Understanding Certificate of Good Standing By Companies House

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A certificate of good standing is also referred to as a summary statement previously known as a statement of good standing. If you wish to trade overseas, you must present a notarised Certificate of Good Standing to confirm that your company is in ‘good standing’. This helps the country acknowledge that the company has been trading continuously with an unbroken existence since the date of incorporation.

But what is a Certificate of Good Standing? This article will highlight what it is, why and when you need it, not forgetting how you can obtain one.

What is a Certificate of Good Standing?

A Certificate of Good Standing is a document you receive to confirm that your company is in ‘good standing’.

Good standing means that the company met all legal requirements and obligations, fulfilled all tax and reporting obligations, paid necessary fees and charges, and has not been involved in fraudulent activities.

Simply, a company's good standing indicates its compliance and reputation in the marketplace.

Who needs a Certificate of Good Standing?

A Certificate of Good Standing is an important document that various entities and stakeholders need. You may need a Certificate of Good Standing if your;

·         New business is looking to establish credibility.

·         Company engages in partnerships or joint ventures.

·         Business is seeking funding or investment.

·         Company operating in countries where proof of good standing is mandated.

·         Company is looking to expand internationally

·         Company wants to merge or be involved in the acquisition

·         Business starts to work with new suppliers

·         Company is bidding on high-value contracts

·         Company needs to open a new company bank account

Why would your company need a Certificate of Good Standing?

Though a Certificate of Good Standing is not a legal requirement in the UK, there are several reasons why you may need it which include:

Trading overseas

Whether you are expanding your business or want to trade overseas you will need a Certificate of Good Standing. You will be required `to present the certificate to the country’s registrar. Setting up a business overseas may require opening a business bank account which will also need the Certificate of Good Standing.

When asked by suppliers, partners, investors

Suppliers, partners, or even banks may ask for a Certificate of Good Standing before collaborating with a business. This helps partners understand if the company’s operations are legitimate and minimise risk before getting into a partnership.

Securing finances

Banks or investors may ask for a Certificate of Good Standing before giving you funds for your business. This is part of the due diligence process to verify that the company is legitimate and compliant.

Merger and acquisition

In situations where a company is being acquired or merged, potential buyers typically request a Certificate of Good Standing to confirm that the target company is properly registered and solvent.

License and permit applications

Certain licenses, permits, and regulatory approvals may require a Certificate of Good Standing as part of the application process to show that the company is following the law and is duly registered.

Maintaining good reputation

A Certificate of Good Standing helps maintain credibility and trust with stakeholders, including customers, suppliers, and investors, by confirming that the company is properly maintained and compliant with regulatory requirements.

Running a UK company with non-UK residents

UK companies with non-UK resident directors may need to provide a Certificate of Good Standing when opening a business bank account.

What details are in the Certificate of Good Standing?

A Certificate of Good Standing has company details such as:

·         name of the company

·         date of incorporation at Companies House

·         company registration number (CRN)

·         registered office address

·         date of issue

·         names of all current company directors

·         name of company secretary (if applicable)

The certificate may also have a good standing statement to acknowledge that the company has met all filings and has one director who is a person and is 16 years and above. The statement also indicates that the company has been operating continuously without a broken existence and is not subject to any dissolution, liquidation, or legal process.

How to obtain a Certificate of Good Standing from Companies House?

To obtain a Certificate of Good Standing from Companies House, your company must:

·         Have at least one individual director

·         Have current and up-to-date annual accounts and confirmation statement filings

·         Not be under any pending actions

·         Have existed continuously and uninterruptedly since its formation

Once you pass the eligibility requirements, you can apply for the certificate online or call Companies House to process it for you. Some company formation agents also offer services for obtaining a Certificate of Good Standing from Companies House.

To get the certificate online, you will need to;

·         Register for a Companies House service account

·    Search for your company by name or number using the Find and Update company information service

·         Select the More tab from the company overview screen

·         Order a certified document

Alternatively, you can request a Certificate of Good Standing by calling Companies House on 0303 1234 500.

Can I use a Certificate of Good Standing abroad?

A Certificate of Good Standing is used when a business is trading internationally, however, the document has to be legalised. Foreign jurisdictions accept legalised documents with an apostille.

An apostille legalisation involves getting an official stamp on the certificate from the Foreign, Commonwealth & Development Office rendering the document legal. The certificate with apostille legalisation is recognised in countries that are parties to the Apostille Convention.

How to maintain your company in good standing?

To maintain your company’s good standing, as a director you will need to;

·         Meet all regulatory obligations for your company

·         Pay taxes on time

·         File required reports

·   Maintain accurate records to understand your company’s financial standing and potential challenges

·         Ensure your company has the correct number of officials i.e. directors and shareholders.

·         Update company documents and file the appropriate documents.

Companies House will not issue the certificate if your company does not meet all these requirements. You should make sure your company does not lack the number of officers mandated. A private limited company requires at least one human director and for public business, at least two directors and a secretary.

In conclusion, a Certificate of Good Standing is important when trading internationally or when you want to partner with suppliers or investors. When your business requires funds, it will also need a Certificate of Good Standing. It is important to maintain your company in good standing.

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FAQ

What is another name for a certificate of good standing?

A certificate of good standing is also known as a certificate of authorisation, certificate of existence, certificate of status, or certificate of compliance.

What is a certificate of good standing (COGS)?

This is a document a business receives to show the company’s status and legal compliance.

How long does it take to get a Good Standing certificate?

In the UK, it takes 10 working days to get a certificate of Good Standing.

How long is a Good Standing certificate valid for GMC? 

A Certificate of Good Standing for GMC is valid for three months.

What information is included in a Certificate of Good Standing?

Information contained in a Certificate of Good Standing includes:

• Company details: that is company name, registration number, business activity, and registered office address.

• Directors: their names. At least one director should be human and 16 years of age.

• Filing obligations: confirms that the company has been compliant with legal and reporting obligations.

• Dissolution: confirms that the company is not in the process of being dissolved.

• Fees and charges: shows that the company has paid all necessary fees and charges.

• Continuous existence: confirmation that the company has been in continuous existence since incorporation.

How does a Certificate of Good Standing differ from a Certificate of Incorporation?

A Certificate of Good Standing shows that the company is compliant with Companies House whereas a Certificate of Incorporation shows that a company legally exists.

Is a Certificate of Good Standing the same as a Certificate of Incumbency?

No, a Certificate of Good Standing is not the same as a Certificate of Incumbency. A COG confirms a company’s legal status and compliance whereas, a Certificate of Incumbency lists the company’s authorised signatories and confirms powers of representation.

Why would a company need a Certificate of Good Standing?

You will need a Certificate of Good Standing if you:

• Trade overseas 

• In case suppliers or banks ask for it

• When the company is being acquired or merged with a potential buyer.

• When getting certain licenses or permits

• When a UK resident is in business with a non UK resident.

In which situations is a Certificate of Good Standing required?

• Trading internationally

• Opening a bank account

• Applying for loans

• Bidding on contracts

• Registering to do business in another country

• Working with new suppliers

• Selling your business

• Work with new suppliers

Can a Certificate of Good Standing be used internationally?

Yes, a Certificate of Good Standing can be used internationally.

How can a company maintain its good standing status?

A company can maintain its good standing status by meeting all legal requirements such as paying taxes, filing statutory documents, maintaining accurate records, and ensuring the company has the right number of officials.

What are the consequences of losing good standing status?

Losing good standing status may have serious consequences such as penalties, difficulty in securing funds, administrative dissolution, legal liabilities, and loss of trust from partners, investors, and customers.

What happens if a company fails to maintain good standing after obtaining the certificate?

If a company fails to maintain good standing after obtaining the certificate, it may face several consequences such as losing the right to use its name in the country where it wants to trade or start a business, fines, and penalties, being struck off, or being automatically dissolved.

What should I check before applying for a Certificate of Good Standing?

Before applying for a Certificate of Good Standing, make sure your company’s status is active, pay all necessary fees and charges, and make sure you have filed all regulatory requirements.

Are there any tips for using a Certificate of Good Standing effectively?

Yes, to use a Certificate of Good Standing effectively, make sure:

• You are compliant: ensure your business is compliant with government regulations

• Get an apostille: If you want to use the COGs overseas, consider an apostille which makes the certificate legally valid in other countries.

• Renew on time: make sure you renew your COGs on time and avoid compliance issues.

What common mistakes should be avoided when applying?

• Incorrect company information such as name, business activities, and incorporation number.

• Failure to check company status

• Failure to meet legal requirements

• Ignoring timelines

• Error before submission

• Neglecting payment details

How to prepare for common real-life scenarios where a Certificate of Good Standing is beneficial?

Opening a business bank account: the bank may ask for COGs as part of the documentation to open a business account. Other requirements will include an Employer Identification Number (EIN) and a Certificate of Incorporation.

Obtaining a business loan: Banks may want to ensure that your business is compliant with legal requirements so they may ask for a Certificate of Good Standing. They will also need other financial documents such as financial statements, business plans, and tax returns.

Entering into contracts: Check if the supplier or partner you want to enter into an agreement with requires COGs to finalise contracts. Review the contract’s terms to understand obligations.

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