How to check the trustworthiness of counterparties and candidates?
Legal Digest \ 21.06.2019

Sometimes the safety and success of your business depends on the trustworthiness of third parties who help you to deliver your activities, whether such parties are newly recruited employees in your company or potential counterparties. The verification of their trustworthiness always remains an important issue, so Acsour’s experts have prepared material in which they speak about the effective methods of verifying the reliability of third parties. You can apply them yourselves or with our help to provide protection for your business.

 Verification of candidates who are being recruited is a very important stage in deciding whether to sign a labour agreement between an employer and an employee. This is because it is vital for the employer to hire not only a responsible and competent but also a reliable specialist. For employees, verification is a chance to show their positive qualities, as well as a sign that the company is very serious in choosing employees. In this case, the employer minimizes in advance the labour and material risks connected with the employee’s activities. When verifying individuals, Acsour helps clients to quickly and efficiently verify the following information:

No.

Body applied to

Checked data

1

Ministry of Internal Affairs

·        The validity of an individual’s passport (not lost, not stolen, etc.)

·        The validity of an individual’s driver’s license

·        Whether an individual is wanted by authorities within Russia

2

State Road Safety Unit

·        The validity of a driver’s license

·        The existence of unpaid fines for road traffic offences

3

Government Services

·        The existence of individual tax arrears

4

Federal Court Bailiff Service

·        Data concerning enforcement proceedings that are carried out in respect of individuals (documents on the basis of which court orders are issued, as well as data from the bailiff who is conducting the enforcement proceeding, and the amount of debt)

5

Justice Service

·        Judgments of a court handed down in respect of individuals

6

Interpol Service

·        Whether an individual is wanted internationally

The verification of a counterparty’s trustworthiness constitutes the most important stage of building contractual relationships, during which it is necessary to evaluate the past work experience of the counterparty with companies and the quality of the counterparty’s performance of contractual obligations. At this stage, the status of the counterparty is checked in terms of whether there are risks of bankruptcy or litigation owing to the non-performance of contracts. It is important to note that in a case where an agreement is concluded with an unscrupulous counterparty, the tax authorities refuse companies a VAT deduction.

 Using the services listed below, you can carry out a detailed verification of a counterparty, which will help you in ensuring the security of your business. As part of the counterparty check, our experts usually recommend checking the following information through the services listed below:

No.

Body applied to

Checked data

1

Federal Court Bailiff Service

·        Data from enforcement proceedings that are carried out in respect of legal entities (documents on the basis of which court orders are issued, as well as data from the bailiff who is conducting the enforcement proceeding, and the amount of debt)

2

Justice Service

·        Judgments of a court handed down in respect of legal entities in civil proceedings

3

Register of bad-faith suppliers 

·        The presence of a legal entity in the list of bad-faith suppliers

4

Commercial Case File

·        Litigation against a legal entity (regardless of the status of the plaintiff/defendant)

5

Unified State Register of Legal Entities (USRLE)

·        Data regarding a legal entity (details, governing bodies, information about the managing director, etc.)

6

Unified federal register of legally relevant information on the facts of the activities of legal entities, individual entrepreneurs and other subjects of economic activity

Data concerning the following:

·        the establishment of a legal entity (also via a reorganization);

·        the beginning of the process of reorganization or liquidation;

·        the exclusion of a legal entity from the USRLE and its liquidation;

·        a decrease or increase of the issued capital;

·        a resolution to change the address of an organization and the fact of such change;

·        a change of the CEO;

·        the unreliability of information contained in the USRLE with respect to a legal entity.

 

 

Thus, it is necessary to state that the issue of checking the trustworthiness of counterparties and candidates for open vacancies is not the last question when assessing the level of profitability and security when doing business. If there is negligence in such situations, the outcome most often will be legal disputes. As an example, on the one hand, there are cases in which unscrupulous former employees have committed fraud at work, for example by stating their authorship of an invention or a work belonging to third parties, or by disclosing confidential information in order to obtain illegal profits from other persons, and in other categories of disputes arising from the illegal activities of employees. On the other hand, the commercial (‘arbitration’) courts consider multimillion-dollar disputes concerning unscrupulous counterparties who, after receiving payment, did not perform work, or did not provide services.

Be farsighted and evaluate your risks in the current situation: should you continue to postpone the issue of quality checking the trustworthiness of counterparties and candidates for open vacancies? If you do decide on this crucial step, our experts will be happy to assist you in this matter and be there to guide you through each of the stages.