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Legal Due Diligence

What Legal Due Diligence Is and Why It Is Needed

Legal due diligence helps identify corporate, contractual, licensing, and regulatory risks before a transaction is completed. For financial institutions, fintech companies, and licensed businesses, such a review is an essential tool for protecting investments and mitigating potential risks.

Since 2016, COREDO has been conducting legal due diligence in connection with M&A transactions, investments, and partnership projects in the fields of financial services, fintech, crypto-assets, and asset management.

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Who This Service Is For

Legal due diligence from COREDO is in demand in the following situations:

Acquisition of a fintech company or EMI/PI: verification of the licence, AML compliance, and obligations to the regulator

Investment in a financial start-up: assessment of the corporate structure, shareholder agreements, and intellectual property

Merger with a payment institution: review of contracts with partner banks, technology agreements, and licence conditions

Purchase of a ready-made company with a licence: confirmation of the validity of the licence, absence of encumbrances, and regulator claims

Partnership agreements with crypto companies: verification of CASP status under MiCA, presence of regulatory notifications

Cross-border M&A and transactions with non-EU financial structures: due diligence on companies and assets regulated in the UK (FCA), Singapore (MAS), Canada (FINTRAC/MSB), Dubai/UAE (VARA), or Switzerland (FINMA) — with coordination across EU and non-EU jurisdictions

What Legal Due Diligence Includes

Corporate Structure and Documents

COREDO specialists review the incorporation documents, history of changes in the ownership structure, shareholder agreements, and internal company regulations. Compliance of the corporate structure with the requirements of the regulator in the country of registration is verified.

Licences and Regulatory Status

The core area of review is the validity and scope of regulatory authorisations. The current status of the licence, the history of interaction with the regulator, and the presence of any open orders or restrictions are analysed. Qualification requirements for directors and beneficial owners of the company are verified.

AML/KYC Procedures

The state of the anti-money laundering system is one of the key risks when acquiring a financial company. Weak AML practices at the target company typically cost more than any discount on the transaction. COREDO assesses AML/CFT policies, client identification procedures, SAR logs, and documentation quality.

Contractual Framework

Key contracts are analysed: bank accounts and relationships with partner banks, client agreements, technology provider agreements, and agency agreements. Encumbrances, rights to unilateral termination, breaches, and hidden obligations are identified.

Legal and Regulatory Proceedings

The presence of open court cases, administrative proceedings, and regulatory investigations — both ongoing and concluded within the past three years — is verified.

Financial and Tax Documentation

Within the scope of legal due diligence, financial statements, capital requirements and their compliance with regulatory standards, tax history, and potential liabilities are reviewed.

The Process

Defining the scope of review.

At the first stage, the COREDO team agrees with the client on the perimeter of the due diligence: the jurisdiction, key risk areas, required documents, and timeline.

01

Requesting and analysing documents.

A detailed list of documents required for the review is compiled. The materials received are systematised and analysed by COREDO’s legal and AML specialists.

02

Risk assessment.

For each area (corporate, licensing, AML, contractual, and judicial), a risk assessment is prepared with classification by level of criticality.

03

Preparing the report.

The findings of the review are presented in a structured report specifying identified risks, their classification, and recommendations for their remediation or for factoring them into the transaction terms.

04

Supporting negotiations.

At the client’s request, COREDO specialists participate in negotiations, help formulate transaction terms taking into account identified risks, and prepare seller warranties or deferred payments.

05

The standard timeline for due diligence is 2–4 weeks, depending on the volume of documentation and the complexity of the company’s structure.

Jurisdictions

COREDO conducts legal due diligence for companies registered and licensed in the following jurisdictions:

EU and EEA:

Czech Republic
Estonia
Lithuania
Poland
Germany
Austria
Netherlands
Cyprus
Malta
United Kingdom
Other EU and EEA jurisdictions — on request

Non-EU Financial Centres:

Singapore (MAS-regulated entities: EMI, PSP, investment firms)
Canada (FINTRAC-registered Money Services Businesses)
Switzerland (FINMA-regulated companies and bank-related entities)
Dubai and UAE (VARA-licensed crypto and blockchain entities)

For non-EU jurisdictions, COREDO engages local partners to coordinate cross-border due diligence and ensure compliance with local legal requirements.

Cost of Legal Due Diligence

The cost of the service is determined individually depending on the scope of the review, the complexity of the target company’s corporate structure, and the time required from specialists. Pricing is based on an hourly model. For more detail on legal service pricing, see the Legal Opinion page.

Our Experts

Legal due diligence is conducted by COREDO’s legal team specialists with experience in financial regulation and M&A transactions.

Pavel Kos

Head of Legal at COREDO. Has been with the company since 2016. Specialises in legal support for financial companies in the EU, licensing, corporate and M&A transactions.

Basang Ungunov

Lawyer at COREDO. Specialises in legal support for clients in financial services, preparation of legal opinions, and contract work.

Frequently Asked Questions

How does legal due diligence differ from financial due diligence?

Legal due diligence focuses on legal risks: licences, contracts, corporate structure, court cases, and regulatory status. Financial due diligence analyses economic indicators, assets, and liabilities. When preparing an M&A transaction, both types of review are generally conducted in parallel.

How long does the review take?

A standard scope takes 2–4 weeks. Complex multi-level structures or large volumes of documentation may require 4–6 weeks. Exact timelines are agreed at the planning stage.

Is due diligence mandatory when purchasing a ready-made EMI company?

Formally — no. In practice — purchasing a licensed company without proper verification carries significant risks: the new owner assumes all historical obligations to the regulator. COREDO strongly recommends conducting a full LDD for any transaction involving licensed financial companies.

Can you conduct due diligence on a company in another EU country?

Yes. COREDO specialises in multi-jurisdictional projects and conducts reviews for companies across the EU and EEA. Where necessary, local partners in a specific jurisdiction are engaged.

What does the client receive at the end of the review?

The client receives a structured report describing the scope of the review, identified risks, their classification by criticality, and recommendations. The format and level of detail are agreed in advance.

Is due diligence needed for an investment round rather than an M&A transaction?

Yes. Investors entering a financial company must understand its legal risks no less than buyers. Legal due diligence helps agree fair entry conditions and protect investments.

Submit Application

Ready to discuss your project? Contact us, and the Head of Legal at COREDO will answer your questions and propose the optimal scope of review.