Ready for due diligence, before anyone asks

Sooner or later, every company is asked to explain itself. A bank opening an account, a landlord, a large customer, a supplier offering credit or an investor will each want to know who the company is, who owns it, who runs it and what it does. The questions arrive at inconvenient moments, often when a contract or a payment is waiting.

A company that keeps its answers ready turns these checks into an afternoon's work. A company that assembles them each time turns them into weeks. The difference is not size or sophistication. It is a file kept current.

What a bank verifies about a company

The Central Bank of the UAE publishes guidance for the banks and other financial institutions it licenses on how to check their customers. For a customer that is a company, the guidance asks the institution to verify, among other things and from reliable and independent sources, the company's name, legal form and memorandum of association, and its head office address or principal place of business. It also asks for the names of the people in senior management and of everyone authorised to give instructions on the account, the company's ownership and structure, the purpose of the relationship and the nature of the business.

On ownership, the same guidance asks the institution to trace the chain upwards until it reaches the individuals who ultimately own or control the company. Apart from an exception for listed companies, another company cannot be the final answer. A company owned through a holding structure should be ready to show every link in that chain, with documents for each.

The guidance also expects the institution to keep monitoring the customer for as long as the relationship lasts, to see that the account is used in line with what the customer said about itself. Due diligence is therefore not a single event at the start. When the business changes, the bank's picture of it needs to change too.

A counterparty running its own checks may ask for some or all of the same information.

Registers a free-zone company keeps

Cabinet Decision No. 109 of 2023 applies to companies licensed or registered in the UAE, including those in the commercial free zones. Under it, a company keeps a register of its beneficial owners and a register of its partners or shareholders. A change to either register is recorded within fifteen days of the company learning of it, and changes are submitted to the registrar within fifteen days.

Those registers answer much of what a bank asks about ownership. A company that keeps them current already holds the core of its due diligence file.

One file, kept current

Keep one folder, paper or digital, that holds the documents a checker is likely to want. The current trade licence. The memorandum and articles of association and any amendments. The registers of beneficial owners and of shareholders. Identity documents for the owners, the managers and the signatories, kept in date. A short description of what the company does, who its customers are and where it operates. A diagram of the ownership, if there is more than one layer.

Add a document whenever something changes, and remove the superseded one to an archive. Set a reminder for every expiry date in the file: the licence, the lease, identity documents. A file with an expired document in it is a file someone has to chase.

Make every document tell the same story

Checkers compare documents with each other. The company's name should be spelled the same way on the licence, the contracts, the invoices and the website. The address should match. The activities described in conversation and on the website should sit within the activities the licence states. The people who sign for the company should be the people the records say may sign.

Read the file as a stranger would, once a year and before any significant application. Where two documents disagree, correct the wrong one, or prepare a one-line explanation. Most inconsistencies are innocent. All of them cost time when a checker finds them first.

Answer questions the same way each time

Write a short, factual description of the company that matches the file: who owns it, who manages it, what it does, where its money comes from and what it needs the relationship for. Use it each time a bank or a counterparty asks. Consistent answers given promptly are, in practice, much of what makes a company easy to deal with.

Banks and counterparties can request a copy of the current trade licence through the enquiries page.