When setting up a business in the United Kingdom you are probably choosing this country because business registration here is not very difficult, your business is valued by many people, and the chance of you getting investors is much greater. And in principle this is not surprising, as the UK is a country that will always be at the top of lists of investors who are looking at businesses they are interested in. 

Yes, there is no doubt that if a business is located in the UK, you will be on the radar of many investors, but not all of them are only looking at the location of your business. As an entrepreneur you are well aware that you do not want to work with problematic corporations (such as those with negative reviews, bad products, frequently lost important documents, legal problems, or debtors) and so do investors. They don’t want to waste their money, so they need to see a compelling reason to do business with you. Then the Certificate of Good Standing can help you. 

What is a Certificate of Good Standing and why do I need it?

The Certificate of Good Standing is a company document which proves that the company has been in continuous and uninterrupted existence since its incorporation, it is therefore useful for investors to understand that your company has no problems which gives them reasons to believe that their money will not go to waste.  A certificate of good standing confirms that all statutory administrative requirements have been complied with in accordance with the Companies Act in the country, which in turn means that your company is in order and there are no problem areas that make you not worth trusting. The certificate also confirms the date of issue, and that the person who registered the company is not taking any action to remove the company from the register. A certificate of good standing will not be issued by the registry if the company has overdue fees or filings. Normally, this document can be certified.

Certificate of Good Standing is required when opening an account for the company and is often requested by partners (investors) as proof that the company legally exists. This certificate is issued by Companies House and is valid for 6 months. The cost of issuance of a Certificate of Good Standing is £200.

You have two options to apply for a Certificate of Good Standing. The first is to call a Companies House contact center to apply online. The second is to visit the Companies House website and make an application there. You will also have a choice between the registration service, there are two of them: standard and same day service. The difference is that the processing with the standard service costs £15 and the document takes 4 days. As for the same day service, it costs a little more and is done on the same day. However, due to the coronavirus at Companies House, the rules have changed, which are that you have to apply by 11am, if you do it later, your application will be done the next day. 

Also, you can request that additional certified facts be included on your certificate of registration. 

These include:

• the names of the directors, and their information (mostly date of birth or citizenship)
• names of secretaries
• registered office address
• company facilities
• statement of good standing of the company

Companies House will only issue a Certificate of Good Standing if the company files its documents in a timely manner. It must be:

• A private company with limited liability (but also at least one director must be an individual)
• A public limited company with a secretary and at least 2 directors (and it is important to add that one of them must be an individual)
• You cannot order certificates with shareholder, equity, or capital statement information
• A certificate of good standing shows:
• Date when the company was incorporated
• The registration number the company has received
• That the company has been duly incorporated under the relevant law (Company Law)
• That the company is still on the Companies House register and has paid all fees and licence charges (this is quite important in obtaining a Certificate of Good Standing)
• The company has not filed articles of merger or consolidation with the Registrar that have not yet become effective
• That the company has filed articles of merger or business combination that have not yet become effective
• That the company is not in the process of liquidation or dissolution.
• That no proceedings have been instituted to strike the name of the company from the register
• To the extent that it is documented that the company is in good legal standing
• If someone needs to, you can request detailed information about all changes in the company’s name
• A statement that the company has existed continuously since its incorporation
• A statement that Companies House is not taking any action to strike the company out and dissolve it (this is also very important to investors)
• A statement that, to the best of our knowledge, the company is not in liquidation or under an administrative order and no receiver or manager has been appointed
• That the certificate has been signed and countersigned by Companies House

The certificate will be sent in PDF format by e-mail or at extra charges by courier service DHL or FedEx.

On Companies House website you can also find information about any company registered in the United Kingdom. All you have to do is select “company information” and enter the company name. You will get information on the date of incorporation, contact details, company type and type of business. 

Conclusion

Most companies do not feel the need for a certificate of good standing, but many simply want to make sure that all company documents are up to date and request one for this purpose. By demonstrating that a company meets its regulatory obligations, a certificate can also show that the company is professional and well-organized, and thereby inspire confidence in customers, suppliers, and other stakeholders.

Even if your business is based solely in the United Kingdom, a certificate of good standing may be required:

• Lenders (as a condition of credit)
• Banks (when opening new accounts)
• Investors or other partners

Basically, if you are confident in your business and you do not need support from additional investors, you do not need to obtain such a certificate. If, on the contrary, you want to get additional financial support, the best way to do it is to get a Certificate of Good Standing.