Acquisitions typically require the buyer to exercise a substantial amount of prior due diligence.  Before committing to a transaction, the buyer will want to obtain an understanding of, amongst other things:  the nature of the business, obligations that come with it, the nature and extent of the target company’s contingent liabilities, the existence of any problematic contracts, and litigation risks.  This is particularly true in private company acquisitions, where the target company has not been subject to the scrutiny of the public markets, since the buyer has little (if any) ability to obtain the information it requires from public sources.

Renewable Energy (RE) facilities currently represent a fast-growing sector in Kazakhstan. They are regulated by Kazakhstan Law “On supporting the use of renewable energy sources” dated July 4, 2009 (hereinafter the “RE law”), as well as the Order of the Minister of Energy of the Republic of Kazakhstan dated March 2, 2015 No. 164 “On approval of the Rules for the centralized purchase and sale by the Financial Settlement Center of Electrical Energy produced by facilities for the use of renewable energy sources” (hereinafter the “Rules”).

This article aims at providing the summary of the most significant legal and business due diligence activities that are connected with a typical RE sector specific M&A transaction. Careful planning and proper anticipation of the related issues that may arise, will allow the target company to be well equipped with particulars to successfully execute the transaction.

The key contractual components of the Legal Due Diligence (DD) of a target company are:

  • Corporate structure;
  • Land plots;
  • Grid Connection Arrangements;
  • Power Purchase Agreement (PPA);
  • Permits and Licenses;
  • Finance and Loans; and
  • Litigation.

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