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Undertaking Background Checks on Corporate Entities

Background checking undertaken on individuals is something that is becoming increasingly accepted both in Australia and globally. After all, it makes sense to minimise the risks associated with hiring a candidate by verifying their background and identifying whether there is anything a potential employer would like to know about! Many corporate entities now include background checking as a standard company practice for all staff and it is a topic that crops up in the media regularly.

Whilst background checking for corporate entities is possibly not as talked about, it is just as important and often more-so in terms of what a company stands to lose if the corporate entity being dealt with does in fact have skeletons in its closet! Background checking can minimise these risks and assist stakeholders in making informed decisions.

This UpClose article outlines when background checking on corporate entities is relevant, what checks are available and what information is required to run these checks.

When would background checking on corporate entities be relevant?

Undertaking background checks on corporate entities is sometimes referred to as “due diligence” and this phrase says it all; it is diligence that is “due” or appropriate given the particular situation. Background checking is appropriate where a company is looking to form a relationship with another corporate entity and there are risks associated with this decision for the company if this association does not work out.

Examples of situations where these risks exist include:

  • Business Partnerships – your company risks funds, reputation and much more if a partnership is formed with the wrong corporate entity;
  • Purchasing a Business – your company runs the risk of acquiring a company that has been misrepresented in terms of funds, reputation, business associations and past history;
  • Lease Arrangements – your company risks non-payment of funds and possible loss or destruction of property if a lease is granted to the wrong corporate entity;
  • IT/Security Consultants – your company risks IT or security breaches if access to your internal systems is granted to the wrong corporate entity;
  • Offering Credit – your company risks loss of funds if a line of credit is made available to the wrong corporate entity; and
  • Sole-traders – your company runs the risk that the individual does not have the appropriate compliance in place, including required insurances.

Much due diligence in terms of assessing financials, company client-base, lease arrangements, intellectual assets, partnership agreements and other aspects can be done internally; however, there is much more that can be verified about an corporate entity through external sources and this is where background checking can assist.

What checks can be run on corporate entities?

Various searches of publicly available information are able to be undertaken for corporate entities. These include:

  • ABN/ACN Validation – Verifies the validity of the corporate entity’s ABN/ACN;
  • ASIC Company/Business Check – Reveals registered information for the corporate entity as well as ownerships, directorships and shareholdings, which may prompt research into individuals/entities;
  • ASIC Relationship search of Company Shareholdings – Exposes interests of the corporate entity which may prompt research;
  • National Criminal History Record Check – Exposes criminal convictions where the offence may be related to the engagement;
  • Commercial Credit Check – Exposes the credit history of the corporate entity which may indicate financial stability;
  • Supreme & Federal Court Checks – Determines whether as corporate entity has been involved in court actions, particularly civil which may expose a business risk;
  • Verification Checks – Confirms compliance for various insurances and licences; and
  • Media Check – May validate corporate entity claims and/or expose articles of an adverse nature.

Often background checking on corporate entities extends to include other related company entities or directors of the corporate entity (as identified in the ASIC Company/Business Check). Checks on directors can include a National Criminal History Record Check, ID Validation, Bankruptcy Check, Credit History Check, Directorship Check and Litigation Check. Needless to say, it is important to identify if directors of a corporate entity are a criminal, bankrupt, have directorships that present a conflict of interest or any other causes for concern exist.

What information is required to run the checks?

In order to run background checks on corporate entities, PeopleCheck would require the following:

  • Company name;
  • Basic company details (ABN/ACN, address);
  • A consent form signed by an authorised representative of the corporate entity; and
  • A specific National Criminal History Record Check form if this particular search is required.

More Information
For more information on how PeopleCheck can assist with background checking on corporate entities, please contact us via phone at +612 4023 0603 or email at validate@peoplecheck.com.au

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