Due Diligence In Mergers, Acquisitions, Investments & Stock Offerings
Acquirers of exporting entities are liable for the export control violations of entities they acquire, even if the acquisition is structured as a purchase of assets. (Half of the 20 million dollar fine alluded to above was paid by the corporation that acquired the assets of the company that violated US export control laws.)
There are lots of other reasons, however, for putting a thorough investigation of the impact of export controls on your clients’ due diligence checklists. For example:
- an issuer representing that it is in regulatory compliance can violate Rule 10b-5 if its non-compliance with the export control laws carries a material risk of sanctions, such as loss of the issuerâ€™s right to export;
- venture capital thatâ€™s committed without knowledge of rules that may limit what a company can do in the international arena is subject to unknown risks; and
- foreigners seeking to acquire high-tech US operations need to know to what extent they, as non-US persons, will have unfettered access to, and use of, the US-origin technology in which they are investing.
Export Compliance NE provides due diligence on export controls for all manner of cross-border transactions.