Standard Operating Procedure (SOP) for Regulatory Due Diligence
Purpose:
The purpose of this SOP is to establish a standardized process for conducting regulatory due diligence in the context of business transactions, such as mergers, acquisitions, partnerships, or licensing agreements. The regulatory due diligence aims to identify and assess potential regulatory risks, compliance issues, and any associated implications to support informed decision-making and mitigate regulatory liabilities.
Scope:
This SOP applies to all personnel involved in conducting regulatory due diligence within the organization. It encompasses all business transactions that require a thorough assessment of regulatory aspects.
Responsibilities:
3.1 Regulatory Affairs Department:
Lead and coordinate the regulatory due diligence process.
Identify and evaluate regulatory risks and compliance issues.
Provide guidance and support to personnel involved in due diligence activities.
3.2 Legal Department:
Assess the legal implications of regulatory findings and provide legal advice.
Review and draft contractual provisions related to regulatory compliance.
Collaborate with regulatory affairs to ensure compliance with applicable laws and regulations.
3.3 Business Development or Project Management:
Initiate and manage the due diligence process in coordination with regulatory affairs and legal departments.
Provide necessary information and documentation related to the transaction being evaluated.
Collaborate with regulatory affairs and legal departments to address any identified regulatory issues.
Procedure:
4.1 Pre-Due Diligence Planning:
4.1.1 Identify the objectives, scope, and timeline of the regulatory due diligence process.
4.1.2 Establish a due diligence team consisting of representatives from regulatory affairs, legal, and business development.
4.1.3 Define the specific areas of regulatory focus based on the nature of the transaction and applicable regulations.
4.2 Information Gathering:
4.2.1 Collect and review relevant regulatory documentation, such as marketing authorizations, regulatory submissions, and correspondence with regulatory authorities.
4.2.2 Identify and gather information related to regulatory compliance, including product registrations, licenses, and any regulatory enforcement actions or penalties.
4.3 Regulatory Risk Assessment:
4.3.1 Evaluate the regulatory compliance status of the target entity or business being assessed.
4.3.2 Identify potential regulatory risks, such as non-compliance with regulations, inadequate documentation, or unresolved regulatory issues.
4.3.3 Assess the impact of identified risks on the transaction and develop risk mitigation strategies.
4.4 Compliance Gap Analysis:
4.4.1 Compare the regulatory requirements and obligations of the target entity or business against industry standards and best practices.
4.4.2 Identify any gaps or areas of non-compliance and assess the potential impact on the transaction.
4.4.3 Develop recommendations for addressing and resolving identified compliance gaps.
4.5 Reporting and Recommendations:
4.5.1 Prepare a comprehensive due diligence report summarizing the findings, risks, and compliance gaps.
4.5.2 Provide recommendations for risk mitigation, compliance remediation, and regulatory strategies to support decision-making.
4.5.3 Communicate the findings and recommendations to the relevant stakeholders, including senior management or the transaction counterparties.
Abbreviations Used (if any):
SOP: Standard Operating Procedure
RA: Regulatory Affairs
Legal: Legal Department
BD: Business Development
Documents:
Due Diligence Checklist
Regulatory Documentation and Correspondence
Due Diligence Report Template
Reference (if any):
[List any specific references to regulatory frameworks, laws, regulations, or industry guidelines]
SOP Version:
This is version [Specify SOP version number and date of the latest revision] of the Regulatory Due Diligence SOP.
Note: The Regulatory Due Diligence SOP should be periodically reviewed and updated to incorporate changes in regulations, industry practices, or internal processes. It is essential to ensure that all personnel involved in due diligence activities are aware of and trained on the latest version of the SOP.