Checking of a foreign partner

Checking of a foreign partner

In the modern world the question of reliability of a foreign partner is now more acute than ever. Being a fiction, legal entity often becomes a barrier through which it is difficult to see the real presence and legal status of an asset, encumbrance, as well as the beneficial owner and its reputation.

Russian’s tax law and governmental departments require to check of the counterparts. Federal law №115 provides to exempt illegal cash withdrawal with the aim of tax evasion. It’s not possible to realize without a proper checking.

The mail idea of ​​checking the counterparty is to obtain the necessary information about the potential or current clients and analyze the received data. In each case, the data selection can be executed by many factors – jurisdiction, risk level of the planned transaction, complexity of the transaction in terms of the number of parties, etc.

It is notable that the checking is applied not only to new partners, but also to current ones already related with you by contracts. For example, to track the status of the tangible asset (for template, real estate or manufactory) in which the funds were invested, you can consider the situation when a foreign company invests in a Russian asset. All or almost all of the primary checking methods were performed – the beneficiary is defined, the ownership of the asset to the recipient of the investment, too.

However, the issue of encumbrance of the asset was not examined – it may be pledged by the bank or this pledge may arise in the future, because of absence of restrictions to receive additional financing after round the investment. As a result, a situation arises where the asset in which the funds were invested can be transferred under the control of the bank and (or) other creditors, may lose liquidity, or even be split and sold by parts. To avoid such risks, there is a need for specialists who will not only be able to identify business risks, but also ways to eliminate them.

You can check your foreign partner by using the following services:

1. State registries
   Examples – Company House (England); European Business Register (EU); France and Germany have their own registries; Information on Greek companies can be found on the CCI website.

2. Non-governmental information systems
   DUN & BRADSTREET, EUROPAGES, LexisNexis and others.

3. State registers of individual
   For example, on the website of the office of the French Arbitration Court, you can get information not only about the status of the company, but also about the current litiga charge.

4. Request for documents in the jurisdiction of the counterparty
   For example, the certificate “Good standing”, which indicates the confirmed legal status of the company.

Walton Consultants DMCC specialists are ready professionally and in a short time provide available information about the counterparty company. After an initial analysis of the situation, we will be happy to offer verification methods that will reduce risks in business planning.