Document background
The Disclosure Letter is a vital component of M&A transactions under Dutch law, serving as a companion document to a share purchase agreement or asset purchase agreement. It is used when a seller needs to make formal disclosures against warranties provided in the main transaction documents, typically during the due diligence phase or immediately before signing. The document provides protection for sellers by qualifying their warranty obligations and offers buyers detailed information about potential risks or liabilities. Under Dutch law, the Disclosure Letter must meet standards of fair disclosure and good faith as required by the Dutch Civil Code. It commonly includes both general disclosures (such as matters of public record) and specific disclosures against individual warranties, often supported by detailed schedules and supporting documentation. The document is particularly important in Dutch transactions as it can affect the buyer's post-completion rights and remedies under the principle of "known risks."
