Business Law & Compliance

What Is A Certificate Of Good Standing & Why Does A Business Need One?

Luisa Ddakis | 7 September 2022 | 2 years ago

Certificate Of Good Standing

If you’re thinking about starting trading abroad, you might be asked to provide a Certificate Of Good Standing for your limited company. This may be requested by the Official Registrar in the country in which you’re hoping to trade to prove that your company is fully registered and compliant and relevant legislation.

But what is a Certificate Of Good Standing and how do you know if your company needs one?

In this article, we’ll explore certificates of good standing in more detail, explaining exactly what this document is and when you might need one. We’ll also explain how you can get a Certificate Of Good Standing for your business and how much it costs to do so.

What Is A Certificate Of Good Standing?

A Certificate Of Good Standing is a document which is used to prove that a company is incorporated and that it is operating legally within its home country. You might also hear of this document referred to as a Certificate Of Existence or a Certificate Of Authorisation.

Essentially, a Certificate Of Good Standing proves two things about your company:

  1. That is incorporated and continues to exist
  2. That action is not currently being taken against the company by Companies House
In other words, a Certificate Of Good Standing simply proves that your company exists and is operating in line with UK regulations.

This is not a document that is legally required in the UK. However, you may be asked for a Certificate Of Good Standing if you plan to trade abroad. You may also be asked for this document when you’re applying for a bank account or a loan for your business within the UK.

Who Needs A Certificate Of Good Standing?

As we explained in the previous section, a Certificate Of Good Standing is not usually required within the UK. However, there are some situations in which you may be asked to provide a Certificate Of Good Standing. Let’s take a look at some of those circumstances in more detail.

1.     When You’re Trading Abroad

If you’re considering beginning trading overseas, you may need to apply for a Certificate Of Good Standing for your company. This is because many countries have laws in place that prohibit companies from trading within their country unless the company can prove that it is incorporated and operating legally.

The official registrar in the country that you’re hoping to trade may request a Certificate Of Good Standing as proof that you are complying with all regulatory obligations in the UK. This helps to ensure that only genuine companies are able to trade abroad.

So, if you are considering expanding your business overseas, it’s a good idea to apply for a Certificate Of Good Standing in preparation.

2.     When You’re Applying For A Loan

When your business is in need of funding, securing a business loan from the bank is a popular option. Some banks will ask for a Certificate Of Good Standing to prove that your business exists and is properly registered with Companies House. This is often a condition of the loan agreement.

You may also find that banks request a Certificate Of Good Standing when you apply to open a business bank account or take out a business credit card. This is one of the easiest ways for a bank to check that your company is incorporated and meeting its regulatory obligations.

3.     When You’re Seeking Investment

Another way to secure finance for your company is to find a new business partner or an investor for your business. When you find a potential investor or business partner, you may find that they ask to see a Certificate Of Good Standing as proof that your company is operating legally in the UK. After all, they want to make sure that they are investing in a company that takes its legal obligations seriously.

4.     For Your Own Peace Of Mind

Finally, many companies choose to request a Certificate Of Good Standing for their own peace of mind. Whilst you probably already know that you are meeting your legal and regulatory obligations, applying for a Certificate Of Good Standings proves that you have done everything you need to do.

This is also a good way to demonstrate to employees, customers and suppliers that you are meeting your legal and regulatory obligations and doing everything you should be doing.

So, whilst a Certificate Of Good Standing isn’t a legal requirement, it is something that many company directors choose to apply for, simply for their own peace of mind.

How To Get A Certificate Of Good Standing

How To Get A Certificate Of Good Standing

Whether you’ve decided to apply for a Certificate Of Good Standing for your own personal records or you’ve been asked to provide the document so that you can begin trading overseas, you need to know how you can apply for your certificate.

It’s important to note that you will only be able to apply for a Certificate Of Good Standing if your company has already been incorporated. This means that if you’re only just incorporating, you may need to wait for a few days before you can apply for your certificate. This is because your company needs to exist in the Companies House database before a Certificate Of Good Standing can be issued.

You will be able to apply for a Certificate Of Good Standing if your company is up to date with its filings. If it is a private limited company, it will need to have at least one director who is a natural person (in other words, a human rather than another company). If your company is a public limited company, it will need to have a secretary, as well as two directors (one of which must be a natural person).

Providing your company meets these criteria, you will be able to apply for a Certificate Of Good Standing.

There are two ways in which you can apply for your certificate: online or by phone.

Applying Online

To apply online, you’ll need to first search for your company on the Companies House website. Once you’ve found your company, click on the ‘more’ tab. You’ll then see a section titled ‘order a certified certificate’. Click the button under this section and you will be able to order your Certificate Of Good Standing.

You’ll need to pay for your certificate online. It will then be posted to your company’s registered office address.

Applying By Phone

To apply for your Certificate Of Good Standing by phone, you’ll need to call the Companies House contact centre. You can reach them on 0303 1234 500. You’ll need to provide the details of your company before your certificate can be ordered.

Payment for your certificate will then be taken over the phone. Once this is done, your certificate will be posted to your company’s registered office address.

How Much Does A Certificate Of Good Standing Cost?

So, now you know how to order a Certificate Of Good Standing for your company. But how much does it cost to order a certificate to prove that your company is authorised to trade in UK law?

When you apply for your Certificate Of Good Standing, you’ll be able to choose from two services: standard and same day.

The standard service costs £15. When you choose this service, your application will be processed within four working days, before being posted to your registered office address via Royal Mail second class postage.

If you need your certificate sooner, you can opt for the same day service. To be able to choose this service, you’ll need to call the Companies House contact centre on 0303 1234 500 before 11am. The certificate will then be printed and dispatched on the same day. This service costs £50 and guarantees that you will receive your certificate sooner than with the standard service.

Who Can’t Get A Certificate Of Good Standing?

It’s important to be aware that there are some businesses that cannot get a Certificate Of Good Standing from Companies House. These include:

  • Companies that have fallen behind when it comes to filing their accounts and confirmation statements
  • Businesses that have not yet been incorporated as a company
  • Companies that do not have the correct number of directors (along with a secretary for a public limited company)
What Is Included On A Certificate Of Good Standing

What Is Included On A Certificate Of Good Standing?

A Certificate Of Good Standing confirms that your company is incorporated and is fulfilling its legal and regulatory obligations. But what is included on the certificate?

Here is some of the information that you will find on a Certificate Of Good Standing:

  • The company’s name
  • The company’s registration number
  • The date on which the company was incorporated
  • If requested, any changes that have been made to the company’s name
  • A statement to confirm that the company has remained in continuous and unbroken existence since its incorporation
  • A statement to confirm that action is not currently being taken by Companies House against the company
  • A statement to confirm that Companies House is not aware of an administration order on the company and that the company is not in liquidation

How Long Is A Certificate Of Good Standing Valid?

Certificates Of Good Standing do not contain an expiration date. However, they will have an issue date printed on the certificate, so whilst the certificate does not expire, you’ll find that most organisations will not accept it after a certain time period has passed.

For many organisations, they will accept the Certificate Of Good Standing for up to three months after the issue date. After this date, you may need to apply for a new certificate to prove that your company is still incorporated and meeting its legal and regulatory obligations.

However, this time frame varies depending on the organisation that has requested the certificate. So, it’s always best to check with the requestor before sending your certificate over.

How Do You Keep A Company In Good Standing?

For a company to remain in good standing, it needs to remain incorporated and meet its legal and regulatory obligation. Here are some of the things that you can do to ensure that you company remains in good standing:

  • File your tax returns and confirmation statements on time
  • Keep your company information up to date with Companies House, ensuring that you notify them as soon as possible of any changes
  • Maintain accurate and proper financial records
  • Pay your tax bill on time
  • Ensure that your company has the right number of directors registered with Companies House
Following these steps will help you to ensure that your company remains in good standing, so that you can apply for and receive a Certificate Of Good Standing whenever required.

Is A Certificate Of Authorisation The Same As A Certificate Of Good Standing?

You might hear the Certificate Of Good Standing also referred to as a Certificate Of Authorisation or a Certificate Of Existence. These are all the same thing – it’s just that different countries have different names for the document.

Essentially all of these types of certificates simply prove that your company exists and is operating legally in its home country. This is exactly what a Certificate Of Good Standing does, as it is confirmation from Companies House that your company is incorporated and there are no known problems with the company.

In Summary

Whilst there is no legal requirement for UK companies to hold a Certificate Of Good Standing to trade within the UK, this document is often requested when companies apply to begin trading abroad. You may also find that you are asked for this document when you’re applying to open a business bank account or take out a business loan.

The Certificate Of Good Standing proves that your company is incorporated and that it is meeting its legal and regulatory obligations by having the right number of directors, maintaining proper financial records and filing tax returns.

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