8 Checks to Conduct on Registered Companies in Singapore

If you are a business owner intending to enter into an important transaction with another company or business entity, you may wish to conduct a check on your counterparty’s legitimacy first.

Such transactions may include acquiring assets from the business, entering into a valuable contract (e.g. if your business supplies goods, or loans money, to another company in return for payment) with the business, investing in the business or entering into a partnership or joint venture with the business.

This article provides a comprehensive overview of the background checks that you can consider conducting on the counterparty before entering into any transaction. It will cover 8 types of background checks:

1. Checking basic information via the ACRA directory
2. Verifying information against the company’s Business Profile
3. Corporate Compliance and Financial Profile
4. Insolvency Search
5. CASE and MAS Watchlists
6. Checking for GST Registration
7. Checking Financial Institution Licences
8. Checking for registered trademarks and patents

Why Perform Background Checks on the Counterparty?

It is extremely important to conduct preliminary checks on your counterparty before transacting with them. This is because some businesses may be unreliable such that they do not perform their obligations, whether these are contractual or otherwise.

Or worse, the business may be fraudulent or have the intention to use the transaction as a vehicle for money laundering or other illegal activities. These may lead to serious economic and reputational losses for your business.

Even if you have no qualms about entering into the transaction, you should consider conducting background searches to verify that what the business entity says about itself are authentic and trustworthy. Should your counterparty turn out to be untrustworthy, you will be able to back out from the transaction and shield your business from any future trouble.

Of course, it will not be necessary to perform all of the following listed background checks for every transaction that your business enters into, as some may not be directly relevant. Nonetheless, it is recommended that you perform all the relevant checks on your counterparty for transactions that are not in the ordinary course of business, or which involve significant assets or liabilities.

Background Checks You Can Conduct on Registered Companies in Singapore

1. Checking basic information via the ACRA directory

Basic information about any business entity you are interested in is available in the Accounting and Corporate Regulatory Authority (ACRA) directory free of charge. The available information includes:

• The business entity’s full name as registered with ACRA;
• The business’ Unique Entity Number (UEN);
• The status of the business entity (e.g. live, struck off, cancelled, dissolved or terminated);
• The registered address of the business entity;
• The industry that the business entity is officially operating in;
• (If the business entity is a company) When it had last filed its Annual Returns;
• When the business entity had last filed its financial statements.

You should deal only with a business entity whose status is “live”, as this means that the business is currently still in operation.

If you are unable to contact a business entity at the registered address listed, or if you suspect that it might have moved premises without updating ACRA about the move, you should exercise caution and perform other checks before dealing with it.

Procedure

1. Search for the business entity’s name in the ACRA Register via the BizFile+ website.
2. In the generated search results, identify the business entity that you are interested in.

2. Verifying information against the company’s Business Profile

If the information obtained from the ACRA directory is insufficient, you may wish to purchase the business entity’s Business Profile on ACRA. The Business Profile provides further information including:

• The registration date of the business entity;
• Its business activities;
• Particulars of position holders and business owners of the business entity (e.g. owners, directors and partners);
• (For companies) Information about its shareholders and paid-up capital.

This information can also be used to verify the information that the business has previously provided you with.

Procedure  

1. Log into the BizFile+ website using your SingPass or CorpPass.
2. Navigate to “Buy Information”, followed by “Business Profile”.
3. Purchase the business entity’s Business Profile for SGD$5.50.
4. Within 15 minutes of successful payment, you will receive an email with a download link to access the Business Profile that you have just purchased. Note that the link for the purchased file will expire 7 days after your purchase.

3. Corporate Compliance and Financial Profile 

If you are concerned about the compliance record and financial health of the business entity, you may wish to purchase the business entity’s Corporate Compliance and Financial Profile. This includes the information that can be found in a Business Profile, and further contains information on:

• Whether the business entity complies with its statutory requirements;
• Key highlights of the business entity’s financial statements, such as its balance sheet, profit and loss and cash flow statement;
• Financial health of the business entity, in terms of liquidity, profitability, operating efficiency and solvency;
• Auditors’ opinion on the financial statements;
• Whether the directors are of the opinion that the accounts drawn up are accurate.

Procedure

1. Log into the BizFile+ website using your SingPass or CorpPass
2. Navigate to “Buy Information”
3. Purchase the business entity’s Corporate Compliance and Financial Profile for SGD$50.00
4. Within 15 minutes of successful payment, you will receive an email with a download link to access the Corporate Compliance and Financial Profile that you have just purchased. Note that the link for the purchased file will expire 7 days after your purchase.

4. Insolvency Search 

In addition, it is advisable that you conduct an insolvency search on the business entity (if it is a Singapore company) beforehand. This search helps determine the liquidation status of companies that have been compulsorily wound up by the court.

Therefore from conducting an insolvency search, you can check if the company has been served with a winding up order. If it has, it likely means that the company is unable to fulfil its financial obligations to its creditors. It is thus not advisable to deal with the company as it may consequently be unable to discharge its obligations in its transaction with you, especially its financial ones.

Procedure 

1. Proceed to the Corporate Insolvency Search on the Ministry of Law’s Insolvency Office E-Services website. To conduct the search, you will need to have the company’s name or UEN.
2. All companies matching your search criteria will be retrieved, and you may choose which results you want to pay for and view.
3. Each search request submitted costs SGD$6.00.

5. CASE and MAS Watchlists

You may also wish to check if the business entity is on the Consumers Association of Singapore (CASE) consumer alert list. This list highlights entities that may be involved in unfair consumer practices. If your business is subsequently associated with these entities, or engages in such unfair practices with them, this may affect the reputation of your business or even implicate your business in investigations.

In addition, the Monetary Authority of Singapore (MAS) maintains an Investor Alert List, of companies that engage in business activities that are not regulated by MAS. This could be relevant if the business entity has represented to you that it is licensed or regulated by MAS. Such representations would lend credibility to the entity, but may in fact be untrue.

These two searches are free of charge.

6. Checking for GST registration

To charge an additional Goods and Services Tax (GST) on goods or services supplied, the entity must be GST-registered. Thus, where a business represents that it is GST-registered, you may wish to verify this information by conducting a GST Registered Business Search, which is free of charge.

If the business is GST-registered, a GST Registered Business Search will show:

• Its GST Registration number;
• Its UEN or NRIC (if it is a sole proprietorship);
• The status of its GST Registration (e.g. registered);
• When the business entity was GST-registered;
• (If the entity has ceased to be GST-registered) Until when the business entity had been GST-registered.

Procedure 

Proceed to GST Registered Business Search on the website of the Inland Revenue Authority of Singapore (IRAS). To conduct the search, you’ll need to have the name of the business entity, its UEN, its GST Registration Number, or the NRIC of the individual who owns the sole proprietorship (if the business entity is a sole proprietorship).

7. Checking Financial Institution Licences

If a business represents that it has a financial institution licence (such as a licence under the Payment Services Act), you may wish to verify this information by conducting a search on the Financial Institutions Directory. This search is free of charge.

If the business is licensed by MAS, this search will include information on:

• What the licences are;
• The business entity’s activities;
• The sector(s) the business entity operates in.

Procedure

Proceed to the Financial Institutions Directory and key in the name of the financial institution.

8. Checking for registered trademarks and patents

If the business transaction involves existing trademarks and patents, you should check whether such trademarks and patents have been duly registered with the Intellectual Property Office of Singapore (IPOS). This may be relevant if for example, you are interested in acquiring, or entering into a joint venture with, a particular business entity because it has represented that it has a particular trademark or patent.

To check whether such trademarks and patents are registered with IPOS, you can conduct a search on the IPOS Digital Hub website. This search is available free of charge.

For trademarks, the relevant entry in the search results will include the following information:

• The trademark itself;
• Status of the trademark (e.g. registered);
• Expiry date of the trademark;
• Description of particular features of the trademark;
• Specification of the type(s) of goods and services the trademark is used for;
• Details of the current applicant or proprietor, including its name, UEN, country of incorporation and address.

For patents, the relevant entry in the search results will include the following information:

• Title of invention;
• Date of lodgement of the patent;
• Details of the current applicant or proprietor, including its name, UEN, country of incorporation and address;
• Details of the inventor, including its name, address and country of residence;
• Specification documents, including drawings of the invention and its description.

Procedure

Use the search features on the IPOS Digital Hub website to search for registered trademarks or patents. There are four options:

1. Basic Search

This search lets you search for trademarks or patents using one search criterion at a time. Examples of search criterion are:

• Trademark or patent application number
• Registrant name
• Trademark description
• Title of patent invention

If you want to use multiple search criteria, you should do an Advanced Search instead.

2. Advanced Search

The Advanced Search helps you search for trademarks and patents using multiple search criteria. You can also use wildcard characters and Boolean operators to narrow your search.

3. Trademark Similar Mark Search

Trademark Similar Mark Search is specifically for searching for registered trademarks that look similar to other trademarks, in the sense that they have similar text and/or image(s).

4. Trademark Goods and Services Search

The Trademark Goods and Services Search helps users find the trade mark class number(s) that may apply to their goods and/or services. If you are checking for registered trademarks or patents, this search is probably not as relevant to you.

Potential Obstacles When Conducting Background Checks on Businesses

First, you will need to have some basic information about the business entity before you can conduct any background checks on it. Such basic information would include the business entity’s registered name and/or its UEN. It is difficult to conduct any checks if you do not have such knowledge.

Some businesses may also choose to trade under names that are different from their registered names. This may pose difficulties in locating the business during your searches if you are aware of only the name the business trades under, and not its registered name.

For example, the fast-food chain McDonald’s is run by Hanbaobao Pte Ltd, and the health and beauty retailer Guardian is run by Dairy Farm International Holdings Limited (which is not incorporated in Singapore, but in Bermuda). This means that simply keying in “McDonald’s” or “Guardian” may not result in a successful search.

In addition, some brands may operate on a franchise model, such that different entities can legally use the trademarks, branding and business models of one franchisor. In Singapore, sandwich chain Subway operates on such a model, and this means that different Subway outlets in Singapore may be owned by different business entities. Thus, if you encounter a franchise model, you need to ascertain the specific entity that you are dealing with.

Finally, some of the background checks are not free of charge, and the payable fee will depend on the type of information that you are seeking.

Engaging a Lawyer to Assist in Conducting Background Checks 

It is strongly recommended that you engage a lawyer to conduct, on your behalf, background checks on businesses that you are considering entering into transactions with.

One reason for this is that some of the abovementioned checks require a certain level of legal knowledge to be able to navigate the sites easily. For example, checking for registered trademarks and patents on the IPOS Digital Hub website requires an understanding of how trademarks and patents work in Singapore.

There may also be other background checks that are relevant to your specific circumstance, but which are not generally known. A legal professional will be able to ensure that all of the necessary due diligence checks are conducted to ascertain the legitimacy of your counterparty before you go ahead with the transaction.

Further, a lawyer can help in analysing the significance of the results from the searches, so that you can better understand how they may affect your business.

Ultimately, conducting these background checks will provide you with a peace of mind before you enter into the transaction with your counterparty. Your initial efforts will go a long way in protecting your business from any future problems.

You may get in touch with experienced corporate lawyers for the conducting of background checks here.