Due Diligence Guidelines –
Interaction with Third Parties including Expert Advisers1
Appendix I – Sample Questions for Third Parties Including Expert Advisers
Qualifications, Experience and Resources
1. Please identify the professional qualification of [the third party] supporting its undertaking of the assignment.
2. How long has [the third party] been engaged by the listing applicant?
3. Is [the third party] and the provision of its service governed by a professional or governmental body to which [the third party] belongs? If yes, please specify. If no, how is the standard of services provided by [the third party] governed?
4. Please provide information on [the third party]’s recent experience in similar IPOs, in particular, in similar industries as the listing applicant.
5. Please identify the core team members of [the third party] involved in this assignment, their seniority levels and provide information on the relevant experience and qualifications of each team member.
6. What is the size and composition of the team involved?
7. How much time does [the third party] expect to commit to this assignment? Please confirm whether resources allocated to the assignment is sufficient.
8. Is there any standard of independence set by the professional or governmental body to which [the third party] belongs? If yes, please specify and confirm that [the third party] is independent from the listing applicant in accordance with the professional rules. If no, please provide a written confirmation from [the third party] that it is independent from the listing applicant, its subsidiaries and their respective directors and controlling shareholder(s).
9. Does any member of the team receive any discretionary compensation with respect to these services? Has any member of the team been employed by the listing applicant before?
10. Were there any other firms being retained prior to the engagement of [the third party]? If so, who was/were it/they? Does [the third party] know why there was such a change?
11. Please confirm that neither [the third party] nor any of its partners/directors working on this project is a connected person of the listing applicant or has a direct or indirect interest in the securities or assets of the listing applicant or in the securities or assets of connected persons of the listing applicant. If there is any such interest, please provide details.
12. Other than the current assignment, what other services is [the third party] performing or has [the third party] performed for the listing applicant and its affiliates? Please advise if there is any other existing or prior relationship, business or otherwise, between [the third party] (and/or any of its partners/directors working on this project) and the listing applicant and its subsidiaries (and/or any of their directors, senior management or controlling shareholder(s)).
13. Does [the third party] foresee any potential conflicts of interest in the future in its role in the current assignment or otherwise which would undermine or affect its independence?
Scope of Work
14. Please describe the scope of work performed by [the third party] in preparing the information and arriving at the conclusions and recommendations stated in the [work product]. Is the scope of work set by a relevant professional body?
15. Were there any limitations on the scope of work which might adversely impact upon the degree of assurance given by [the third party’s] report?
16. Please confirm if there were any procedures and processes in the scope set out in the engagement letter which [the third party] was unable to perform.
Bases and Assumptions
17. What is the methodology adopted by [the third party] in preparing the [work product]? Is this methodology commonly used by other experts in the same field? If not, what is the commonly used methodology in the industry?
18. What are the bases and key assumptions on which [the third party’s] report is based? Does [the third party] consider that the bases and key assumptions on which the [work product] is based are fair, reasonable and complete? Is [the third party] aware of anything which could possibly lead the sponsors to believe that such bases and assumptions may not be fair, reasonable or complete?
Consistency and Sufficiency of the Work Results
19. Please explain the basis on which any sample set was selected. How comfortable is [the third party] that its report provides a fair representation of the target population’s behaviour?
20. Please describe the independent sources of information used in [the third party’s] report. Is such information publicly available or not? Does the use of such information require the consent of any third parties? If so, has such consent been obtained?
21. Please confirm whether [the third party] considers it has obtained sufficient information to arrive at the conclusions or the opinion set out in the [work product].
22. Is there any factual information which will not be appropriately disclosed or commented on in the prospectus? If yes, please specify. Did [the third party] encounter any data or figures that are not consistent with [the third party’s] industry knowledge? If so, please explain the procedure undertaken to address the issue?
23. Is there any factual information that is relied on but not verified by [the third party] or by an independent source? If yes, please specify.
24. Were any representations made by the Listing Applicant in respect of [the third party’s] report? If so, what were these representations?
25. Are there any unusual findings or irregularities noted by [the third party] in preparing the [work product]? If yes, please specify.
26. Please confirm that the prospectus fairly represents and discloses [the third party’s] views.
27. Is there any qualification or non-compliance which will not be disclosed in the prospectus? If yes, please specify and provide reasons for such non-disclosure.
28. Please confirm whether the [work product] is consistent with the information known to [the third party] about the listing applicant and its business.
29. Are there any other matters about the listing applicant which [the third party] would like to bring to our attention?
HKCFEF Limited and the contributing law firms, accountants and sponsors are not offering these due diligence guidelines as legal, financial or professional advice or services and they should not be relied upon as such. These due diligence guidelines should not be used as a sole basis for any decision, action or inaction and are not meant to serve as a substitute for the advice of qualified professionals. See here for the full terms and conditions.