You can do a basic risk assessment of the business entity or people involved with it from your background checks, by asking some of the following questions:

  • How long has the business entity been in business? 

    This will give you some idea about the history and stability of the business entity

  • What is the business entity’s status? 

    You should only deal with a business entity which status is “live” in ACRA’s register.

  • Who are the people listed as being involved in the business entity? How long have they been involved? 

    If you notice very frequent changes in the people involved in the business entity, this may suggest that the business entity is not stable or that it may have inconsistent management policies.

  • Are the people involved in a business entity which has given you problems also involved in another dubious entity which has contacted you?

    You should exercise caution if you notice the following: 

    • The business profiles show that some or more of the same people are involved in both entities;
    • You have experienced problems with some people from the first business entity, and you notice that some or more of the same people are involved in the second entity (even though they are not listed in the Business Profile of the second entity);
    • The business profiles show that both entities operate from the same registered address;
    • The second entity was set up only recently and soon after the first entity was set up;
    • You can no longer contact the first entity;
    • The second entity wrote to you or informed you that they have taken over from the first entity, or the first entity wrote to you or informed you that it has been taken over by the second entity; or
    • You are told that you have to sign a new contract and pay money to the second entity before it will help you resolve your existing problems with the first entity.

    • What is the role of the person who has contacted you? 

      If you notice that the person who has contacted you seems to be in charge of the business entity but is not listed in the business profile of the entity, you should first check his actual role in the entity.

    • What is the involvement of the person who is contacting you in other business entities? 

      If you notice from the People/ Business Profiles that this person is involved in other business entities that have failed, you may wish to find out more about him before dealing with him further

    • What is the company’s paid-up share capital compared with the amount of investment that you wish to put in the company? 

      If the paid-up share capital of a company is very small compared to your potential investment, you may wish to consider how much capital the company has to pay its creditors if it shuts down subsequently. You should also consider how much capital the existing shareholders are actually willing to invest in it, and how much risk they are willing to accept for their investment. 

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