What Is A Certificate Of Good Standing And When Is It Necessary?
A Certificate of Good Standing is a document that is frequently required by banks and/or international organizations. It demonstrates that a firm has been operating continuously since its incorporation, whenever that may have been. Additionally, it demonstrates that a firm has kept up with all required document submissions and accounting obligations and that, at the time the certificate was issued, there was no any winding-up procedures pertaining to the company.
When is a Certificate of Good Standing required?
Technically, certificates of good standing are not necessary until another business or bank asks you for one, as can be the case before sizable contracts are drafted or a bank account can be opened. Despite this, a lot of businesses will ask for a copy of their certificate for their own records so they can stay current on filing paperwork.
The following are typical situations where you will have to ask for and offer your Texas Certificate of Good Standing:
- When dealing with new vendors or customers to demonstrate the company’s certification
- Opening business bank account
- When applying for a business loan
- Whenever potential investors or business partners approach you
- Starting a business in another state
- Opening a business branch in a new state or country
- Signing significant contracts with foreign businesses
How to obtain a Certificate of Good Standing?
Following the fulfillment of the following requirements, the Secretary of State will issue you with a Certificate of Good Standing:
- Your company is recognized by your state as a legal entity.
- Your business is not in default of any corporate rules
- The state has not currently suspended your operation.
- Taxes and other debts are paid in full before submitting the application.
If a company satisfies all of these requirements, it may submit an application for a Certificate of Good Standing directly to the state or, for an additional cost, through a third party.
In order to confirm a company’s legitimacy and existence, it can also be required at some stage to see if it has a Certificate of Good Standing. If the need arises, certified public search services are the best means to check the standing certificate of a business entity.
What exactly does a Certificate of Good Standing contain?
- Business name
- Company identifier
- Registration date
- A statement confirming the existence of the company since its incorporation date
- A statement stating that there are no legal proceedings pending or filed against the company.
- A statement stating that the business is neither insolvent or about to be sold
Where necessary, further information might be requested and added:
- Address of the registered office
- Corporate Officers (must be two directors for Public Limited Companies)
- Corporation Secretaries
- Previous business names
- Business objectives
- In more specific circumstances, details like the nationalities or dates of birth of the directors may also be requested.
Prior to requesting a Certificate of Good Standing from another organization or bank, it’s critical to understand the details they expect to be included. For instance, certain businesses could demand that your certificate be notarized and/or have an apostille attached. Your certificate will be recognized as valid in all states.