The following Environment practice note provides comprehensive and up to date legal information covering:
For general information on share purchase, see Practice Notes: Due diligence—share and asset purchases and Warranties and indemnities—share purchase.
The purpose of environmental due diligence is to:
assess the risk of contaminated land liabilities at current and previous properties owned or occupied by the target
identify any material non compliance issues or threatened proceedings or claims associated with the target
highlight any significant capital expenditure requirements to comply with the target’s environmental permits or with current or anticipated environmental legislation
provide recommendations to help mitigate these risks as far as possible through contractual protections, price negotiations, further investigations or environmental insurance
Contaminated land is often one of the largest liability concerns in a corporate transaction and is a particularly important consideration in a share acquisition.
In a share purchase, the buyer can inherit liabilities if the target has ‘caused’ or ‘knowingly permitted’ contamination at current and previously owned or occupied properties. The target can also have clean up liabilities as an innocent ‘owner’ or ‘occupier’ if any of the target’s properties are impacted by historic contamination.
The target may also have contractual liabilities from leases or if it has given indemnities in previous agreements.
See Practice Notes: Environmental liabilities—what are clean-up liabilities? and Contaminated land—who may be liable?
It is good practice for a buyer
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