Background:

CloudPay provides digital payment solutions in Asia. During preparation for listing, the following issues emerge:

1. Revenue Recognition

CloudPay has two revenue models:

• Upfront implementation fees (30% of revenue)

• Monthly subscription fees (70% of revenue)

However, sales teams have been:

• Recording full year subscription revenue upon contract signing

• Offering unofficial "cooling off" periods to customers

• Allowing verbal amendments to written contracts

• Making side agreements about refund terms

2. Regulatory Compliance

The company recently discovered:

• Their payment gateway license in Thailand expired 6 months ago

• No formal AML procedures despite handling customer funds

• Data servers located in jurisdictions without proper permits

• Customer data protection policies below regulatory standards

3. Internal Control

Recent findings include:

• No proper segregation between sales and finance teams

• Sales commission calculated before customer payment received

• Verbal approvals for major contracts common practice

• No formal credit control policy

Question:

As Company's Counsel:

• How would you guide the company to address these issues?

• What remedial actions should be taken immediately?

• How would you structure disclosure to sponsors?

• What documentation should be prepared?

• How to manage potential sponsor questions?

As Sponsor's Counsel:

• What specific due diligence would you conduct?

• What expert opinions would you require?

• How would you verify the remedial actions?

• What additional documents would you request?

• What undertakings/confirmations would you require?