An opinion letter should be obtained in respect of every transaction in Great Britain with a foreign company eg a sale or purchase, a security transaction, a lease transaction or the grant of guarantees. Failure by solicitors to take steps to establish whether a document granted by a foreign company has been duly authorised within that country may amount to negligence.
A legal opinion is a letter that sets out opinions as to matters of law. It does not cover factual matters. If one party to a transaction is a foreign company, the other party will need to obtain a legal opinion addressed to themselves (and any lender) from an independent firm of solicitors qualified in the jurisdiction of the foreign company. An in-house lawyer is not considered to be independent. Ensure that the firm has sufficient professional indemnity insurance. If the opinion is incorrect and the firm has been negligent, a claim could be made against them.
A ‘foreign company’ is one incorporated outside Great Britain (ie outside England, Scotland and Wales). Therefore, companies incorporated in Northern Ireland, the Channel Islands and the Isle of Man are classed as ‘foreign companies’ for th
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