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September 15, 2022

KYC Documents For Companies: KYC For Business Entities

Every business entity needs to comply with certain laws and regulations. Click here to know about the benefits & list of important corporate KYC documents for verification!

Operating a business checking account makes it easier to manage business finances daily. When approaching a bank to open a business account, one must ensure that they carry with the Know Your Customer (KYC) requirements. The Reserve Bank of India mandates the KYC to prevent fraudulent activities concerning financial institutions' operations. Irrespective of the bank people's approach, the list of required KYC documents for companies remains the same.

How Can Business Entities Open A Checking Account?

Business entities must provide proof of business ownership for opening and operating a checking account. The following types of business entities must fulfil the KYC documents requirement for companies:

  1. Sole proprietorship
  2. Partnership firm
  3. Limited liability partnership
  4. Private or public limited company

The corporate KYC documents required for business entities differ based on the type of ownership. These documents are helpful not only for mitigating the internal risk management of banks but also for preventing financial fraud.

List Of KYC Documents for Companies

Generally, proof of identity and address of the business owner and their corporate entity is required. Here is a list of different business entities and the KYC documents for each company.

Sole Proprietorship

Any business owned and operated by one individual is called a sole proprietorship firm. In this case, the individual and business entities are considered the same. Based on the specific bank requirements, the following corporate KYC documents are acceptable:

  • GST registration certificate
  • Excise registration certificate
  • Value Added Tax (VAT) registration certificate
  • Turnover tax registration certificate
  • Professional tax registration certificate
  • Commercial tax registration certificate
  • Importer-Exporter Code Number certificate
  • Complete income tax return
  • Certificate of registration for small-scale industries or Entrepreneurs Memorandum EM  (Part II)
  • The municipal authority-issued certificate or registration under the Shops and Establishments Act (Gumastha License) or Municipal Trade/Tax bill
  • Utility bills such as water, electricity, and telephone (not older than two months)

Partnership Firm

A business registered under a partnership between two or more people with a maximum of 20 people is called a partnership firm. The partnership deed explains the partners' responsibilities, sharing of profits, and losses. The following KYC documents for companies must be submitted to verify the firm's credentials:

  • Registration Certificate for registered partnership firms
  • PAN card of the Partnership firm
  • Partnership Deed
  • Proof of Legal name and telephone number of the firm and its partners 
  • Power of Attorney granted any one of the partners or employees to transact business on its behalf
  • Copies of identity and address proof along with PAN of the partners and officials mentioned in  the PoA

Limited Liability Partnership (LLP)

LLP combines elements of a corporation and partnership firm where the partners have limited liability in the firm. Corporate KYC documents for companies of LLP type include:

  • Certificate of Incorporation document (mentioning LLPIN) and DPIN of the
    designated partners
  • LLP agreement
  • PAN of LLP
  • Identity and address proof along with PAN of the designated partners and other people holding the PoA
  • Resolution for account opening and a list of authorised persons with specimen signatures to operate the account, duly attested by designated partners.

Private or Public Limited Company

A private limited company has many directors who have ownership of the company. A minimum of two people can open such a company.

On the other hand, a public limited company must include at least seven directors, where ownership is shared with the public through stock options. The following documents must be provided for KYC for public or private limited companies:

  • Certificate of incorporation (with CIN)
  • Memorandum & Articles of Association
  • PAN of the Company
  • Resolution of the Board of Directors for account opening 
  • A list containing names of officials authorised to operate the account
  • Proof of identity and proof of address along with PAN card of managers, officers, or employees holding Power of Attorney of the company to transact business on its behalf
  • Authorised signatories should be identified using pictures and signature cards that the firm has adequately confirmed
  • List of directors, DIN, and copy of Form 32 (if directors differ from AOA)
  • A valid certified copy of the business commencement certificate (Public Limited Company)
  • Proof of the company's name, principal place of business, mailing address, and Telephone/Fax numbers (Telephone bill not older than two months)

KYC for business entities is more detailed because it allows banks to take measures to avoid fraudulent activities. Stakeholders must visit the branch in person to submit KYC documents for a private limited company.

FAQ

Is a PAN card mandatory for corporate accounts?

PAN cards of authorised users of the bank account and the company or partnership firm PAN card are mandatory for corporate accounts.

Can a checking account for an online business operating from home be opened?

Yes, the documents required remain the same. The business owner may use their home address as the business address.

FAQs

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