If an investor is doing due diligence on your company, they may ask for a Certificate of Good Standing. But what is this document? Do you really need it and, if so, how can you get one? Here are all the key things that you need to know.
What is a Certificate of Good Standing?
A Certificate of Good Standing might also be known as a Certificate of Existence, or Certificate of Authorisation. It is used to show two important things:
- That your company has existed since its time of incorporation
- That there is no action being taken to remove it from the companies register.
Here in the UK, a Certificate of Good Standing is issued by Companies House. They will send this to your registered company address. Alternatively, you may be able to obtain an electronic copy. However, bear in mind that this will not bear an official signature and may not be good enough for all purposes.
What information does it show?
Your Certificate of Good Standing should include the following:
- Your company name and number
- Date of incorporation
- A declaration to validate your uninterrupted existence from your time of incorporation
- An acknowledgement that no action has been taken by Companies House to strike the company off or describe it as invalid
- A declaration that the company is not insolvent or subject to an administration order as far as the registrar is aware
Do I need the certificate to run my business?
In most cases, the answer to this question is no. For most companies, a Certificate of Good Standing is not needed. However, businesses often request one for a number of reasons. Sometimes they want it to ensure their own filings are current. Other times it’s to fulfil a request from a third party. This could include a bank, potential investor, lender or business partner. Because it proves you are meeting all your regulatory requirements, it can be a good way to look more efficient. It also provides greater reassurance to any partners you’re doing business with.
Where it does come in handy, though, is if you’re planning to open overseas. In most cases, authorities will require a Certificate of Good Standing to show that the UK company is on top of its regulatory obligations.
How to get a Certificate of Good Standing from Companies House
To get yours, just go to the Companies House website and request one.
How much does a Certificate of Good Standing cost?
Companies will charge you around £15 for standard delivery, or £50 for same-day service.
The Certificate of Good Standing offers validation that the company is in good working order and reliable to work with. It may not be strictly necessary, but it is something you might want to think about getting. To learn about the other documents you will definitely need for your limited company, check out our articles about the Certificate of Incorporation and writing business plans.
If you have any further questions about this, or any other aspect of setting up a limited company, head to our help centre.