Occasionally referred to as an Existence Certificate, the Certificate of Good Standing is used to attest that a company is authorised and incorporated to conduct business in a specific state.
A Certificate of authorisation for a company validates two important things:
That the company has been in existence from the time of incorporation; and that no action is presently being taken to remove the company’s name from the companies’ register.
In the UK, a Certificate of Existence is given by Companies House and sent to the company’s registered office address by post. Although it is possible to have an electronic copy, this will not bear the official signature of a Companies’ House and consequently is not always right.
A Certificate of Good Standing includes:
- The company’s number and name;
- The date of incorporation;
- A declaration to validate its uninterrupted existence from the time of incorporation;
- A declaration that no action has been taken by Companies House to strike off the company and describe it as invalid; and
- A declaration that, as far as the Registrar is aware, the company isn’t in insolvency, subject to an administration order and no manager or receiver of the company’s property has been chosen.
Is it Necessary to have a Certificate of Good Standing?
The majority of companies will not have a specific need of a Certificate of existence, even though several companies wish to keep their filings current and as such, request one for this purpose.
By indicating that the company is fulfilling its regulatory responsibilities, a certificate can show that the company is certified and well organised, and thus give confidence to their suppliers, clients and other concerned parties.
Nonetheless, the fundamental benefit of a Certificate of Authorisation is where you are looking to conduct businesses overseas. Should you desire to setup a foreign branch in another country, you will usually be required to tender a Certificate of Good Standing to the authorised registrar that is equivalent to Companies House in that country. This will be requested for, so as to be sure that the UK Company is on top of its regulatory obligations. Even if your business is strictly based in the UK, a Certificate of Good Standing may be demanded by:
- Banks, when setting up new accounts
- Lenders, as a clause of a loan offer
- Likely investors or business partners
- Merely validating that a company has been in existence from the time of its incorporation and that no action is being taken at the moment to remove the company from the register is not enough detail for a few of the above organisations.
Consequently Companies House can include supplementary information on the Certificate of Good Standing if need be. For instance:
- Registered office address
- Names of Directors
- Company objectives
- Names of Secretaries
- Issued share capital
If all these bits of information are still not enough, then Companies House will deem adding additional information like nationality, or dates of birth of the directors if requested.
How can I obtain a Certificate of Good Standing (Authorisation)?
A Certificate of Good Standing can be prepared for a company that has by now been incorporated. However, once it is indicated in the database of Companies House, a certificate can be demanded. This implies that a Certificate of Good Standing can be provided even if the company has just existed for some days.
However, Companies House will not issue a Certificate of Good Standing in the following situations:
- If the company’s accounts or yearly returns are not up to date;
- If necessary details regarding the constitution of the company, its ownership or control has not been provided;
- In case the company fails to have the anticipated number of officers – a minimum of one natural director for a private company or minimum of two directors and a secretary for a public company.
- By providing simple automatic diary reminders for filing yearly Returns, Your Company Formations is going to make sure you do not lag behind with several of these duties. Should you need to update the details of your officers, Your Company Formations will again provide simple step by step guides to ensure every removals and appointments are up to date. Immediately you received your Certificate of Good Standing, it will remain legal for just three months from the issued date. Thereafter, most authorities will desire to see a more updated certificate.