A certificate of incumbency is a document employ to identify the company officers and shareholders of a legally established business.
Usually, the certificate of incumbency is used to list the company officers that have the authority to sign contracts and other legal documents or forms on behalf of the company.
Therefore, this type of document is created when the company is starting, when is been formed a new business.
However, it can be made or modify to add a new company officer or when a shareholder is included.
Also, it is like using an identification of the company because other organizations will want to know which individuals have the power to enter into agreements.
Furthermore, they might even require it, before entering or doing business with an enterprise.
Likewise, if you are starting a new business or company you need to make sure to have an incumbency certificate.
There are some steps an requirements to have into account.
Designate a Secretary
The secretary of the company is going to be the officer in charge of the company records.
Therefore, the secretary is going to be in charge of writing the certificate of incumbency, which describes the corporate structure.
Usually, this includes a certificate of the country registration, the official address and all the company related information.
A certificate of incumbency should include
- The name of the company
- The File Number and date incorporated
- Information regarding the identities and titles (If it is an LLC) of the company’s directors and officers
- The percentage owned by the company indicated
- The incumbent’s name, position
- Whether the incumbent is going to be elect or appoint, and his or her term of office
- The incumbent’s signature
- Secretary’s signature
- Company seal or header
- A signature sample for comparison
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It could also include
- Details of where the company registers are
- Information related to any mortgages or charges
- Details of the bank account signatories
Names of company officers that can enter into an agreement on behalf of the company - Confirmation that the company is in good standing and not in liquidation (financial situation)
- The legal status of the company (Confirmation that no legal actions are proceeding against the company)
The certificate may be worded as follow
First, it has to appear the undersigned, Secretary of (the “Company” name) Inc.
Following, “hereby certifies that the company officer (name and change) hold the position or power to set forth opposite his or her names with the Company and that they are authorized to…”
This declaration should include the list of:
- The directors
- Designate officers
- The date
- The secretary’s signature.
Take in the regard that the certification of incumbency is a document that can be requested by a financial institution (bank) when the company solicits an account or initiates a major transaction.
As well, the certificate can be asked by an attorney or anyone who wants to confirm the legality and position of a director or officer within the corporation.
As well, to be sure to engage or to be involved in future transactions. In order to bind the company to the contracts.
Situations when a certificate of incumbency is necessary
- In the occasion when the business is incorporating and must identify its officers
- At the moment that someone becomes a new officer within the company and needs official documentation
- When the company changes an administrative manager or secretary who is in charge of corporate documentation
- To confirm the authority of a certain officer you have to make it in writing
- To be able to open a foreign bank account
- For tax purposes
- At the moment to go into business in a foreign country
Notarize the document
After the secretary makes the document, it must be signed by all the officers, directors and stakeholders in the presence of a notary or signed and be notarized.
Usually, the notary is going to charge you a fee.
And in addition, if the company is going to be doing business with a foreign enterprise or in a foreign country the certificate of incumbency must be attested by the State or/and the United States Agency. For that procedure are going to be additional fees.