[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"advice-en-legal-audit-due-diligence":3},{"slug":4,"title":5,"excerpt":6,"body":7,"datePublished":8,"dateModified":8},"legal-audit-due-diligence","Legal audit of a firm: how to vet a company before a deal","Step by step legal audit of a company: when to commission it, which areas and registers to check, typical findings in small firms and how to turn results into a contract.","\u003Cp>A legal audit of a firm is an orderly examination of documents and registers that shows the legal, tax and HR risks weighing on a business. It is carried out before buying or selling shares, bringing in an investor, converting a company, or simply to tidy up the firm before an inspection. The result is a report with a list of problems, an assessment of their severity and a recommendation on how to remove them or secure them in the contract.\u003C\u002Fp>\u003Ch2>When an audit makes sense\u003C\u002Fh2>\u003Cul>\u003Cli>\u003Cstrong>Purchase of shares or an enterprise\u003C\u002Fstrong> — the buyer takes over the company together with its past: contracts, disputes, arrears.\u003C\u002Fli>\u003Cli>\u003Cstrong>Sale of a firm\u003C\u002Fstrong> — an audit conducted by the seller (vendor due diligence) allows gaps to be removed before negotiations and the price to be defended.\u003C\u002Fli>\u003Cli>\u003Cstrong>Entry of an investor or a new shareholder\u003C\u002Fstrong> — the investor will require such an examination anyway.\u003C\u002Fli>\u003Cli>\u003Cstrong>Internal review\u003C\u002Fstrong> — rapid growth, new management, employing foreigners, change of accounting office.\u003C\u002Fli>\u003Cli>\u003Cstrong>Before taking a management board role\u003C\u002Fstrong> — a board member may be personally liable for the company's debts, so it is worth knowing its condition.\u003C\u002Fli>\u003C\u002Ful>\u003Ch2>What is checked — areas of review\u003C\u002Fh2>\u003Ctable>\u003Cthead>\u003Ctr>\u003Cth>Area\u003C\u002Fth>\u003Cth>Typical questions\u003C\u002Fth>\u003C\u002Ftr>\u003C\u002Fthead>\u003Ctbody>\u003Ctr>\u003Ctd>Corporate governance\u003C\u002Ftd>\u003Ctd>Are the articles of association, resolutions and KRS entries consistent? Were shares effectively taken up and transferred? Have ultimate beneficial owners been reported to CRBR?\u003C\u002Ftd>\u003C\u002Ftr>\u003Ctr>\u003Ctd>Contracts with counterparties\u003C\u002Ftd>\u003Ctd>Are there change-of-control clauses, contractual penalties, non-compete clauses, exclusivities? Can key contracts be terminated upon a change of owner?\u003C\u002Ftd>\u003C\u002Ftr>\u003Ctr>\u003Ctd>Intellectual property\u003C\u002Ftd>\u003Ctd>Does the company have rights to the code, trademark, domains? Have B2B developers transferred copyright in writing?\u003C\u002Ftd>\u003C\u002Ftr>\u003Ctr>\u003Ctd>Employment\u003C\u002Ftd>\u003Ctd>Are civil-law contracts in essence employment contracts? Do foreigners have valid work bases? Are working-time rules observed?\u003C\u002Ftd>\u003C\u002Ftr>\u003Ctr>\u003Ctd>Taxes and ZUS\u003C\u002Ftd>\u003Ctd>Are there arrears? How were VAT, transfer prices and costs settled? Does the company have individual tax rulings?\u003C\u002Ftd>\u003C\u002Ftr>\u003Ctr>\u003Ctd>Assets and real estate\u003C\u002Ftd>\u003Ctd>Who is the owner? What are the encumbrances in the land and mortgage register and the register of pledges?\u003C\u002Ftd>\u003C\u002Ftr>\u003Ctr>\u003Ctd>Disputes and proceedings\u003C\u002Ftd>\u003Ctd>What litigation, inspections and administrative proceedings are ongoing? Is the company listed in the National Register of Debtors?\u003C\u002Ftd>\u003C\u002Ftr>\u003Ctr>\u003Ctd>Regulatory compliance\u003C\u002Ftd>\u003Ctd>Personal data protection (RODO), anti-money laundering, sector licences and permits.\u003C\u002Ftd>\u003C\u002Ftr>\u003C\u002Ftbody>\u003C\u002Ftable>\u003Ch2>Audit step by step\u003C\u002Fh2>\u003Col>\u003Cli>\u003Cstrong>Setting the scope and materiality threshold.\u003C\u002Fstrong> At a small service company there is no point analysing every PLN 2,000 contract — it is enough to set, for example, a value threshold or a list of key counterparties.\u003C\u002Fli>\u003Cli>\u003Cstrong>Non-disclosure agreement.\u003C\u002Fstrong> The seller shares documents only after signing it.\u003C\u002Fli>\u003Cli>\u003Cstrong>Request list.\u003C\u002Fstrong> The auditor sends a list, and the seller places documents in a virtual data room or shares them in an agreed way.\u003C\u002Fli>\u003Cli>\u003Cstrong>Examination of public registers.\u003C\u002Fstrong> Independently of the documents from the seller, the auditor checks publicly available data (see below).\u003C\u002Fli>\u003Cli>\u003Cstrong>Questions and talks with the management.\u003C\u002Fstrong> Clarifying ambiguities, filling gaps.\u003C\u002Fli>\u003Cli>\u003Cstrong>Report.\u003C\u002Fstrong> Usually in a table: issue, source, risk (high, medium, low), recommendation.\u003C\u002Fli>\u003Cli>\u003Cstrong>Translating findings into the contract.\u003C\u002Fstrong> A price reduction, part of the price paid into an escrow account, representations and warranties from the seller, an obligation to cure defects before closing.\u003C\u002Fli>\u003C\u002Fol>\u003Ch2>Registers worth checking on your own\u003C\u002Fh2>\u003Cul>\u003Cli>\u003Cstrong>KRS\u003C\u002Fstrong> — a current and full extract, management board, commercial proxies, capital, arrears in filing financial statements.\u003C\u002Fli>\u003Cli>\u003Cstrong>Repository of Financial Documents\u003C\u002Fstrong> — financial statements; the annual statement is approved within 6 months of the balance-sheet date and filed with the KRS within 15 days of approval. Missing statements are a warning sign.\u003C\u002Fli>\u003Cli>\u003Cstrong>CRBR\u003C\u002Fstrong> — who actually controls the company.\u003C\u002Fli>\u003Cli>\u003Cstrong>National Register of Debtors\u003C\u002Fstrong> — bankruptcy and restructuring proceedings and enforcement proceedings discontinued as ineffective.\u003C\u002Fli>\u003Cli>\u003Cstrong>White list of VAT payers\u003C\u002Fstrong> — VAT status and bank accounts reported to the tax office.\u003C\u002Fli>\u003Cli>\u003Cstrong>Electronic land and mortgage registers\u003C\u002Fstrong> — ownership of real estate, mortgages, easements.\u003C\u002Fli>\u003Cli>\u003Cstrong>Register of pledges\u003C\u002Fstrong> — registered pledges on movables and shares.\u003C\u002Fli>\u003Cli>\u003Cstrong>Polish Patent Office databases\u003C\u002Fstrong> — trademarks and their owners.\u003C\u002Fli>\u003C\u002Ful>\u003Cp>Certificates of no arrears from the tax office and ZUS are issued on the company's request (the tax office will issue them to a counterparty only with its consent), so making their presentation a condition of the deal is worthwhile.\u003C\u002Fp>\u003Ch2>Most common findings in small and medium firms\u003C\u002Fh2>\u003Cul>\u003Cli>no written agreements transferring copyright from developers and designers on B2B — the company formally does not own the rights to its own product,\u003C\u002Fli>\u003Cli>B2B cooperation that bears the features of an employment relationship, which creates the risk of overdue contributions,\u003C\u002Fli>\u003Cli>resolutions not adopted or not reported to the KRS (e.g. approval of the financial statement, change of management board),\u003C\u002Fli>\u003Cli>outdated CRBR notification after a change of shareholders,\u003C\u002Fli>\u003Cli>contracts with key clients with a termination right on change of owner,\u003C\u002Fli>\u003Cli>no personal data protection documentation or data processing entrustment agreements.\u003C\u002Fli>\u003C\u002Ful>\u003Ch2>Personal risk of the management board — why an audit also protects managers\u003C\u002Fh2>\u003Cp>Shareholders of a sp. z o.o. as a rule are not liable for its obligations. It is different for management board members: if enforcement against the company proves ineffective, they are liable for its debts jointly, severally and personally (Article 299 of the Commercial Companies Code), unless they filed a motion for bankruptcy or restructuring in time. A person who is to join the management board of a company being acquired should therefore know its real situation before signing the consent to appointment.\u003C\u002Fp>\u003Ch2>Example: purchase of a software company\u003C\u002Fh2>\u003Cp>An investor wants to buy 100% of the shares in a sp. z o.o. developing a mobile app, valued at PLN 1.2 million. The audit shows that three of five developers work on B2B without agreements transferring copyright, the CRBR notification was not updated after a change of shareholder, and the company has a disputed invoice for PLN 40,000. The parties agree that before closing the developers will sign agreements transferring the rights, the management will update CRBR, and 10% of the price will be paid into an escrow account until the dispute is resolved. Without the audit, the investor would have bought a company that formally did not own its main product.\u003C\u002Fp>\u003Cp>The rules on filing financial statements are described by \u003Ca href=\"https:\u002F\u002Fwww.biznes.gov.pl\u002Fpl\u002Fportal\u002F00245\" target=\"_blank\" rel=\"noopener noreferrer\">Biznes.gov.pl\u003C\u002Fa>.\u003C\u002Fp>\u003Ch2>How Good Balance helps\u003C\u002Fh2>\u003Cp>We carry out legal and accounting audits of companies before a transaction, as well as internal reviews, and translate the findings into specific contract provisions — as part of a \u003Ca href=\"\u002Fen\u002Fservices\u002Flegal\u002Fconsultation\">legal consultation\u003C\u002Fa>. For the sale or purchase of a firm, we support the whole process in our service \u003Ca href=\"\u002Fen\u002Fservices\u002Fbusiness-offers\u002Fcompany-sale\">company sale\u003C\u002Fa>. If the audit covers data protection, our guide \u003Ca href=\"\u002Fen\u002Fadvice\u002Fwhat-is-rodo\">RODO in a firm\u003C\u002Fa> will be helpful.\u003C\u002Fp>","2026-10-09"]