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Legal Audit


THE AIMS AND OBJECTIVES of a Legal Audit is to identify the potential, present and prospective legal problems your Company might be exposed to in the course of its operations / undertaking / Joint Business ventures/ collaboration arrangements/ agreements etc. in order to:

• reduce or eliminate the potential and vulnerable legal risks / dangers your Company may be prone to, with comprehensive coverage of the entire procedures, rules, regulations, and covenants, undertakings, agreements signed with proposed and existing buyers, creditors, suppliers, customers, clients etc.

• reduce or eliminate the potential and vulnerable legal risks / dangers your Company may be prone with respect to employment and labour related issues

• review and ensure enforcement and protection of the company’s legal and propriety rights and

• review and ensure enforcement and protection of the company’s legal and propriety rights and

• review and ensure compliance on all statutory and regulatory issues.

• review and mitigate the cost of legal obligations.

“Prevention is better than cure.”


Legal Audit can be compared to preventive laws initiated with abundant and discreet prudence and caution to dispense with any litigation arising in future, getting fined, prosecuted or penalised in avoidable litigation due to deficiencies / lacunae existing in the written documents / agreements / undertakings / statutes / bye laws executed by the individuals, partnerships, companies, corporate undertakings, banks and government bodies, etc., in transgress of the laws and regulations of the organisation / company / government, (i.e. deviation from the laid down Memorandum and Articles of Association of the Private Limited Company).
thout any prior knowledge.”

A Reality Check for Corporate Establishments

Periodic reality checks should be performed to test and adjust the validity of a company’s business model. As corporate lawyers, we are aware that these “business model reality tests” typically take the form of a legal audit.


In a legal audit, we review key documents and records, and analyse and identify current and projected legal needs of the company. The legal audit also lays the groundwork for the establishment of an on-going legal compliance and prevention program in order to ensure that the company’s goals, structure and on-going operations are consistent with the company’s business model and latest developments in business and corporate law.


A comprehensive legal audit will examine a wide range of issues which may include: choice and structure of the entity; recent acts of the board of directors and documentation (or lack thereof) relating to those decisions; protection of intellectual property; forms and methods of distribution and marketing; pending and threatened litigation; estate planning; insurance coverage; hiring and firing practices; employment agreements; securities law compliance; antitrust and related trade regulations; product liability and environmental law; and a review of sales and collection practices. Naturally, the extent and complexity of the legal audit will vary depending on the size and stage of growth of the company, the type of business (such as service vs. manufacturing), the number of shareholders and employees, the extent to which the company does business in a “regulated industry,” and a host of other factors.



A legal audit may be performed on a periodic basis as part of an on-going compliance program or may be performed in connection with a specific event, such as a financial audit, or in connection with a specific transaction, such as an acquisition or securities offering. There are also specialized legal audits in specific areas, such as tax; labour and employment; estate planning/asset protection; government contracts; franchising compliance; and environmental law. The mechanics of the legal audit and a sample questionnaire are listed below.

Mechanics of the Legal Audit

  • Discuss and review legal documents/records, strategies obligations with respective staff
  • Analyse issues, cost, legal liabilities and obligations etc.
  • Write a detailed report and prefer solutions, recommendations to the above
  • Help straighten records/documents where necessary and implement recommendations

Implementation of the Post-Audit Recommendations.

  • Once the legal audit team has issued its post-audit evaluation to the management team, your company can implement the recommendations of the report. What you may do will vary, depending on the growth planned by the company, as well as the specific findings of the report.


     If significant problems are discovered during the audit, we would be careful about what is included in the final written report in order to avoid potential adverse consequences down the road under the rules of evidence. In addition, the company can establish a periodic reporting system and key dates/deadlines, as well as a time set for the next legal audit.

Risks of Not Complying

The failure to have an independent legal audit performed by qualified legal counsel can have a significant adverse impact on the company and its shareholders. The risks of non-compliance with these many laws and regulations include:

Piercing of Corporate Veil

1. Failure to keep proper books and records or mixing personal assets with business assets could lead to the ability by third parties to "pierce the corporate veil," thereby removing the limited liability protection of a corporate body, or even to litigation among co-owners.

Complications With Regulatory Authorities

3. Failure to comply with certain laws and regulations may lead to problems under federal, state and local laws with agencies such as the LSIRS, FIRS, CAC, NIPOST, the FEPA & State EPAs, and even SEC etc.

Liabilities to Shareholders & Investors

5. Failure by the directors of the company to keep accurate records and minutes of its decision-making procedures, such as proving that directors are exercising informed judgment, could subject the company and its board to liability to its shareholders and investors.

Penalties and Closure of Business

2. Failure to obtain all proper permits and licenses could lead to fines, penalties, and, in some cases, even closure of the business by governmental agencies.

Government & Civil Liabilities

4. Failure to have employment applications, personnel handbooks and general employment policies reviewed periodically could give rise to governmental and civil liability.

Default With Lenders or Investors

6. Failure to monitor the company's reporting requirements may put the company into default with lenders or investors

Make a Choice Today!

To sum up, the LEGAL AUDIT is imperative in these days when one is living and operating in the midst of complex, confounding intricate laws prevailing in our land with all its diverse interpretations of laws and indubitably, LEGAL AUDIT will be a boon and blessing to all individuals, Firms, Government bodies, Banks, Borrowers, Guarantors, Corporates; etc. Moreover, the advantages of LEGAL AUDIT enumerated above is only illustrative and not exhaustive; hence only a trial with us is worth the deal and will surely convince you of the tremendous benefits you can reap by way of our Legal Audit.

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