Certificate of Good-Standing: What is it?

Nowadays business has gone beyond national laws from long ago. Business has become international and for this reason capabilities offered by the offshore companies are popular on all continents. Due to the fact that the world norms of doing business can differ significantly from the national ones, businessmen have to study the legal aspects of this matter. Generally, the rules differ to the maximum extent in the aspect of maintaining the documentation required for work. Documents are the face of the company and its reputation and their drawing up shall be given as much as possible power and attention.

So as to conduct business activities in the international markets without any problems, some special documents used in the international practice may be in high demand.

Certificate Of Good Standing

The most famous of these documents is Certificate of Good Standing. This document is a kind of confirmation. It contains data on the legal capacity of a particular company, its status, as well as the financial situation. Without this document to conduct business at the international level is virtually impossible. No serious company will cooperate with anyone not having a Certificate of Good Standing.

If the company has this certificate, it means that it is not a bankrupt and not at the liquidation stage. Moreover, this document confirms the right of the company to conduct business activities as it is registered properly, draws up reports and pays taxes in a regular manner.

What is the certificate for?

This document is required to confirm that a legal entity (commercial company) exists in reality and does not have any debts to the national authorities. This document is also a guarantee that the company has no legal problems. If the company has a certificate, then any commercial activity with it is safe.

Some companies conduct their activities without this document, but such activities are illegal and fraudulent. Though this document is not mandatory for everyone, it can be requested at any time.

This certificate may be of interest for the partners cooperating with the company at any time and for this reason it is important to collect all the required documents and to obtain a certificate once a year. It is important to note that this certificate is issued even to individuals for employment in the medical field in some European countries. In such a case, it contains data on absence of prior conviction and any other legal issues.

Who has the right to issue certificates?

All certificates are issued exclusively at the national level. Also, this process depends on local laws. As a rule, a specific organization deals with issue of such certificates. It is entitled as well to refuse to issue this document, if the company has any problems, namely, problems with payment of taxes and state duties, etc. Most of all, an organization entitled to issue certificates is a registration or commercial register of legal entities.

An application for a certificate can be submitted at any time, but in some countries there are a number of formal nuances to be born in mind. Most often, you have to wait at most two weeks to get a certificate. This period is sufficient to collect complete information about a particular private company.

What information can be in the certificate?

The key information is the full name of the subject, the date of issue of the document.

The most important information that can be in the certificate concerns payment of all mandatory charges to the state budget. They include taxes, as well as duties and other payments that are required at the local level.

Also, information that the company is neither at the liquidation stage nor consolidates with another company is indicated in the certificate.

The information that no court proceedings are conducted against the company, which can put under a ban any activity in the near future, is of particular value. The most visual information that can be in the certificate is the letter designation of the status.

The main difference of this certificate from the other references issued in the European countries is that it is impossible to find data on the management and the legal address in it. Moreover, this document has no limitations of its validity period, but most of the efficiently-run companies require that at most one year is expired since the date of issue of this certificate.

Who requests a certificate most of all?

As a rule, they are business partners that want to make sure that they have not been cooperating with the fraudsters.

The document is also required for the government audits. Banking institutions require this document from the legal entities very often as they are not entitled to service a company, which is a bankrupt. If the bank cannot get this document, then no access to a number of banking services is possible. It concerns both opening of the account and the ordinary update of data on the company.