Certificate of Good Standing

Who can request a Certificate of Good Standing?

The requests we receive are usually made by the directors of an Australian company who wish to do business or invest overseas. Generally, the certificate may be required by a foreign bank or other lender, a foreign government department, or investors.

When do you need a Certificate of Good Standing?

A certificate of good standing may be required if the directors of a company wish to do business or invest overseas. These certificates are issued by a notary public and are used to confirm that a company is in good standing and has no legal issues outstanding. The notary public is responsible for ensuring the accuracy of information included in certificates of good standing, although it is the responsibility of the company directors to confirm the correctness of the certificate of good standing.

Here are the common scenarios where such a certificate may be requested:

• Business Entities: Corporations, limited liability companies and public companies, and other types of business entities may request a Certificate of Good Standing to demonstrate their compliance with statutory requirements and their authorisation to conduct business in a particular jurisdiction.
• Legal and Financial Transactions: Companies often need to provide a Certificate of Good Standing during legal or financial transactions, such as opening a bank account, applying for loans, or entering into business contracts.
• Registration in Other Jurisdictions: If a company wants to register or do business in another country, it might need to submit a Certificate of Good Standing from its home jurisdiction as part of the registration process.
• Renewal of Licenses or Permits: Some industries require companies to show a Certificate of Good Standing when renewing foreign professional licenses or permits.
• Selling the Business or Attracting Investors: When selling a business or seeking investment overseas, a Certificate of Good Standing can assure potential buyers or investors of the business's legal status.
• Compliance and Governance: The company's board or management may request a Certificate as part of internal governance or compliance checks.

However, in most cases, businesses request a Certificate of Good Standing for foreign legal or financial transactions.

What does a certificate of good standing include?

A certificate of good standing is evidence that your company has been properly registered in Australia and has been in continuous existence since its registration. It includes evidence that your company is:

• Currently registered (under the Corporations Act 2001);
• Not in liquidation;
• Not under any form of external administration; and that
• None of the company’s property or assets are under the control of a receiver or other external controller.

The certificate will also include:

• The registered office address and principal business location of the company
• The names and addresses of the company's directors and secretary

How to get a certificate of good standing

Because companies no longer register their constitutions with the Australian Securities and Investments Commission (ASIC), a true up to date copy of the company’s constitution must be produced to the notary public before they can complete the certificate of good standing of an Australian company.

The notary will usually ask the secretary of the company to sign a declaration which annexes a copy of the company’s constitution.

What is a company constitution?

A company constitution is a key document for any Australian business. It acts as the foundation for how a company is managed internally. This document is more than just a formality; it's a guide that outlines how your company operates and how it's managed. It plays a vital role in defining how company directors and shareholders interact, helping keep things clear and organised.

In drafting a company constitution, there are several important areas typically covered to ensure a well-rounded governance structure:

• Management Structure: Outline your company's organisational framework, roles, and responsibilities. This forms the basis for all operations and decision-making.
• Information about Directors: Detail the roles, powers, and responsibilities of the directors, who oversee the company's day-to-day management and strategic direction.
• Voting Procedures: Clearly define the voting rights of shareholders and the procedures for voting at meetings. These processes are essential for making key company decisions.
• Governance of Meetings: Set procedures for meetings, including annual general meetings (AGMs). This is necessary for effective management and legal compliance.
• Issuance of Shares: Specify how shares are issued. This impacts the company's capital structure and shareholder equity.
• Transfer of Shares: Establishing rules for share transfers helps control company ownership and ensures legal and regulatory compliance.
• Share Certificates: Addressing the issue of share certificates is vital for formalising share ownership and keeping accurate records.
• Details on the Company Secretary: If your company has a secretary, including their role and responsibilities is important for meeting statutory and regulatory requirements.

A well-prepared company constitution isn't just about meeting legal requirements; it's a practical tool for smooth business operations, offering a clear framework for making decisions and resolving conflicts. Consulting with legal experts or notary services is always recommended when creating or updating your company's constitution to ensure it meets current Australian corporate law standards and suits your business needs.