Incumbency Certificate: Everything You Need to Know
An incumbency certificate is an official document that identifies and authorizes certain people to agree to and execute legally binding agreements on behalf of a corporation.5 min read
What Is an Incumbency Certificate?
An incumbency certificate is an official document that identifies and authorizes certain people to agree to and execute legally binding agreements on behalf of a corporation.
The incumbency certificate may be requested by another party to confirm that the person has the right to enter a binding agreement with the corporation. It may also be used in this case as a way to confirm and guarantee the signer's identity.
The incumbency certificate can also be used to identify the current directors, officers, and possibly, shareholders of the company. The certificate states who holds which positions within the company.
The people listed on the incumbency certificate are typically the chief executive officer and the chief financial officer. The incumbency certificate of a company is typically available to the public upon request.
An incumbency certificate is most often issued by the corporate secretary, who is the person who keeps track of the corporation's documents and records. The document should include a corporate seal which signifies that this is an act of the company and that the document can be relied upon for authenticity.
Alternate Terms for Incumbency Certificate
Certificate of incumbency, certificate of officers, officer's certificate, register of directors, and secretary's certificate are some alternative names.
The name of the document is dependent on local law and custom, but the use and content remain the same.
Elements Included on an Incumbency Certificate
Information regarding the identities of the company's directors and officers
The incumbent's name, position, whether he or she was elected or appointed, and his or her term of office
The incumbent's signature
Company seal or header
A signature sample for comparison
The incumbency certificate might read something like this:
"The undersigned [insert person's name], secretary of [insert business name] or "the company," certify that the people named below hold the position within the company stated next to their names. The Secretary also certifies that the signature next to each person's name is their true signature and that they are authorized to [insert powers or stipulation of the deal]."
After this text, there would be a list of the officer names, titles, and space for signatures. The Secretary must also sign the document.
Who Needs an Incumbency Certificate?
An incumbency certificate is often requested by a bank or other financial institution to confirm that the person who signs truly has the corporate authority to sign and is the person they say they are.
An attorney drafting an agreement or contract between companies may also require an incumbency certificate. The certificate helps that attorney to know who can legally bind the company in a contract.
Situations Where an Incumbency Certificate Is Necessary
When a business is incorporating and must identify its officers
When someone becomes a new officer within the company and needs official documentation
When someone becomes an administrative manager or secretary who is in charge of corporate documentation
When the authority of a certain officer must be confirmed in writing
When opening a foreign bank account
For tax purposes
For an individual who is doing company business in a foreign country
Power of Attorney vs. Incumbency Certificate
The incumbency certificate is similar to the power of attorney document. A power of attorney provides some power to an officer to represent a company in a foreign country and while doing business.
Power in a Foreign Country
A certificate of incumbency grants different rights and powers to a company's officer than a power of attorney and is extremely important when a company officer is doing business in a foreign country. A certificate of incumbency specifically outlines responsibilities for the officers that will conduct business abroad. It also proves that this is the will of the corporation versus in the interest of a particular employee.
An Apostille can be attached to a notarized incumbency certificate. This is helpful when working with countries outside the U.S. that are members of the Hague Convention.
For example, if the company wants to open an office in The Netherlands, the incumbency certificate lists the powers given to the company representative and the papers that he or she may issue and sign on behalf of the company. It also gives him or her the power to make withdrawals from the company's bank account. The incumbency certificate gives the employee specific powers, but not unlimited power.
Preparation of an Incumbency Certificate
An incumbency certificate is typically prepared by the company's registered agent and notarized. This is most common in the State of Delaware.
When preparing an incumbency certificate, the people listed on the certificate will be required to provide a passport photo or government issued ID.
A business is also often required to be in good standing in the state in which it is incorporated.
In Delaware, these are the fees you might expect for the preparation of an incumbency certificate:
Incumbency certificate and certificate of good standing: $180
Apostille attachment to an incumbency certificate: $60
Expedited processing of documents (24 hours): $100
Standard delivery outside the U.S.: $35
What is being certified in an incumbency certificate?
This document certifies the identities of all the people who are named in it and sign it. An incumbency certificate is typically signed by a corporation's officers, directors, or shareholders. The incumbency certificate also guarantees that the people who signed the document have the right to enter the corporation into a legally binding agreement.
Who is the Secretary?
This is the officer of the corporation who is in charge of maintaining and tracking the records.
Who are the corporation's officers?
These are the members of the uppermost level of the corporation's management. They are typically appointed to their position by the board of directors, though not always. The officers might include the President, CEO, Secretary, Treasurer, and other people in similar positions.
What is a Minute Book?
This is a written document that contains a history of a company's key documents and records. These might include corporate articles, bylaws, directors' resolutions, shareholders' resolutions, annual reports, and minutes from meetings.
Are witnesses required for the signing of an incumbency certificate?
No. Witnesses are not required nor must they sign the incumbency certificate. Besides the incumbent, only the Secretary must sign an incumbency certificate.
Who might require an incumbency certificate?
An incumbency certificate might be requested when opening a foreign bank account or when completing any business with an entity that wants to confirm the legal status of a person to enter a corporation into a legally binding agreement.
What is the purpose of an incumbency certificate?
The certificate of incumbency is used to support and prove a person's authority to sign legally binding documents for a corporation.
Can an LLC get an incumbency certificate?
Yes, the process to get an incumbency certificate is the same for an LLC and a corporation. For an LLC without officers, a manager or managing member takes the place of the secretary.
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