A Certificate of Good Standing (CGS) is an official document, issued by the Registrar of Companies. A CGS confirms that a particular company legally exists, has complied with all the administrative requirements as to its presence within the official registry, has paid all government duties, has paid its taxes due under the Income and Business Tax Act, and, thus, is “in good standing” vis-a-vis the Companies Register as of the date of issue. In its form and substance, the Certificate of Good Standing usually resembles the initial Certificate of Incorporation of the IBC.
The Certificate of Good Standing is used to formally confirm the continued legal existence of an offshore company after it has already been in operation for some time. The CGS confirms that the status of an independent legal entity (a juridical person) has not been revoked and has not became void for the particular offshore company, that this company has not merged with another firm, has not filed for dissolution and has not been struck-off.
Most banks tend to regularly ask for fresh Certificates of Good Standing in respect to the offshore companies with accounts on their books. Such requirement is standard procedure as soon as the IBC is more than one year old. Any other party (for instance, a potential business partner) may ask for a CGS to assure himself that your company is in legal existence. The Certificate of Good Standing can be requested and obtained from the Registry of Companies, as and when required. This is a standard service, provided by the Registered Agent. As the Certificate of Good Standing is basically a “snapshot” of the legal health of the company at a particular moment in time, there is no sense to order the CGS in advance, without a special need.
If, over time, the offshore company has not been properly maintained or has not paid its renewal fees, it will lose its status of good standing and, ultimately, will be struck-off from the Registry. For such companies, of course, the Certificate of Good Standing will not be issued until all overdue fees are paid and the good corporate status is restored. Reinstatement of a “bad” company is possible, but it costs dearly and takes some time.
Some beneficial owners of offshore companies routinely request Certificates of Good Standing for their own companies, thus checking if their Registered Agent has done the job of maintaining the IBC in good legal standing. It`s a good management practice, and we only encourage that.
