Certificate of good standing
Certificate of good standing, also called a Certificate of Existence or Certificate of Authorization, is a document issued by the proper authority - government, proves that corporation, partnership or limited liability company (LLC) has met its statutory requirements and is authorized to do business in that country. Certificate of good standing confirms that company: is validly existing, does not owe taxes and is legally allowed to do business in a particular area[1].
Information
Certificate of good standing including the full name of the subject and the date the document was issued. The most important information that can be found in the certificate relates to the payment of all mandatory transfers to the government's budget such as taxes, as well as fees and other payments that are required at the local level. The certificate also contains information that the company is not at the stage of liquidation, and also does not merge with another company. Important data conducted in the certificate is that no proceedings are being conducted against the company, which may impose a ban on the conduct of a particular activity in the near future. The most visual information that can be found in the certificate is the letter designation of the company's status. The main difference between a certificate and other statements is that it is impossible to find information about the composition of the management and the legal address. Moreover, this document does not have any limitations on the statute of limitations, however, the majority of successful companies require that no more than one year has passed since the certificate was issued[2]:.
Requirements
This document is necessary to confirm that the company really exists and does not have any debts to the national authorities. Also, this document is a guarantee that the company has no legal problems of any kind. If a company has a certificate, then it is safe to conduct any commercial activity with it. The certificate may be of interest to partners with which the company cooperates, it is important that once a year it is necessary to collect all the required documents and obtain a certificate[3].
Typically Certificate of Good Standing might be required for the following[4]:
- opening bank account,
- completing an official business transaction or a contract,
- forming Foreign Entity in a different state,
- selling the business,
- to prove that a company has come back into compliance with the state of formation.
Footnotes
| Certificate of good standing — recommended articles |
| Mandatory disclosure — Nominee shareholding — Bank secrecy — Minute book — Customs clearance agent — Statutory meeting — Shareholders Agreement — Accounting documents — Letter of commitment |
References
- Borden B. T., Rhee R. J. (2019), Limited Liability Entities: A State by State Guide to LLCs, LPs and LLPs, Wolters Kluwer, p. 32-33, 137, 195,
- Spadaccini M. (2010), Ultimate LLC Compliance Guide: Covers All 50 States, Entrepreuner Press, p. 283
- Cambridge Business English Dictionary, Cambridge University Press, (2011), p. 125
- Corporate Compliance: The Consequences of Losing Good Standing Status, Wolters Kluwer, (2018)
- 4 Reasons to Stay in Good Standing for Business Compliance, Wolters Kluwer, (2018)
- Certificate of good standing, My USA corporation, (2019)
Author: Aleksander Szafraniec
