Legal Due Diligence & Compliance Checklist
Transaction[●]
Issuer[●]
SPV (if applicable)[●]
Underlying Asset[●]
Jurisdiction[●]
Lead Counsel[●]
Target Closing Date[●]
Purpose
This Legal Due Diligence & Compliance Checklist (the "Checklist") is intended to assist legal counsel in identifying, reviewing and completing the principal legal workstreams associated with a proposed securities offering, digital asset issuance, or real world asset tokenization transaction.
This Checklist is intended as a transaction management tool and should be tailored to the applicable jurisdiction, transaction structure and regulatory requirements.
1Corporate Due Diligence
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 1.1 | Confirm legal existence of the Issuer | Applicable Corporate Statute | ||
| 1.2 | Obtain Certificate of Incorporation / Formation | Applicable Corporate Statute | ||
| 1.3 | Obtain Certificate of Good Standing (if applicable) | Applicable Corporate Statute | ||
| 1.4 | Review constitutional documents (Charter, Bylaws, Operating Agreement, etc.) | Applicable Corporate Statute | ||
| 1.5 | Verify corporate structure | — | ||
| 1.6 | Verify directors, officers, managers or trustees | Applicable Corporate Statute | ||
| 1.7 | Review capitalization and ownership records | Applicable Corporate Statute | ||
| 1.8 | Confirm corporate authority to enter into the transaction | Applicable Corporate Statute | ||
| 1.9 | Review material corporate contracts | — | ||
| 1.10 | Identify existing financing arrangements, liens or restrictions | UCC / Applicable Law |
2Asset Legal Due Diligence
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 2.1 | Verify ownership of the underlying asset | Applicable Property Law | ||
| 2.2 | Review title documentation | Applicable Property Law | ||
| 2.3 | Identify existing liens, pledges or encumbrances | UCC / Applicable Law | ||
| 2.4 | Confirm transferability of the asset | Applicable Contract & Property Law | ||
| 2.5 | Review material contracts affecting the asset | Contract Law | ||
| 2.6 | Conduct litigation and dispute review | Court Records / Applicable Law | ||
| 2.7 | Confirm required governmental permits or licenses | Applicable Regulatory Law | ||
| 2.8 | Obtain third-party consents (if required) | Applicable Agreements | ||
| 2.9 | Review insurance coverage | Applicable Agreements | ||
| 2.10 | Confirm legal readiness for asset transfer | Applicable Law |
3Securities Law & Regulatory Compliance
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 3.1 | Determine the applicable securities law framework for the proposed offering | Securities Act of 1933 | ||
| 3.2 | Determine the availability of an exemption from registration | Section 4(a)(2); Regulation D; Regulation S (if applicable) | ||
| 3.3 | Confirm the offering structure (private placement, offshore offering, or other exempt offering) | Securities Act of 1933 | ||
| 3.4 | Determine whether the digital asset or token constitutes a security under applicable law | Securities Act of 1933; Securities Exchange Act of 1934; applicable SEC guidance | ||
| 3.5 | Determine investor eligibility requirements | Rule 501(a) of Regulation D | ||
| 3.6 | Verify Accredited Investor status (where required) | Rule 506(c) of Regulation D | ||
| 3.7 | Review general solicitation and marketing restrictions | Rule 502(c); Rule 506(b) of Regulation D | ||
| 3.8 | Determine disclosure requirements applicable to the offering | Securities Act of 1933 | ||
| 3.9 | Prepare or review the Offering Memorandum / Private Placement Memorandum (if applicable) | Securities Act of 1933 | ||
| 3.10 | Determine Form D filing requirements | Rule 503 of Regulation D | ||
| 3.11 | Review applicable state ("Blue Sky") securities law requirements | Applicable State Securities Laws | ||
| 3.12 | Determine ongoing reporting obligations (if any) | Securities Exchange Act of 1934 |
4AML, KYC & Sanctions Compliance
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 4.1 | Establish Know Your Customer (KYC) procedures | Bank Secrecy Act; FinCEN Regulations | ||
| 4.2 | Establish Anti-Money Laundering (AML) procedures | Bank Secrecy Act; USA PATRIOT Act | ||
| 4.3 | Verify investor identity | Bank Secrecy Act; FinCEN Regulations | ||
| 4.4 | Verify beneficial ownership information | FinCEN Beneficial Ownership Rule (as applicable) | ||
| 4.5 | Conduct sanctions screening | OFAC Sanctions Regulations | ||
| 4.6 | Screen for Politically Exposed Persons (PEPs) (where applicable) | Internal AML Policy / Risk-Based Procedures | ||
| 4.7 | Review source of funds documentation | Bank Secrecy Act; Internal AML Procedures | ||
| 4.8 | Assess suspicious activity reporting obligations (where applicable) | Bank Secrecy Act; FinCEN Regulations | ||
| 4.9 | Establish ongoing customer due diligence procedures | FinCEN Customer Due Diligence Rule | ||
| 4.10 | Retain KYC and AML records in accordance with applicable law | Bank Secrecy Act; Applicable Recordkeeping Requirements |
5Data Privacy & Tax Compliance
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 5.1 | Determine applicable privacy and data protection requirements | Applicable Privacy Laws | ||
| 5.2 | Review collection and storage of investor personal information | Applicable Privacy Laws | ||
| 5.3 | Determine applicable tax reporting obligations | Internal Revenue Code | ||
| 5.4 | Determine FATCA reporting requirements (if applicable) | FATCA | ||
| 5.5 | Determine CRS reporting requirements (if applicable) | OECD Common Reporting Standard (where applicable) | ||
| 5.6 | Obtain required tax documentation (e.g., Forms W-9, W-8BEN, W-8BEN-E, or equivalent) | Internal Revenue Code; FATCA |
6Transaction Documentation
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 6.1 | Prepare and review the Terms Sheet | Applicable Contract Law | ||
| 6.2 | Prepare and review the Subscription Agreement | Applicable Contract Law | ||
| 6.3 | Prepare and review the Token Purchase Agreement | Applicable Contract Law | ||
| 6.4 | Prepare and review the Investor Questionnaire | Securities Act of 1933; Regulation D (if applicable) | ||
| 6.5 | Prepare and review the Offering Memorandum / Private Placement Memorandum (if applicable) | Securities Act of 1933 | ||
| 6.6 | Prepare and review the Asset Transfer Agreement (if applicable) | Applicable Contract & Property Law | ||
| 6.7 | Prepare and review the Tokenization Services Agreement | Applicable Contract Law | ||
| 6.8 | Prepare and review the Custody Agreement (if applicable) | Applicable Contract Law | ||
| 6.9 | Prepare and review ancillary transaction documents | Applicable Contract Law | ||
| 6.10 | Verify consistency among all transaction documents | — |
7Corporate & Transaction Approvals
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 7.1 | Obtain Board approval for the transaction | Applicable Corporate Statute | ||
| 7.2 | Obtain shareholder or member approval (if required) | Applicable Corporate Statute | ||
| 7.3 | Obtain SPV approval (if applicable) | Applicable Corporate Statute | ||
| 7.4 | Obtain Asset Owner approval (if applicable) | Applicable Corporate Statute | ||
| 7.5 | Obtain lender, trustee or secured party consent (if applicable) | Applicable Agreements | ||
| 7.6 | Obtain required governmental or regulatory approvals (if applicable) | Applicable Law | ||
| 7.7 | Verify authority of all signatories | Applicable Corporate Statute | ||
| 7.8 | Confirm execution authority for all transaction documents | Applicable Corporate Statute |
8Closing Requirements
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 8.1 | Confirm satisfaction or waiver of all conditions precedent | Transaction Documents | ||
| 8.2 | Verify execution of all transaction documents | Applicable Contract Law | ||
| 8.3 | Confirm receipt of subscription proceeds (if applicable) | Transaction Documents | ||
| 8.4 | Confirm transfer or contribution of the underlying asset (if applicable) | Applicable Property Law | ||
| 8.5 | Verify completion of investor onboarding and compliance procedures | AML/KYC Requirements | ||
| 8.6 | Authorize issuance of securities and/or digital assets | Applicable Corporate Statute; Transaction Documents | ||
| 8.7 | Deliver legal opinions (if required) | Transaction Requirements | ||
| 8.8 | Exchange closing deliverables | Transaction Documents | ||
| 8.9 | Complete the closing checklist | Transaction Documents | ||
| 8.10 | Close the transaction | — |
9Post-Closing Compliance
| No. | Item | Legal Reference | Status | Remarks |
|---|---|---|---|---|
| 9.1 | Update corporate records and statutory registers | Applicable Corporate Statute | ||
| 9.2 | Maintain executed transaction documents | Applicable Recordkeeping Requirements | ||
| 9.3 | Complete post-closing regulatory filings (if applicable) | Securities Act of 1933; Applicable Law | ||
| 9.4 | Complete Form D filing (if applicable) | Rule 503 of Regulation D | ||
| 9.5 | Complete applicable state securities filings (if required) | State Blue Sky Laws | ||
| 9.6 | Maintain ongoing AML/KYC records | Bank Secrecy Act; FinCEN Regulations | ||
| 9.7 | Monitor compliance with transaction documents | Transaction Documents | ||
| 9.8 | Monitor ongoing regulatory obligations | Applicable Law | ||
| 9.9 | Archive transaction records | Applicable Recordkeeping Requirements | ||
| 9.10 | Establish a compliance calendar for recurring obligations | Internal Compliance Procedures |
AAppendix A — Primary Legal Authorities
| Subject Matter | Primary Legal Authority |
|---|---|
| Securities Offerings | Securities Act of 1933 |
| Secondary Trading / Reporting | Securities Exchange Act of 1934 |
| Private Placement Exemptions | Regulation D |
| Offshore Offerings | Regulation S |
| Accredited Investor Requirements | Rule 501(a) of Regulation D |
| General Solicitation | Rules 502(c), 506(b), and 506(c) of Regulation D |
| Form D Filing | Rule 503 of Regulation D |
| State Securities Compliance | Applicable Blue Sky Laws |
| AML | Bank Secrecy Act |
| Customer Identification & AML | FinCEN Regulations |
| Sanctions | OFAC Regulations |
| Tax Reporting | Internal Revenue Code |
| FATCA | Foreign Account Tax Compliance Act |
| CRS | OECD Common Reporting Standard (where applicable) |
| Privacy | Applicable Federal and State Privacy Laws |