What is a Legal Opinion?

Legal opinion is a tool that allows the parties to a transaction obtain a qualified third-party opinion on the subject, object and other issues related to the conclusion of the transaction. It is a document drawn up by a competent lawyer on any specific question or problem.

Before entering into any commercial transaction, the parties to such a transaction must carefully consider the nature and volume of the transaction, as well as legal issues related to it.

Why is it necessary to prepare Legal Opinion due to structuring a transaction?

If a person, such as a member of the board of directors or a business owner is concerned about a serious legal problem related to making a complex transaction, such as buying and selling a company's shares or an interested-party transaction. The individual will be advised to read the legal conclusion of the transactions compiled by an independent expert, who investigates the problem of disinterest, both directly and indirectly in the final result of the transaction. Such a person may conduct a legal investigation to render his expert opinion, for example, on the legality and potential risks of buying shares (shares) of a company.

In the process of preparing such a legal opinion for the purchase, sale, re-issuance of the company's share, the lawyer (the drafter) of the legal opinion will be directly involved in the process of collecting, understanding and assessing all the legal risks associated with the merger and acquisition process of the company.

During a comprehensive audit of the target company (that is, the one whose shares are to be acquired) of the business, the compiling lawyer will carefully review and study all documents related to it, for example, lease agreements, current supply contracts and many others. Sometimes a lawyer (the compiler) conducts individual conversations with employees of the target company, if a legal opinion is drawn up for major international transactions.

The idea of such an investigation is to understand whether there may be any legal problems in the form of lawsuits or fines for future owners of the company: for example, are there any obligations of the target company to their counterparts that it cannot perform, which may require serious financial costs or management efforts.

Legal opinions on mergers and acquisitions, as a rule, are presented in accordance with the agreement of the parties to the transaction.

What should be considered when drawing up a legal opinion for the sale of a company?

A legal opinion must necessarily be prepared by a specialist with experience in the field of civil law and should not be provided by the law of such a foreign state with which the lawyer is not familiar with the compiler.

Qualitative Legal Opinion is distinguished by rigorous language, clarity of the circumstances provided, validity in accordance with current legislation, and the presence of transparent and understandable conclusions.

It is important to know that if the customer's activity investigated is illegal, the conclusion cannot be positive. It should be noted that no self-respecting law firm will risk its name and give a legal opinion on the legality of the activity, if the activity being studied is illegal.

It is important to bear in mind that when drawing up a legal opinion for the sale of a company’s shares, lawyers are responsible for their opinion, as they conduct legal and factual research, analysis and verification.

It is for this reason that providing a legal opinion on a transaction can be a rather expensive process.

Form of compilation for Legal Opinion

The law does not establish any specific form that a lawyer must adhere to when drawing up a legal opinion. Legal Opinion, however, has a certain form developed over the centuries, that is the practice of drawing up legal opinions by lawyers from countries around the globe.

Usually, the structure of a legal opinion on the acquisition of a property (buying a house, apartment) is as follows:

1. Information about the customer, information about the person to whom the opinion is addressed, information about the compiler, information about the task that is delivered to the compiler. In some cases, it is also assumed that the legal opinion will be used by persons other than those specified. As an example, a legal opinion addressed to the underwriter regarding the legality of the proposed issue of shares or bonds, upon which the issuer's transfer agent (transfer agent) or issuer’s bank must also rely.

2. General presentation of the documents under study, other factual or legal issues that were considered by the compiler in the presentation of Legal Opinion, as well as information on the various admitted reservations. Such reservations may vary depending on the nature of the request. For example, there is an opportunity to make a statement about the advisability of using a foreign law, in the event that the obligation must be fulfilled outside the country. This is especially true in cases where issues of more than one country are being raised, which requires the involvement of relevant lawyers, attorneys or foreign partners.

3. The legal opinion of a lawyer, including the study of facts, interpretation of the facts on the subject of their legality or potential risks. The compiler of Legal Opinion should clearly and in details examine a sufficient number of facts confirming each of the conclusions set forth in the legal opinion.

4. The conclusion of compiler based on the study. In most cases, the findings of Legal Opinion can be backed up by copies of the documents examined, with which the legal compiler issued an opinion.

5. The date and signature of the author, who issued the legal opinion. Usually, legal opinions are signed on behalf of the company with the specifications of the person who made the report. It should be noted that even such a seemingly insignificant moment as the date of the approval of the legal opinion is extremely important, since the legal opinion must show the status of legal norms and the practice of their application at the time of preparing the opinion. Legislation including corporate, banking and tax is subject to change, and with this, conclusion set forth in the legal opinion may change.

It is necessary to take into account that a legal opinion should not be considered as a substitute for legal support, and the client should understand that having received a legal opinion, it does not mean a “guide to action” or a deal on its own.

Lawyers of Law and Trust provide services for the development of a legal position on issues raised by you and further development of legal opinion.

Key benefits of legal services offered by Law and Trust International

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Experience and qualifications. The experience of the L&T International team is more than 15 years. It gives the opportunity for working with cases in many business areas like finance, IT, agriculture, trade and foreign economic activity. Thanks to this experience, our specialists always offer the best selection of services.
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Comprehensive approach and individual solutions. Law and Trust International always provides a vast range of services for our clients, taking into account the individual characteristics of each particular case. Due to this symbiosis, our specialists always fulfil all the wishes of clients in full and taking into account the requests and preferences of customers.
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Monitoring and innovation.Our team keeps tracking the newest and most advanced working methods, as well as the latest legislative, financial and economic information events around the world. It allows lawyers of Law and Trust International to quickly and creatively resolve virtually any issues in the field of legal consulting.
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Privacy and responsibility. The security of our customers' data and respond to them are particularly important in the work of Law and Trust International. For all the time of work, we have not had a single leak of commercial, personal or legal information. It allows us to develop, grow and achieve new opportunities.
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Reputation and result. A team of lawyers of Law and Trust International always welcomes the success of our clients. Reaching new results, we develop new skills that we successfully use in our work. Thanks to successful cases, our clients and our team, we are creating qualitatively new opportunities to achieve the desired result now.

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