Due to the Anti-Terrorism Schema and Compliance Review process now in place world wide for new / unknown buyers of fuel and other commodity products, Buyers need to be prepared to provide the following information to Title Holder / Sellers as they engage them in a transaction.
At the time an ICPO / RFQ (request for quote) is submitted to a Title Holder / Seller (sellers will provide a Template for that document based upon successful initial Compliance Review), potential buyers will need to be prepared to add the following documentation (if not submitted previously):
1) A Corporate Profile of the Buyer.
This provides a general overview of the Buyer, their history in the marketplace, and other relevant data. No Seller will engage a Buyer without knowing something about the Buyer Company and their activity. This is "public information," and no legitimate buyer should have any issues providing this level of disclosure.
2) Bios on the Company's Principals.
Most Buyers include this information in their Corporate Profile. This allows Sellers to review the individuals they will be working with.
Many Title Holder / Sellers will also ask for #3 with an ICPO / RFQ. If not with the ICPO / RFQ, then certainly at the time Contracts are provided.
3) A Copy of the Certificate of Incorporation of the Buyer's Company.
This is a straightforward request. Sellers need to see that the Buyer is currently organized and in good standing. They must obtain this information. They use it in conjunction with satisfying the Patriot Act in the US, and other similar laws in other jurisdictions. Sellers provide this document as an attachment to their submission for Compliance to their various Government and Regulatory Agencies.
Once the ICPO / RFQ Process is completed between the Principals, Sellers will typically provide an FCO and/or Contract to formalize the Transaction.
Buyers will then need to be prepared to provide the remainder of the information necessary for Compliance when they return the Transactional Document:
4) Confirmation of whether the company is operating within a JV and, if so, a Copy of the Company Articles and Memorandum of Association.
Sellers simply need to know whether the person signing the ICPO will be the same person who will sign the Contract and issue the verification of POF. If the Buyer is part of a JV, Sellers need to know whether the individual signing the ICPO can also sign on behalf of the JV. The Memorandum of Understanding setting out the JV agreement clarifies that requirement. The basis of this request is that they have found that many transactions fail when it is determined that the signer for the financial documents is different from the signatory on the ICPO / RFQ; Sellers want to flush this out right away. If the Buyer is not working inside of a JV, they can ignore this provision.
5) Logistics: Confirmation of the Buyer Company's ability to transport the product or provide storage facilities (evidence of both if already in place).
What Sellers are looking for is how the Buyer expects to handle their logistics; how they plan to obtain and ship the product. Do they have tanks in Rotterdam? Do they have a Charter Party Agreement, or vessels, Q88's, etc? Buyers can indicate their plans as part of their Letter regarding the transaction to the Seller, and provide confirming documents for logistics already in place. What is behind this is that Sellers do not want to provide a dip test for fuel that cannot be picked up, for example.
6) Verification of whether the company has completed a previous transaction, e.g., Charter Party Agreement, Refinery Commitment, Commercial Invoice, etc.
The Seller needs some indication of whether or not the Buyer has previously closed a fuel transaction; i.e. their level of experience in the fuels business. That can be verified in any number of ways to include CPA's, Q88's, Previous Proforma or Commercial Invoices, SGS reports, etc. Anything that shows the Buyer is in the business. If they have not previously closed a transaction, they should simply say so in their covering Letter, and provide a brief explanation of how they expect to manage this transaction.
Sellers working with experienced Buyers can operate more quickly, and will assume the Buyer can do so as well. Moreover, they expect the Buyer to be fully conversant with the various intricacies of a fuel transaction, and will not need much in the way of help. If the Seller knows that a Buyer is new to the fuels business, they can exercise a greater level of care in the transaction, and ensure that all parties fully understand their various roles and responsibilities.
7) Banking Structure that will determine how the Parties intend to operate together - information that sets out the Buyer's ability to transact business at the required level.
Banking Details (LC instrument utilized in the transaction, product payment method, etc.) are confirmed during direct discussions between the Buyer Signatory and Seller Principals in the Contract phase of the Transaction.