How to check a counterparty before signing: registers and a checklist

Signing a contract does not in itself mean your interests are protected. Even a well-drafted contract will be of limited help if the counterparty already has significant debts, is in insolvency proceedings, systematically fails to perform its obligations, or if the person signing the document does not actually hold the necessary authority.

That is why checking a counterparty before entering into a transaction is not a formality, but one of the basic elements of managing a business’s legal and financial risks.

Below we look at which state registers are worth checking, what exactly to pay attention to, and which signs should raise concern before a contract is signed.

1. Start with the Unified State Register of legal entities and sole proprietors

The first check is the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations (the USR).

A legal entity can be searched, among other things, by its EDRPOU code. A sole proprietor can be searched by name or by other identification data provided for by the service. As of 2026, access to basic USR information through a free request is operational.

What you need to check:

• whether the company or sole proprietor is registered and whether its activity has been terminated;
• the full name and EDRPOU code;
• the registered address;
• the date of state registration;
• the head of the legal entity;
• the person entitled to act on behalf of the company;
• any restrictions on representation;
• the main types of economic activity;
• founders and participants;
• the ultimate beneficial owner;
• information on the ownership structure;
• information about the legal entity being in the process of termination.

The USR also provides for entering information on ultimate beneficial owners and on the ownership structure of a legal entity.

What deserves particular attention

A very recent registration date. A new company is not a problem in itself. However, if a counterparty was registered a few weeks ago and at the same time proposes a significant transaction, a large advance payment or claims many years of experience, this calls for additional verification.

Frequent changes of the director, owners or address. A single change is not evidence of risk. But regular changes of the director, participants, address or ownership structure over a short period may be a reason to clarify the reasons for such changes.

A mismatch between the activity and the subject of the contract. For example, the company offers complex construction work or specialised IT services, although the nature of its registered activities and its overall history do not support this. A registered activity code does not in itself absolutely prohibit entering into a particular contract, but such a mismatch may be one of the risk factors.

2. Check who exactly will sign the contract

One of the most underestimated checks is the authority of the signatory.

It is not enough to see the wording “represented by the director acting on the basis of the Articles of Association” in the contract. You need to make sure that this person really is the director or another authorised representative and has the right to enter into this particular transaction.

Under Article 92 of the Civil Code of Ukraine, a person acting on behalf of a legal entity must act within the powers granted by its articles of association and by law.

Therefore, for significant contracts it is advisable to obtain:

• a current extract from the USR;
• the articles of association of the legal entity;
• the document appointing the director;
• a power of attorney, if a representative signs;
• a resolution of the general meeting or another corporate body, if it is required for the relevant transaction.

This is particularly important for significant transactions. For an LLC, for instance, Article 44 of the Law of Ukraine “On Limited and Additional Liability Companies” sets out special rules for approving significant transactions. In particular, if the value of the property, works or services under the transaction exceeds 50% of the value of the company’s net assets according to the latest approved financial statements, approval falls within the competence of the general meeting, unless the articles of association provide otherwise.

So when entering into a significant transaction, checking the director in the USR alone may not be enough.

3. Check the counterparty’s tax status

The next stage is the services of the State Tax Service of Ukraine. The open part of the STS electronic cabinet provides, among other things:

• data on registration of taxpayers;
• the register of single tax payers;
• data from the register of VAT payers;
• the register of non-profit institutions;
• certain other tax registers and services.

If the counterparty states in the contract that it is a VAT payer, this must be verified separately. The STS allows VAT registration to be checked, in particular by tax number or name.

For transactions with a sole proprietor, it is worth checking whether they are on the simplified taxation system and which single tax group they belong to, if this matters for the structure of the transaction. Where the contract amount is significant, it is also advisable to request documents from the counterparty confirming the absence of material tax debt.

4. Check court cases

The next mandatory stage is the Unified State Register of Court Decisions. The register allows searches of court decisions, in particular by context, case number, court and other parameters. At the same time, during martial law access to certain court decisions or information may be restricted.

For a legal entity it makes sense to search:

• by full name;
• by EDRPOU code;
• by previous company names, if they have changed.

What should raise concern

Not the mere existence of court cases: for a company that has been actively doing business for many years, several disputes may be entirely normal. What matters is a pattern. For example:

• dozens of claims for recovery of debt;
• regular failure to perform contracts;
• disputes over the return of advance payments;
• significant tax disputes;
• corporate conflicts;
• disputes over title to key assets;
• numerous cases in which the counterparty is the debtor.

The situation is especially dangerous when the nature of the court cases directly coincides with the subject of your future transaction. For example, if you plan to pay a contractor a significant advance and find in the court register a series of cases seeking recovery from that same contractor of advances received earlier and not returned.

5. Check the Unified Register of Debtors

Another important resource is the Unified Register of Debtors of the Ministry of Justice of Ukraine.

Under Article 9 of the Law of Ukraine “On Enforcement Proceedings”, the Unified Register of Debtors contains information on debtors with outstanding obligations within enforcement proceedings. The data of the Register is open. A counterparty can be checked through the official service of the Ministry of Justice.

The presence of a company in the Register of Debtors does not automatically mean that you cannot work with it. You need to assess:

• the number of enforcement proceedings;
• the category of recovery;
• the nature of the debt;
• whether there is a pattern;
• the ratio between the potential debts and the scale of the business.

A single enforcement proceeding and dozens of similar ones are fundamentally different levels of risk. For transactions involving the disposal of a debtor’s property, an entry in the Register matters even more: the law expressly provides for legal consequences for transactions with a debtor’s property in defined cases.

6. Check insolvency and bankruptcy

For significant transactions you need to establish separately whether insolvency proceedings have been opened against the counterparty.

Information on the opening of such proceedings is officially published on the web portal of the judiciary of Ukraine. The Code of Ukraine on Bankruptcy Procedures provides for free and open access to the relevant information.

The very fact that insolvency proceedings have been opened materially changes the risks of cooperation. Particular caution is required with:

• a significant advance payment;
• long-term deferral of payment;
• delivery of goods without security;
• acquisition of such a counterparty’s assets.

7. Check sanctions

For Ukrainian business, sanctions screening is already part of normal compliance and due diligence.

Ukraine operates a State Register of Sanctions maintained by the Staff of the National Security and Defence Council of Ukraine. The Law of Ukraine “On Sanctions” defines this Register as a system containing information on persons subject to sanctions. Its data is open and publicly available. The official State Register of Sanctions has been operating since 2024.

It is advisable to check not only the company itself, but also:

• its participants;
• its ultimate beneficial owners;
• its director;
• key companies in the group;
• foreign owners and related structures, where they are known.

For international transactions, the Ukrainian sanctions list may not be enough. Depending on the country of payment, the bank and the structure of the deal, screening against EU, US, UK and other jurisdictions’ sanctions may be required.

8. For certain transactions, check assets, licences and permits

The scope of the check depends on the subject of the contract.

If the counterparty is selling real estate, checking the company alone is not enough: you need to check the property itself, the registered rights, encumbrances, mortgages and other legal risks. When acquiring equipment, vehicles or other valuable property, a check of the relevant encumbrance registers may be required.

If the counterparty’s activity is subject to licensing or requires a special permit, you need to verify that the licence or permit exists and is valid.

The principle is simple: you need to check not only the counterparty itself, but also its legal right to perform the specific contract.

9. Request documents directly from the counterparty

State registers are only part of the check. For a significant transaction it is normal practice to request a package of corporate and financial documents. Depending on the situation, these may include:

• the articles of association;
• a current extract from the USR;
• the resolution appointing the director;
• the representative’s power of attorney;
• the resolution approving a significant transaction;
• licences and permits;
• financial statements;
• confirmation of bank details;
• title documents for the asset;
• certificates;
• documents on the origin of goods;
• the ownership structure;
• documents for AML/KYC checks.

A counterparty’s reluctance to provide standard documents for a material transaction may in itself be a reason for additional caution.

10. Check the bank details

A separate practical risk is the fraudulent substitution of payment details. If, after the contract is signed, you receive a letter saying “our account has changed, please pay to the new details”, you should not simply make the payment.

Before transferring a significant amount:

• verify the name of the recipient;
• check the IBAN;
• make sure the account belongs to the party to the contract;
• confirm the change of details through a previously known communication channel;
• where necessary, formalise the change of details by an addendum or another method agreed in the contract.

This reduces the risk of so-called invoice fraud, where third parties substitute payment details.

Red flags before signing a contract

Heightened attention is required where several factors are present at the same time:

• the company was registered recently;
• the director or owners have changed frequently;
• the ownership structure is unclear;
• there are many court cases seeking recovery of funds;
• there are numerous enforcement proceedings;
• insolvency proceedings have been opened;
• there are sanctions-related links;
• the counterparty refuses to provide corporate documents;
• the signatory has no obvious authority;
• 100% prepayment without security is demanded;
• payment details keep changing;
• the actual activity does not match the declared one;
• the counterparty insists on signing urgently, with no opportunity for a legal review.

None of these signs alone automatically means fraud or that cooperation is impossible. But the more of them coincide, the deeper the check should be.

A simple counterparty check algorithm

Before a standard B2B transaction we recommend going through at least the following stages:

1. Check the company or sole proprietor in the USR.
2. Check the director and the authority of the person signing the contract.
3. Check the tax status through the STS services.
4. Analyse court cases.
5. Check the Unified Register of Debtors.
6. Establish whether there are insolvency proceedings.
7. Run sanctions screening of the company, its owners and beneficiaries.
8. Where the subject of the contract requires it, check assets, encumbrances, licences and permits.
9. Obtain the necessary corporate documents directly from the counterparty.
10. Only after that agree the final wording of the contract and make any significant advance payment.

Is it enough to check a company in YouControl or Opendatabot?

Such services considerably simplify initial due diligence, because they aggregate information from different sources. But for a significant transaction we do not recommend relying solely on an automatically generated rating or a single “reliability” score.

Legally, it is important to understand the primary source of the information and the substance of the specific risk. For instance, an entry about a court case says very little on its own: you need to understand who the claimant is, who the defendant is, what the dispute is about, what the amount is and how the case ended.

Does checking a counterparty guarantee a safe transaction?

No. No check can guarantee 100% that a future contract will be performed. But properly conducted legal due diligence reveals a significant part of the risks before the company transfers money, delivers goods or assumes other obligations.

In addition, the results of the check make it possible to structure the contract correctly. For example, instead of 100% prepayment you can provide for:

• payment in stages;
• a bank guarantee;
• a pledge;
• a surety;
• retention of part of the payment until the result is accepted;
• additional warranties and representations from the counterparty;
• the right to unilateral termination in defined circumstances;
• increased liability for breach of key obligations.

Conclusion

Checking a counterparty is not a search for a single “red mark” in a register. Good due diligence is a combination of checks: the corporate structure, the director’s authority, court disputes, debts, insolvency, tax status, sanctions, assets and the substance of the future transaction itself. The larger the contract amount and the potential losses, the deeper the check should be.

ARGUS Consulting group carries out legal due diligence of counterparties and transactions before they are concluded, analyses corporate, contractual, sanctions and litigation risks, and helps to build protective mechanisms directly into the contract.