After the Russian annexation of Crimea in 2014, France ignored the economic sanctions imposed by the European Union, becoming the largest direct investor in Russia. Hundreds of companies with French capital operated there for years. Similarly, dozens of Russian companies conducted legal activities in France. Currently, the EU is imposing new sanctions for the invasion of Ukraine, and free economic cooperation is prohibited. However, economic ties between France and Russia are so strong that both countries’ markets find it challenging to operate independently. Polish entrepreneurs also face high penalties, reaching 20 million PLN and 15 years of imprisonment, for engaging in transactions with blacklisted entities. How to check a company from France to protect against the threat of sanctions?
Exercising due diligence in verifying the counterparty
In today’s world, establishing a company is easy, often achievable online without leaving home. Therefore, one cannot be certain about the true identity behind a registered name until verified. Verification involves common practices in economic intelligence, starting with assessing the counterparty’s reliability and the currency of documentation, such as the National Court Register (KRS), Tax Identification Number (NIP), Business Registry Number (REGON), as well as permits and certificates required for specific activities. Verification can be conducted by obtaining information from relevant entities such as registry courts, social security institutions (ZUS), tax offices, national and international chambers of commerce. It is crucial to delve into the history of the business and its owners, including reviews, by searching the internet or consulting other entrepreneurs and associates of the entity, as well as the entity itself. Failure to exercise due diligence in choosing a counterparty carries legal consequences, such as accusations of knowingly participating in irregularities, leading to further tax and legal sanctions.
Economic cooperation with France
According to GUS information, in 2021, France became Poland’s third-largest importer, importing goods and services worth 16.3 billion EUR. Exports to France amounted to 9.5 billion EUR, ranking as the 6th largest partner. The main exports to France include electromechanical products, chemicals, metallurgical products, and agri-food products. Imports from France include cars, medicines, tractors, insecticides, cosmetics, iron and steel products, and hygiene items. As of the end of 2020, the total value of French investments in Poland exceeded 17 billion EUR, with 1317 French companies operating in 2018. Polish companies invested over 103 million EUR in France by the end of 2020. Bilateral economic relations are primarily regulated by EU law due to the membership of both countries, as well as agreements dating back to 1975 and 1989 regarding double taxation prevention and mutual promotion and protection of investments, respectively. In December 2022, the first Poland-France Economic Forum took place in Krakow, attended by representatives of Polish and French businesses and institutions.
National and EU sanctions
Due to the violation of Ukraine’s territorial integrity, the European Union imposed 11 sets of sanctions on Russia by June 23, 2023. Poland also imposed additional sanctions, targeting key figures in Russia and companies from both Russia and Belarus. Trading goods and services with Russian and Belarusian companies is prohibited, and Polish entrepreneurs face financial penalties up to 20 million PLN and up to 15 years of imprisonment for violation. However, Russian and Belarusian entrepreneurs have found ways to circumvent international restrictions, utilizing complex holding structures established in other countries, making it difficult to detect true ownership structures. As reported by InfoSecurity24.pl, Russia has long pursued a ‘soft power’ policy in France, aiming to protect Kremlin’s political agenda by promoting increased economic cooperation while undermining the European Union’s position, including the sanctions imposed since 2014. Russia challenges France, arguing that if Germany profits from the Russian market, so should the French. The Franco-Russian Chamber of Commerce operates intensively to enhance business contacts between both countries. Detailed information on the types of EU-sanctioned economic transactions with Belarus and Russia can be found on the European Council’s website: https://www.consilium.europa.eu/. The Official Journal of the EU at the address: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0269-20220721 contains a list of individuals and entities subject to sanctions. The Polish Ministry of Internal Affairs and Administration also maintains a current register of entities subject to sanctions, where one can check a counterparty, its connections, reasons for inclusion, and applied sanctions: https://www.gov.pl/web/mswia/lista-osob-i-podmiotow-objetych-sankcjami. Therefore, the first step in checking a company from France is to see if it is listed in any of the above registers. The Regulation (EU) 2022/576 of April 8, 2022, amending Regulation (EU) No 833/2014 regarding restrictive measures concerning Russia’s destabilizing actions in Ukraine, is also a valuable source of information.
Economic intelligence, or how to check a counterparty from France?
Verification of a counterparty can be entrusted to a professional economic intelligence agency specializing in such tasks. A private detective in Warsaw, Poznań, Wrocław, or other cities will know how to obtain necessary verifying information about the current or future counterparty. The most crucial way to verify a counterparty and its potential connections with Belarus or Russia is to identify the real beneficiary and then check if they are on the aforementioned sanction list maintained by the Ministry of Interior and Administration (MSWiA). This information can be found in the Central Register of Ultimate Beneficial Owners managed by the Ministry of Finance: https://crbr.podatki.gov.pl/adcrbr/#/wyszukaj
A publicly accessible method to obtain information about a counterparty is to search online resources. Verifying a company, checking if it has a website, and examining opinions about it can be done through an internet search. If one prefers not to do this independently, a professional economic intelligence research agency can be commissioned. There are many more sources of information than just the World Wide Web. For example, one can inquire with the Embassy of the Republic of Poland in Paris about a specific entity, asking if there have been complaints from other entrepreneurs, or if, according to the diplomatic mission’s knowledge, the French counterparty has a bad reputation. Similar information can be obtained from Polish-French chambers of commerce.
Direct Inquiry to the Contractor
In case difficulties arise in determining the ownership structure of a business partner using available registers, another method of verification within economic intelligence activities is to directly request confirmation from the partner about who its ultimate beneficiary is. Of course, to authenticate the provided answer, one can ask the French entrepreneur to present documents confirming their statements.
Polish and EU Registries
In the Public Information Bulletin of the Ministry of Entrepreneurship and Technology, as the minister responsible for the economy, a register of representations of foreign entrepreneurs is maintained. If we find the representation of our contractor in this register, we can assume that the contractor itself still exists and conducts business. Another such registry where one can check the contractor is the European VAT taxpayer registry and the EORI registry. Companies and individuals wishing to engage in commercial activities within the Union must use the EORI number as an identification number in all customs procedures.
The VAT Information Exchange System (VIES), a search engine operated by the European Commission, allows checking whether a given entity is registered as conducting intra-community transactions. This is essential, among other things, to apply a 0% VAT rate to a specific transaction. If VIES does not confirm the registration of the contractor, one can request verification from the tax office of the country where the contractor is based. It is also worthwhile to check whether the company has the necessary permits and certificates if required in a particular country. The EU Business Register (http://www.eubusinessregister.org/) enables searching for companies worldwide. The Registry of Insolvent Debtors allows checking whether a specific contractor is not listed. There are also economic information bureaus that have detailed information about the activities of companies. BIK, the Credit Information Bureau, established by the Polish Bank Association, collects data on the credit history of bank, credit union, and non-bank loan company clients.
French Company Registries
Local registries of companies and partnerships (registres du commerce et des sociétés – RCS) are maintained by clerks (greffiers) of commercial courts (tribunaux de commerce) in metropolitan France, mixed commercial courts (tribunaux mixtes de commerce) in overseas departments and regions, and clerks of combined commercial courts (tribunaux judiciaires à compétence commerciale) in the Bas-Rhin, Haut-Rhin, and Moselle departments. Declarations of registration, change, and deletion filed by companies in trade and company registers are checked by clerks to ensure that statements comply with statutory and executive regulations and correspond to supplementary documents and attachments. These substantive and formal compliance checks are carried out under the supervision of the president or judge entrusted with the task and responsible for resolving any disputes between the entrepreneur and the registrar.
The Kbis, which is an extract from the trade and company register, is the “identity card” of the company and contains all the information that the company is obliged to declare. The purpose of the Kbis extract is to provide legal certainty regarding commercial transactions by providing interested parties with information about the legal structure of the company, its directors, activities, place of business, and the company’s mode of operation. The document also states whether collective bankruptcy proceedings have been initiated against the company. This official document (acte authentique), issued and signed by the court clerk, is considered authentic unless falsification is alleged.
At the national level, the national register of companies and partnerships (registre national du commerce et des sociétés – RNCS) is maintained by the National Institute of Industrial Property (Institut National de la Propriété Industrielle – INPI). INPI centralizes all information and documents that have been checked and approved by registrars and entered into trade and company registers maintained in each registry. INPI is responsible for disseminating and providing free access to technical, business, and financial information contained in RNCS to the public for further use.
The Infogreffe search engine is a platform for disseminating all business and partnership registers (continental France, including Alsace-Moselle, and overseas departments and regions). It offers extracts from the Kbis, information about ultimate beneficiaries, debt statements, company acts and agreements, annual financial reports, and ongoing bankruptcy proceedings. Available in French. Infogreffe provides free access to some information about the listed companies. Extracts from business and partnership registers and attached documents can be obtained for a fee set by the state. https://www.infogreffe.fr/
The INPI website allows access, through the DATA INPI portal, to registers of registrations, changes, and deletions, as well as annual financial reports of companies. Available in French and English. Access to RNCS INPI data through the DATA INPI portal is free. However, using the data collected there requires obtaining a license. https://www.inpi.fr/licence-registre-national-du-commerce-et-des-societes-rncs
BODACC (Bulletin officiel des annonces civiles et commerciales) is the official bulletin in which documents registered in business and partnership registers are published, from the establishment of the company to its liquidation, especially regarding sales and transfers, collective bankruptcy proceedings, and financial reporting. The documents in question are sent to BODACC without any action or initiative being taken by interested parties. Announcements in BODACC are made under the responsibility of the registrar who receives the information. Available in French. Announcements in BODACC are free. https://www.bodacc.fr/
“Portail de la Publicité Légale des Entreprises” [Public Portal for Legal Information on Companies] – this digital access portal allows users to access, through one interface, legal information published on the following three websites: https://www.infogreffe.fr/, https://actulegales.fr/, https://www.bodacc.fr/.
Better to Thoroughly Check the Contractor
Before making a transaction, establishing cooperation with a contractor from France, it is better to conduct economic intelligence and thoroughly check it, especially whether it is associated with Belarus or Russia. Violating the bans imposed on certain types of transactions with these countries and specific individuals and companies may result in a financial penalty of up to PLN 20 million and from 3 to 15 years of imprisonment. Additionally, verifying the contractor, observing due diligence in its selection, is a requirement always applicable when conducting business, incumbent on entrepreneurs as professional market participants.
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