwise be liable under the Securities Act, s 11(a), if the person can establish that he had, after reasonable investigation, reasonable ground to believe, and did believe, that the statements in the registration statement 'were true, and there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading'. The Securities Act 1933, s 12(a)(2) imposes liability on persons who sell securities by means of a communication that includes an untrue statement of a material fact or an omission of a material

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