Running a company entails a number of paperwork. There are a lot of types that need to be filed with the state–some that may depend on what your small business structure is, and some which might be optional but good to have.
Even after a couple of years of being on this planet of enterprise, you should still feel overwhelmed by legal terms and paperwork you never even knew existed. A Certificate of Incumbency is one in all these vital, however not essentially well-known, documents.
We’ll explain what this certificate is and why it needs to be certified.
Let’s get into what Certificates of Incumbency are all about and why they’re important.
Certificate of Incumbency Defined
A Certificate of Incumbency, sometimes additionally called an incumbency certificates, is a legal doc issued by a corporate entity–Limited Liability Company (LLC) or a company–that establishes who the directors, officers, and key stakeholders are.
It specifies who each individual is and what position they hold.
This doc most commonly serves as validation for figuring out who is able to enter into legally binding agreements on behalf of the company, or in other words, who the company’s signatories are.
Commonly the directors, officers and shareholders who are recognized in the Certificate embody, but aren’t limited to:
President
CEO
Secretary
Treasurer
The document certifies the identities of who is authorized to sign official paperwork on behalf of the corporate, rendering them legally admissible.
Issuing a Certificate of Incumbency
An organization’s secretary will draft up a Certificate of Incumbency document and often will embody the corporate seal. It may be notarized by a public notary, but this just isn’t necessarily required. It tends to fluctuate from state to state, so ensure you know your local rules (or at the very least hire a authorized expert who can guide you through them!).
Since this is considered an official act of the corporate with the Secretary because the officer in charge of records, the Certificate is an official corporate doc and third parties will settle for its legitimateity.
In addition to the officers’ names and titles, the Certificate of Incumbency contains whether or not they had been elected or appointed, and the way lengthy their term is. Oftentimes, the doc will embody each officer’s signature as well, in an effort to provide a pattern for verification.
The language on the form itself shouldn’t be too complex and would usually read something like the following boilerplate:
“The undersigned, [Secretary’s Name], Secretary of [Company Name]. (hereafter the “Company”), hereby attests that:
He/she is the elected and performing Secretary of the Firm and is answerable for issuing and sustaining the records, minutes, and seal of the Company.
Pursuant to the Firm bylaws (or Articles of Affiliation) the individuals listed under hold the position set forth opposite their names with the Firm, the signature appearing opposite each such officer’s name is their own true signature.
Pursuant to the Firm bylaws (or Articles of Association) adopted by the Board of Directors, the person’s listed are authorized to behave on behalf of the Company to enter into legally binding and enforceable agreements and transactions.”
This would then be adopted by a list of names, titles, signatures, the date, after which lastly the secretary’s signature on the end. It is not essential to have any witnesses to the signing, as the secretary’s signature automatically validates the document. The data must be kept up-to-date as new members be part of the company and old members leave.
The Certificate of Incumbency is then stored in the company’s Minute Book. A Minute Book is a vital doc which comprises copies of all key company paperwork and records.
The contents of the Minute Book will range from company to company, but the key paperwork to include here are:
Corporate Articles
Bylaws
Directors’ Resolutions
Shareholders’ Resolutions
Annual Reports
Shareholders’ Assembly Minutes
Directors’ Assembly Minutes
These are just among the many official paperwork that you will need to prepare when starting up an organization or LLC. Depending in your alternative of enterprise entity, your tax standing, and what state you might be operating in, there may be additional filings you are not aware of.