Certificate of Incumbency: Purpose and What to Include
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What is a Certificate of Incumbency?
A certificate of incumbency is an official document used by a Limited Liability Company (LLC) or corporation to certify who the directors, officers, and shareholders are of a company. They typically include an incumbency certificate and register of directors within them.
Purpose of a Certificate of Incumbency
The purpose of a certificate of incumbency is to confirm who the signing officers of a company or corporation are. In a nutshell, they operate to designate who has the legal authority to make decisions on behalf of a Limited Liability Company (LLC) or corporation.
Making Business Deals
When entities want to do business with your company, it’s important for them to know which individuals in your company have the authority to sign agreements with them. This ensures that when they enter a commitment with you, the individual who signs their agreement has the authority to do so.
If an individual who does not have the authority to sign an agreement enters a contract with another entity, it makes the contract null and void. This means that no matter what agreements were made within the contract, it is not legally enforceable.
Opening Business Banking Accounts
Another major business operation that a certificate of incumbency is required for is opening financial accounts. If you want to establish a business banking or checking account, the bank is going to want to know who your authorized agents are. In addition to any legal documents that establish your business under state laws, certificates of incumbency are usually a minimum requirement to open new accounts.
This helps banks to be sure that whoever is opening the business account has the authority to do so. It all goes back to the legal implications of business dealings – entities can only work with authorized representatives of companies or risk getting into serious legal trouble otherwise.
Working with Corporate Lawyers
Certificates of incumbency can also establish who the registered agent affiliated with the company is. That means that you can give delegate the rights to enter into agreements to a third party, which is helpful from a business perspective if you choose to work with corporate lawyers who make decisions on your behalf.
Certificates of incumbency also help lawyers determine to who they can release vital legal information about the company to.
Even if you don’t intend to delegate daily tasks to a lawyer, a certificate of incumbency is still needed. If you need a lawyer for assistance with any legal-related matters, your representative will need to know who the big names in the company are and who’s authorized to have access to critical legal information.
Check out this article to learn more about the purpose of a certificate of incumbency.
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What’s Included in a Certificate of Incumbency?
Successful certificates of incumbency are all-inclusive of all members of the company who can enter into agreements with other entities on the company’s behalf. They also include details about how the members within were brought on with the company, either elected or appointed, and how long they have the rights to sign on behalf of the company.
Here is a rundown of the members that a certificate of incumbency should include:
- President
- CEO
- Secretary
- Treasurer
- Shareholders
- Officers
- Registered agents
In addition to this basic information, certificates of incumbency should also include signatures for each authorized officer. This is helpful for providing a sample signature and protects against any non-authorized parties creating forged signatures to enter illegal business deals on the company’s behalf.
Ensuring that each member of the company who is an authorized signer is included in your certificate of incumbency is vital to your business operations. This can help you avoid legal roadblocks that could prevent you from making essential business agreements for your company.
If you need help crafting a certificate of incumbency, the best thing you can do is hire a lawyer. Their expertise in the area can help you navigate the process with ease.
Here is an article about what’s included in a certificate of incumbency.
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How to Get a Certificate of Incumbency
Obtaining a certificate of incumbency is easier than you might think.
Here are two simple steps that you can follow to get a certificate of incumbency for your business:
Step One: Draft the Certificate
The first step to obtaining a certificate of incumbency is easy: draft the document. This process is usually completed by a company’s secretary and is the most vital part of the process. It can be helpful to draft a comprehensive list of all the company’s authorized signers to make this process as easy as possible.
Some states require that the document be notarized by a public notary, but this is not always required. Be sure to check the laws in your state to find out whether this is a requirement for you.
Once this document is created and notarized (if required), then it is filed with the State Secretary Office in the state that the company is headquartered in.
Certificates of incumbency should always include the company’s seal. This solidifies it as a valid legal document and is essential to the legality of the document as a whole.
Step Two: Create and File Minute Book
A minute book is a company file that includes a copy of all essential legal documents related to the business. Since the certificate of incumbency delegates who can enter legal agreements, it makes sense that it should be filed here.
Minute books are essential to company operations because they store vital paperwork all in one place. In the event of a legal dispute, having access to all legal documents in one easy-to-find place makes the process a lot simpler.
In addition to a certificate of incumbency, minute books also include these important documents:
Learn more about how to obtain a certificate of incumbency by checking out this article.
Who Signs a Certificate of Incumbency?
A successful certificate of incumbency is comprehensive of all representatives of a company who can enter into legal agreements on the business's behalf. In order to certify that the certificate is valid, signatures are needed. Typically, the following parties must sign the certificate to make it legally valid:
- President
- CEO
- Secretary
- Treasurer
- Shareholders
- Officers
- Registered agents
Once all authorized parties have signed and printed their names, the company’s secretary signs the bottom to seal the deal. Once the certificate is signed and filed, any changes made can be completed using an addendum or by creating a new certificate of incumbency, which makes the previous version invalid.
Do you need to create a certificate of incumbency, but you’re not sure where to start? You need the help of experienced corporate lawyers to get the job done right. Post a project on ContractsCounsel today to get connected with corporate lawyers who specialize in certificates of incumbency today.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
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