What Is A Certificate Of Good Standing & How Do I Get One?

Converting a business to a company comes with a host of advantages, and many of those advantages come in the form of stability, regulatory compliance and trust. A certificate of good standing is an official document that acts as a full-blown mark of approval in these areas.

But what is a certificate of good standing, and how do you get one? In RealBusiness, we will outline exactly this, as well as what it can do for your company, who may need it and more.

Understanding What A Certificate Of Good Standing Is

A certificate of good standing is an official document issued by Companies House to prove that a company legitimately exists and has become eligible for this status. To achieve this, the company needs to have done the following:

1. Become incorporated – This means your company has completed the incorporation process and become a UK company.
2. Directors – It has the correct number of company directors (a PLC requires at least two directors).
3. Completed filing – It has all annual accounts and confirmation statements filed.
4. Office address – It has a registered office address that is valid and active.

A certificate of good standing is made up of the following company details:

1. Company name – The name that you’ve chosen for your company.
2. Company number – A unique identification number issued during incorporation.
3. Date of incorporation – This confirms how long the company has had a continuous unbroken existence.
4. Statement of good standing – It confirms all of the points in the previous section.

You can get a certificate of good standing by doing the following:

1. Submit request – Submit a request online via companies house’s website. You can also request by post, but it’s much slower.
2. Pay the fee – Prices are as follows:
   • Standard – A standard costs £15 and takes five working days to arrive.
   • Express service – Express service costs £50, and you can get the certificate of good standing the same day if ordered before 11AM.
3. Receive the certification – You will get it as a paper document.

What can a certificate of good standing do?

The document proves several things about your company:

• Validity – It is legally valid.
• Uninterrupted existence – This proves the company is healthy enough – having never been dissolved, failed to meet statutory filing requirements and legal obligations, and is not entered liquidation/administration.
• Compliant – The company is fully compliant with UK regulations.
• Complete filing – It has filed both confirmation statements and annual accounts.
• Directors – It has the correct number of directors.
• Address – It has a registered office address.

All of these traits give confidence to business partners, banks and regulators.

What optional details can you include in a certificate of good standing?

When you request a certificate of good standing from companies house, you can choose whether or not to include specific details within for various reasons. The more company information you include, the more informed anyone who verifies the certificate of good standing will be. But this may require keeping said information updated, or it could clue them in to an element they dislike (such as certain shareholders being too powerful).

These details are:

1. Company’s registered office address – The official address on public record, and where the company is legally based.
2. Directors names – You can choose whether or not to make the director names public. When trading overseas, authorities may want to confirm a natural person holds dictatorship.
3. Statement of capital – This outlines and confirms the capital structure, giving people an idea of the scale of ownership, verification of financial structure and more. It breaks things down into the following:
   • Class of shares – This refers to the types of shares issued by the company, such as:
     • Ordinary shares – Standard shares with equal voting rights and dividends.
     • Preference shares – Often feature fixed dividends and are given higher priority in the event of liquidation.
     • Redeemable shares – These can be bought back by the company at a future date. Each class may have different rights attached – voting, dividend or return of capital.
   • Number of shares issued – Total shares that have been allocated to shareholders.
   • Nominal value per share – The face value of each share (e.g. £1 per share).
   • Total nominal value – Aggregate value of all issued shares (e.g 100 shares at £1 = £100).
   • Currency – GBP, typically.
4. Shareholder information – Names of shareholders can be added if required, but it will remain valid only as a snapshot of the date, meaning it may need to be brought up to date in the event of shareholders leaving.
5. Company’s objects – The stated business purposes from the memorandum of association.
6. Statement of significant control (PSC) – Identifies the individuals, or entities, that have major influence over the company. This will give a full window into the powers of the company itself.

How does a certificate of good standing help with international trade?

It doesn’t. A certificate of good standing only denotes that the UK government recognises a company, and in most cases, it won’t be enough for most cases with foreign jurisdictions – although private companies may make an exception.

Nonetheless, there is a way around this – making your document an apostilled certificate. You can do so by sending your certificate of good standing to the UK Foreign, Commonwealth and Development Office and submit your apostille application online.

This will give your certificate the following:

1. Widened recognition – An apostilled certificate of good standing doesn’t change the contents, it serves as a government-level stamp of approval.
2. Allows trade overseas – Foreign authorities in Hague Convention countries accept it fully.
3. Prevents forgery – Apostillisation means that the government has checked and authorised it, reducing fraud risk significantly.

Foreign companies and overseas regulators in the Hague Convention view an apostilled certificate of good standing favourably, as it confirms your company has the valid pre-requisites to do business.

It enables the following:

1. Open overseas business bank account – Foreign banks often demand a certificate of good standing to confirm your company is legally registered and active in the UK.
2. Register with foreign authorities – Some countries require a certificate before allowing local branch establishments, applications for trading licenses and tax registration.
3. Enter contracts with foreign companies – Overseas partners may ask for it to prove your legal status.
4. Foreign regulatory obligations – Overseas regulators use it during the due diligence process for easy confirmation of the company’s existence, governance and compliance.
5. Meet customs and compliance – When declaring goods, applying for import/export permits or verifying ownership, a certificate of good standing does half the work.

What is the Hague Convention and its countries?

The Hague Convention refers to the 5th of October 1961 convention that took place in Hague, where the 120 country-wide international treaty simplified their overseas trade verification process via the “Abolishment Requirement of Legalisation for Foreign Public Documents”.

The simplification was the government-level mark of approval known as apostillisation. Although there are too many countries to go through, the top ten countries in GDP that signed this convention are:

1. United States
2. China(Mainland China joined in 2023)
3. Japan
4. Germany
5. United Kingdom
6. France
7. India
8. Italy
9. South Korea
10. Canada

Conclusion

In the end, a certificate of good standing is a mark of honour amongst UK businesses, but requires apostillation if the company’s operations ever expand overseas. Once you have it, though, you’ll find that Hague Convention countries will simplify most of your foreign business dealings and streamline your company’s growth.