Chapter 2

Due Diligence Guidelines –

General Principles

7. Reasonable Reliance on Third Parties and Experts

It is recognised that the production of a listing document is a cooperative exercise which, while coordinated by the listing applicant’s sponsor, is the product of input by the directors and senior management, the third parties engaged to undertake specific due diligence tasks, and the experts retained by the listing applicant, in addition to the sponsor. Further, it is recognised that the sponsor does not have the expertise, competence, statutory authority or qualifications, as the case may be, to undertake the work of third parties which undertake specific due diligence tasks, such as lawyers engaged to undertake verification of title to properties and accountants engaged to review internal controls, or that of the experts retained, such as reporting accountants and valuers. However, the sponsor cannot rely at face value or blindly on the work of third parties or experts. The sponsor is expected to perform the due diligence procedures in Paragraph 17.7 of the Code of Conduct with respect to an expert and its report and, having performed those procedures, should have no reasonable grounds to believe that the information in the expert report is untrue, misleading or contains any material omission.7 In order to rely on the work of a non-expert third party, the sponsor is required to perform the due diligence procedures in Paragraph 17.6(g) of the Code of Conduct.

Endnotes

7. Paragraph 17.5(c) of the Code of Conduct.