Virtual Data Rooms And Legal Compliances In India

Data rooms are essential for maintaining relevant and up to date information by various organisations. Companies have been using data rooms for legal compliances and mergers and acquisitions in India and abroad. However, time has come to shift to the contemporary practices and standards in this regard so that companies can successfully complete various legal due diligences and compliances in India.

For instance, virtual data rooms (VDRs) can be used to store documentary and legal information pertaining to various organisations and companies. If these companies and stakeholders use virtual data room (VDRs) for their legal and due diligence compliances, it can greatly benefit them in managing their legal aspects.

A VDR is essentially a hosted website with limited and controlled accessibility to authorised personnel only. VDR uses secure log in credentials, as supplied by the vendor/authority, which can be modified or disabled at any time by the vendor/authority in appropriate situations. Such log in credentials can be used by the bidders and their advisers to gain access to relevant documents and information.

Establishment of VDRs is considered as a viable and cost effective alternative to traditional data rooms. Electronic legal due diligence relies heavily upon virtual data rooms instead of traditional data rooms. In fact, corruption and technology related legal due diligence may use VDRs in future.

The merger and acquisition trends in India 2011 have shown a decline in merger and acquisition transactions in India except for few areas. Banking related mergers and acquisitions in India are on the cards in the year 2012. The virtual data rooms (VDRs) can be used for the future merger and acquisitions, legal due diligence requirements, loan syndication, private equity and venture capital transactions, etc.

This due diligence process has traditionally used a physical data room to accomplish the disclosure of documents. For reasons of cost, efficiency and security, virtual data rooms have widely replaced the more traditional physical data room.

A VDR is quick to set up. Scanned data and existing electronic files can be mixed, information can be added or eliminated at any time (the changes could be logged if required) and any or all information can be restricted to any or all registered viewers at any time.

There are many disadvantages of a physical data room like time consuming, narrow bandwidth, expensive, cost of travel, paper intensive, etc. On the other hand, VDRs has many advantages like improvement in the number of bidders, increased speed of transactions owing to improved accessibility, enhanced merger and acquisition, takeovers and property deals compared with purely face-to-face and hardcopy document transactions, etc. So time has come to start using VDRs for legal compliances and legal due diligence in India.

Data Rooms, Legal Compliances and Merger And Acquisitions In India

Data rooms are maintained by companies and organisations to manage and make available companies related information and documents so that they can be analysed and inspected by authorised persons and companies.

Data rooms are used for different types of transactions and multiple stakeholders these days. Vendors use data rooms in the case of a property, merger and acquisition, legal due diligence, share sale, etc. Similarly, authorities engaged in public private partnerships (PPPs) prefer to disclose a large amount of confidential data to proposed bidders during the due diligence process.

The traditional data room that is used in this regard is located at a secured physical location to which limited and authorised access is granted to selective people only. It is generally located at the vendor’s offices or at their lawyers or at some other secured place, which the bidders and their advisers will visit in order to inspect and report on the various documents and other data made available.

Often only one bidder at a time will be allowed to enter and if new documents, or new versions of documents are required these will have to be brought in by courier as hardcopy. Teams involved in large due diligence processes comprise of number of experts in different fields and so the overall cost of keeping such groups on call near to the data room is often extremely high.

Establishment of virtual data rooms (VDRs) is considered as a viable and cost effective alternative to traditional data rooms. Electronic legal due diligence relies heavily upon virtual data rooms instead of traditional data rooms. In fact, corruption and technology related legal due diligence may use VDRs in future.

A VDR is essentially a hosted website with limited and controlled accessibility to authorised personnel only. VDR uses secure log in credentials, as supplied by the vendor/authority, which can be modified or disabled at any time by the vendor/authority in appropriate situations. Such log in credentials can be used by the bidders and their advisers to gain access to relevant documents and information.

Obviously, the documents and information is sensitive and confidential and technological safeguards and restrictions should be applied to the viewers' ability to release this to third parties by forwarding, copying or printing. Technological solutions like digital rights management is one example of such technological safeguards. Cyber law and cyber security due diligence must also be undertaken by various stakeholders.

The cyber law trends in India 2012 by Perry4Law and Perry4Law Techno Legal Base (PTLB) have clearly projected that cyber law due diligence in India would going to increase. In fact cyber law due diligence for Indian companies has become so important that it must be made a part of their policies and corporate strategies.

Similarly, e-discovery in India is also going to increase the demands for data rooms and virtual data rooms in India. E-discovery services in India are still evolving but e-discovery for social media in India is one area that has tremendous potential in India and world wide.

Data rooms and virtual data rooms also facilitates mergers and acquisition and legal due diligence exercises. The merger and acquisition trends in India 2011 have shown a decline in merger and acquisition transactions in India except for few areas. However, banking related mergers and acquisitions in India is going to increase and e-legal due diligence in India may be involved in such mergers and acquisitions in India.

Virtual data rooms can also used for legal, accounting, investment banking and private equity companies performing mergers and acquisitions, fundraising, insolvency, corporate restructuring, and joint ventures. India may soon realise the benefits of virtual data rooms for merger and acquisition and other purposes.

E-Discovery For Social Media In India

Social media websites are no more mere social platforms but they are also rich source of digital evidence. Social media websites are increasingly used for proving or disproving facts in many court cases these days. In many cases, social media websites provided the sole and conclusive evidence. Any good law firm would keep this aspect in mind while providing litigation, consultancy and other similar services.

However, digital evidence is neither easy to acquire nor simple to prove in a court of law. There are very few law firms in the world that possess the necessary expertise in this regard. For instance, electronic discovery of evidence and cyber forensics analysis are still areas far beyond the competence and knowledge of a majority of law firms in the world.

Electronic discovery in India is going to play a major role in future litigations. E-discovery services in India would also be required because Indian judiciary has already started exploring the use of technology for judicial purposes. Use of ICT for judicial and legal reforms in India is well recognised and establishment of e-courts in India could bring many far reaching legal and judicial reforms in India.

Indian judiciary is exploring the concepts like e-courts in India, digital evidencing in India, etc. Further, bail orders would now be sent through e-mails in India and an electronic bail granting and communication system in India may also be established. Electronic legal notices in India are also in use. Even cyber forensics in India is being explored for it possible use in legal and judicial purposes.

The cyber law of India also provides for social media due diligence in India. Social media websites are now required to follow the guidelines and requirements as mentioned in the information technology act 2000 (IT Act 2000). If social media websites fail to achieve cyber law due diligence, many civil and criminal liabilities are attracted.

All these circumstances have made e-discovery for social media in India an essential requirement. E-discovery for social media in India may be required to prove online defamatory or hateful contents. Similarly, such e-discovery may also be required to investigate a cyber crime that has been committed using a particular social media platform. Since e-discovery requires a sound knowledge of both technology and law, it is advisable to start acquiring the same as soon as possible.

Electronic Discovery (E-Discovery) In India

Electronic discovery (e-discovery) in India is an area that has started gaining importance in India. Although electronic discovery (e-discovery) services in India are primarily provided by LPO and KPO companies and firms in India yet very few companies and firms are doing it for Indian clients. This shows e-discovery in India has still to be adopted and accepted as an essential part of individual and corporate business dealings.

The reason for limited adoption and growth of e-discovery in India is lack of knowledge, expertise and appropriate laws in this regard. We have no dedicated e-discovery laws in India and e-discovery laws and practices in India have still to mature. Similarly, allied fields like cyber forensics, cyber security, etc have also not grown much.

This is the reason why e-discovery and litigation services LPO and KPO in India have not grown much. We have an exclusive techno legal digital evidencing and e-discovery centre of India managed by Perry4Law Techno Legal Base (PTLB). PTLB is managing many techno legal services in India including electronic discovery and litigation support services in India.

The cyber law of India has also given rise to many cyber laws due diligence liabilities in India. In fact, cyber due diligence for Indian companies is very stringent on various accounts like privacy protection, data protection, etc. If these cyber due diligence requirements are not met, these companies can be held civilly and criminally liable.

E-discovery is also relevant for law enforcement, lawyers and judiciary. Legal and judicial fraternity of India needs a temperament for scientific knowledge. This includes knowledge about cyber law, cyber forensics, digital evidencing and e-discovery.

E-discovery policy in India needs to be developed by India government. This has become necessary due to the proposed electronic delivery of services bill (EDS Bill) 2011 that mandates delivery of services in an electronic form. Electronic delivery or non delivery can be sufficiently proved with the help of e-discovery practices in India. Indian government must start thinking about developing e-discovery related policy and legal issues as soon as possible.