What kind of company can be considered to be ‘well-established’?

The company may be considered well-established as referred to in the Act on the Contractor’s Obligations and Liability when Work is Contracted Out if the company has been doing business for a long time, usually more than three years. ‘Doing business’ means that the company has effectively been engaged in business operations. In other words, a shell company with no operations of its own cannot be considered a well-established company.

Contractors must themselves assess whether they consider the operations of a partner well-established before signing an agreement. The contractor must be able to prove by way of a document of having considered whether the operations of a contracting party are well-established before signing an agreement.

Even if the company has been in existence for a long time, the contractor is required to obtain the reports described above if any changes have occurred in the company’s operations or if there is reason to believe that the company intends to default on its statutory obligations. The contractor is required to obtain relevant reports, for instance, if the ownership of the company has changed or if public records show that the company has neglected its statutory obligations, or if the company has been eliminated from the Prepayment Register.