Last Updated on March 3, 2025 by admin
When you start a business, many situations arise when obtaining a certificate to prove your business’s existence and the authorities managing it become necessary. At that point, you will need to obtain a Certificate of Incumbency.
This certificate may be new to start-ups or new small businesses, but understanding the purpose of the document and when and why you need it is crucial. This article will highlight what a Certificate of Incumbency is, why and when you need it, and where and how to get it.
What is a Certificate of Incumbency?
A certificate of incumbency is a legal document that verifies the people with authority within the company. These authorities include directors, shareholders, secretaries (if applicable), and beneficial owners. The document will also include their details, duration, and responsibilities.
This document is often required in various business transactions such as opening a business bank account, obtaining a business loan, engaging in international dealings, and entering into contracts. The certificate ensures that individuals acting on behalf of the company are authorised to do so.
In the UK, businesses do not often require a Certificate of Incumbency since they use a Certificate of Good Standing which is issued by Companies House.
Why do you need a Certificate of Incumbency?
Confirms the company’s authorised representatives:
This is a legal document that confirms the authorities of the company. It states their details, responsibilities, and mandate duration. It shows that the authorities can act and make decisions on behalf of the company, especially entering into contracts with businesses in foreign countries.
Opening a business bank account:
Banks may require a Certificate of Incumbency to verify if the officials opening the bank account on behalf of the company are authorised to do so. They will also want to verify and ensure that the account will not be used for fraudulent activities such as money laundering.
To seamlessly enter into contracts and agreements:
Partners and investors may ask for a Certificate of Incumbency to verify that they are engaging with the right authorised representatives. They will also want to check the legal standing of the company to ensure the business is in good standing.
Get funds for your business:
Financial institutions will require a Certificate of Incumbency when a company is applying for a loan. This will be used to conduct a background check to ensure the legal standing and that the loan is being approved and signed by the authorised representatives.
Applying for public subsidy:
Before a public subsidy is awarded to your company, the government will require a Certificate of Incumbency.
When do you need a Certificate of Incumbency?
You will need this certificate in several situations such as:
- Dealing with international businesses: Cross-border dealings will require a Certificate of Incumbency to prove the company’s authorised representatives.
- Opening a business bank account: Banks will use it to verify the identity and authority of the official managing the company’s finances.
- Seeking financing: Lenders request the document to assess the legal standing of the company and the authorities representing it.
- Entering into contracts: Potential business partners will request the certificate to ensure the officials representing the company are legit.
Who issues a Certificate of Incumbency?
In the UK, a Certificate of Incumbency is not a government-issued document. It is prepared and signed by the company’s directors or a legal professional. The certificate will be issued by:
- The company’s secretary who is responsible for keeping accurate records.
- A registered agent can issue the certificate since they can access company information on Companies House.
- The notary public can prepare the certificate after verifying information from Companies House.
What information is included in a Certificate of Incumbency?
The Certificate of Incumbency generally contains all the names and positions of the company directors and key shareholders. It may also include the status of the officials either as elected or appointed, their term of office, and a signature sample for each individual.
Other information includes:
- Company name
- Company registration number
- Main company address
- Place of company registration and address where registers are held
- Details of mortgages and fees
- Confirmation that the company is in good standing and not liquidation
- Confirmation that there are no current or pending actions to close the company
How to obtain a Certificate of Incumbency?
Gather necessary information: Before applying for the certificate, ensure you gather all the required information. The information may include the company’s legal name, registration number, the official’s name, position, responsibilities, and status.
Prepare supporting documents: you will need supporting documents to ensure relevancy. Supporting documents include Certificate of Incorporation, Articles of Association, Shareholders’ resolutions, and relevant certificates.
Pay necessary fees: Depending on where you are getting the certificate, there may be fees that you will need to pay during the application process. However, if the company’s secretary is the one preparing it, there are no fees associated with obtaining the certificate.
Certificate collection: Follow up with the appropriate authority to ensure timely processing and collection of the certificate.
How to maintain an up-to-date Certificate of Incumbency?
- Update and review your company records regularly. This includes changes in authorised representatives, shareholders, directors, and ownership.
- Notify appropriate authorities of the company changes. A UK limited company has to annually notify Companies House of the company changes.
- Keep track of the validity period of the certificate. Ensure you provide an active certificate to relevant parties and organisations. Make sure you proactively renew the certificate once the validity period ends.
- Store the certificate securely. You can keep it as a digital copy or also as a physical copy as long as it is secure from damage. Store it with utmost care since it holds the information of the company’s officials, structure, and their responsibilities.
In conclusion, a Certificate of Incumbency is vital for seamless business transactions within and outside the company’s jurisdiction. Regularly reviewing and updating it, will ensure accuracy and effectiveness. An accurate Certificate of Incumbency demonstrates the legitimacy of your business and financial transactions. It will also prevent potential delays in your company dealings.
Need a Certificate of Incumbency? BusinAssist can prepare one for you seamlessly. For more information, contact us at [email protected].
FAQs
Q: How to get a Certificate of Incumbency?
Ans: You can get this Certificate by preparing it or requesting a registered agent to process it for you. To get it, you will have to,
- Gather necessary information such as the company’s legal name, registration number, officials’ details, and responsibilities.
- Prepare supporting documents to ensure the relevancy of the information.
- Pay the necessary fees depending on where you are obtaining the certificate.
Q: Is a Certificate of Incumbency the same as a Certificate of Incorporation?
Ans: No, a Certificate of Incumbency is not the same as a Certificate of Incorporation. A Certificate of Incorporation confirms the legal formation of a UK company. It verifies that the company complied with the Companies Act 2006. It includes the company’s name, date of registration, and registration number.
In contrast, a Certificate of Incumbency verifies a company’s current status and identifies the individuals who hold director, officer, and shareholder positions. It’s often required when opening a business bank account, accessing financing, entering into contractual agreements, and international dealings.
Q: Does a Certificate of Incumbency need to be notarized?
Ans: Yes, this certificate may need to be notarized, depending on local requirements. Notarization and signing of the certificate help to ensure its authenticity and credibility.
Q: Who issues a Certificate of Incumbency?
Ans: This certificate is issued by registered agents, the notary public, and the company secretary. It is not a government-issued document.
Q: Can a company produce its own Certificate of Incumbency?
Ans: Yes, a company can produce its own Certificate of Incumbency.
Q: How long is a Certificate of Incumbency valid for?
Ans: The Certificate of Incumbency is valid for 60 days from the date of issue.
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