The Good Standing of British Businesses

Tracing its roots back to 1844, Companies House has long been responsible for ensuring that limited companies file all relevant documents about their businesses and for making that documentation publically available. It is one of the great trade offs of modern capitalism: in exchange for the great privilege of limited liability, companies allow transparency of their ownership and financial affairs.

Most of the types of documents available for UK companies are well known and well understood, Annual Accounts, Annual Returns, Confirmation Statements, Memoranda and Articles of Association, Mortgage Documents etc.

However there have always been more obscure documents for more niche applications. Chief amongst these is the Certificate of Good Standing (CGS), also known as Certificates of Authorisation, Certificates of Existence or Existence Certificates. Whilst sounding a little archaic, these certificates have long provided a valuable service to the British business community working internationally.

CGSs are used to prove that a company is incorporated and authorised to undertake business in a particular jurisdiction, in our case the UK. Specifically they show that the company has continued to exist since it was incorporated and no action is underway to remove the company from the register.

Differing from other official company documents whose filing is mandated, CGSs have traditionally been issued by Companies House on request. There are a number of reasons why a company might make this request with the most likely being related to initiatives to trade abroad

The CGS is signed by a Company House official and sent by post to the company’s registered office address. It includes:

  • The company’s number and name
  • The date of incorporation
  • A declaration to validate uninterrupted existence from the time of incorporation
  • A declaration that no action has been taken by Companies House to strike off the company and describe it as invalid
  • A declaration that, as far as the Registrar is aware, the company is not in insolvency, subject to an administration order and no manager or receiver of the company’s property has been appointed.

Companies House can also include supplementary information if requested, such as:

  • Registered Office address
  • Names of Directors and Secretary
  • Company objectives
  • Shareholders
  • Issued share capital
  • Nationalities of Directors
  • Directors Dates of Birth

Most companies will never need a CGS, although some have used them to demonstrate that their filings are current. For business trading exclusively within the UK, a CGS may occasionally be required by banks when setting up new accounts, lenders as a clause of a loan offer or likely investors or business partners

However the key benefit of a CGS is to help companies looking to conduct businesses overseas.  For instance setting up a foreign branch in another country will usually require a CGS to be tendered to the authorised registrar in that country. By indicating that the company is fulfilling its regulatory responsibilities, the certificate will show that the company is certified and well organised, and thus give confidence to potential suppliers, clients and other concerned parties.

The use of CGSs between member nations of the EU has declined as open access to documentation has increased. However business dealings between non EU and British companies have long been facilitated by CGSs. They are often a requirement in foreign contracts. It is a real possibility that when the UK leaves the EU our former partner nations in that organisation will resume their requirements for a CGS when dealing with British businesses.

In theory a CGS can be demanded for any company listed in the database of Companies House. The demand can be refused for certain reasons such as the company’s accounts or yearly returns are not up to date.

Strangely, however CGSs now seem to have become even more elusive. Towards the end of last year requests were met with the response that no more would be provided. Searching for Certificate of Good Standing on the web still leads one to the Companies House website but it is no longer possible to find any information about how to obtain them. At the last two Companies House user group meetings, Armadillo Chairman and CEO Emmanuel Cohen has asked why it is no longer possible to obtain CGSs, and was told that Companies House was no longer going to provide them..

With Brexit looming it would seem that anything that can help British businesses to thrive overseas should be cherished. Preparation needs to be in place for the increasing focus on dealing outside of the EU and for regulatory change within the EU. The latter in itself may cause an increase in requests for these certificates. Whether used by EU member states or throughout the rest of the world CGSs facilitate the purchase of property and the signing of import and export deals. If the Certificate of Good Standing is a casualty of Companies House cost cutting the timing is, to say the least, unfortunate.

This unexplained change threatens to leave UK businesses ill prepared for the challenges and opportunities associated with Brexit.