The primary consideration is still the title and ownership of the property.

Engage a suitable lawyer to represent you and undertake necessary checks, verifying the title via reference to:

• The title deed

• The survey plan

• Extracts from the Land Registry

• Encumbrance certificate (Ownership certificate)

If the title is clear you can move on to reviewing the state of the holding company(ies).

(Some may prefer to start all checks together - that’s up to you but if you engage a Chartered Accountant or similar adviser for the corporate diligence and find the legal title is insufficient you may have incurred costs needlessly.)

The corporate due diligence will include:

• Checks on company structure - Directorships, Shareholders, Articles of Association.
  
  There should be checks on nominee structures also - if any local shareholders are engaged to hold shares on your/the seller’s behalf.

• Financial due diligence - a review of audited accounts to check for debts/loans, tax liabilities, contingent liabilities etc.
  
  A tax clearance letter from the Inland Revenue Department (IRD) may be requested to guarantee no tax liabilities.

• Operational checks - reviewing any outstanding contracts, rental agreements, supplier agreements etc.
  
  A key element for a property operating with staff will be employee contracts and pension contributions.

The Share Purchase Agreement (SPA) is a document, typically drafted first by the Buyer’s lawyer, to lay out in full detail the terms of the agreement and describe who will do what and when.

In part, it can act as a checklist for both sides to be sure they’ve provided everything required to complete the deal on the agreed date.

Again, it is up to you and your advisers but it may be sensible to start drafting the SPA once the legal title is cleared. It would include clauses for so-called ‘conditions precedent’, e.g. regulatory checks that have not yet been completed but will be satisfied before completion.

To avoid any confusion the SPA should specify all elements for completion including the method of payment and location for signing.

It should include Representations & Warranties - i.e. undertakings from the seller that there are no hidden issues with the property or the company and may also include an Indemnity, with the seller agreeing to cover the cost of any liabilities incurred pre-sale.

It will lay out the post-sale obligations also, describing the necessary steps of Directors resigning, Shares being transferred etc.

If there are any other elements to your agreement - e.g. the handover of access to rental booking sites - these can be included in the SPA too.

Once the legal title and company checks are done and the SPA is drafted and agreed, the bulk of the work is done and the Company Secretary or lawyer for the seller will start on the necessary admin to effect the transaction.

Docs to be prepared…

• Board resolutions confirming agreement to sell the shares

• Board resolutions confirming resignation of existing Directors and appointment of new ones (you)

• Board resolutions confirming resignation of existing Company Secretary (if you’re changing it) and appointment of new Company Secretary

• Share transfer certificates
  
  

From your (the buyer’s) side you need to ensure you have the right bank account and mechanism for payment in place.

If you are investing in Sri Lanka from overseas this will involve having an IIA bank account set up. This bank account allows you to repatriate (send back) funds from any sale in the future (after tax obligations are met).

You can open an IIA in multiple currencies but transfers within Sri Lanka (from an IIA) can only happen in Sri Lankan rupees and so the bank will convert your dollars or pounds to LKR just prior to completion.

The typical method for payment is then for your bank to issue bank drafts (essentially a guaranteed cheque) that you hand over to the Sellers at point of completion.