Company of Good Standing?

I was recently requested to provide a client with an up to date ‘confirmation of good standing’ in connection with a tendering process in China and must admit I had not come across this before. My research then confirmed that in the UK, a ‘Certificate of Good Standing’ is provided by Companies House and is used to prove that a company is incorporated and authorised to undertake business in a particular way. It is sent by post to the company’s registered office address and is sometimes also referred to as a ‘Certificate of Authorisation’ or ’Certificate of Existence’.

A Certificate of Good Standing confirms two important things about a company:

  • That the company has continued to exist since it was incorporated, and
  • That no action is currently being taken to remove the company from the Register of Companies
  • A Certificate of Good Standing includes the following information:
  • The company name and number
  • The date the company was incorporated
  • A statement that it has been in continuous and unbroken existence since being incorporated
  • A statement that no action is being taken by Companies House to strike off the company and dissolve it, and
  • A statement that, as far as the Registrar is aware, the company is not in liquidation or subject to an administration order and no receiver or manager of the company’s property has been appointed

Additional information can be included if required (registered office address, company objects, directors’ names, secretaries’ names, issued share capital and shareholders).

While most companies won’t have a particular need for a Certificate of Good Standing, other than to satisfy themselves that all their filings are up to date, it can demonstrate that the company is meeting its regulatory obligations and a certificate can also show that the company is professional and well organised, and thereby give confidence to customers, suppliers and other interested parties.

The main benefit of a Certificate of Good Standing is if you are looking to conduct business abroad, either from the UK or by setting up a foreign branch in another country. You will generally need to provide a Certificate of Good Standing to the Official Registrar (the equivalent of Companies House) in that country. Even if your business is solely based in the UK, a Certificate of Good Standing may be requested by lenders (as a condition of a loan offer), banks (when opening new accounts) or by potential business partners or investors.

Companies House will only issue a good standing statement if the company is up to date with its filings (annual accounts and confirmation statement). It also has to be a private limited company with at least one director who is a natural person or a public limited company with a secretary and at least 2 directors (one of which is a natural person).

A Certificate of Good Standing can be ordered directly through Companies House and remains valid for three months from the date of issue.  After that, most authorities will want to see a more up to date certificate. Both a standard (£15) and same day service (£50) are available and are issued by post (Recorded Delivery). Copies can be faxed or emailed but only the certified and posted certificate will be signed.

With the advent of online filing and information being more freely available via the Companies House public beta service, the usefulness of the Good Standing confirmation may not seem that beneficial any more, however it is provided directly from Companies House and does still seem to have a use and especially when looking to conduct business overseas.

 

Blog written by Andy Harper

Talk to Barnes Roffe today
Share this page:
Contact Us
ICAEW The Chartered Institute of Taxation ACCA IPG