Standing and Legal Existence Certificates
Best Practice Summary
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limited liability companies and some other businesses that organize through filing
with the secretary of state's office are required to file annual or biennial reports,
pay franchise or excise tax and other requirements in order to remain "in
good standing" with the state. The status of a business entity may be preliminarily
checked at many secretaries of state web sites which may be quickly accessed using
Connection and LLC
Connection. Status may also be checked by calling the secretary of state directly
or using Virtual Paralegal Services.
A certificate of legal existence certifies only to
the existence of the foreign or domestic entity in the state and not necessarily
to the entity's good standing. Good standing and legal existence certificates
may be ordered in long form (listing all amendments and/or officers and directors
of the company) or short form (simple statement of good standing).
Legal Existence Certificate
type of certificate issued varies from state to state. Some states, such as Delaware,
offer only one type of certificate, a good standing certificate. The Delaware
certificate certifies that the company is validly organized and existing in the
state of incorporation and in good standing. Other states such as Massachusetts
offer separate certificates; a good standing or a legal existence.
The good standing certificate certifies that the company is in
good standing with the state, essentially meaning that all annual reports have
been filed, the company has an active resident agent and all other statutory requirements
are being met.
The legal existence
certificate simply certifies that the company legally exists in the state but
does not necessarily certify as to its good standing. Therefore, a company could
be not in good standing but still be able to prove its existence.
typical transactions, good standing certificates are preferred over legal existence
certificates. Legal existence certificates though, may temporarily suffice if
the company is unable to expeditiously restore good standing.
Short Form Certificate
States will provide a "long form" or a "short
form" legal existence or good standing certificate, depending upon the state.
A short form certificate are available for
domestic and foreign companies. It will provide either that as of the date of
the certificate, the corporation is in good standing or that as of the date of
the certificate the company legally exists. It may be ordered when the certificate
will not be accompanied by other certified documents on file and/or in foreign
states where the company is qualified to do business. Short form certificates
are typically available upon request and require no particular wait time.
A long form certificate, available only in the domestic state, states
that the company is in good standing or legally exists as of the date of the certificate
as well as providing a list of documents on file (charter and any and all amendments)
or a list of officers and directors or managers in the case of a limited liability
company. For transactional purposes, it is common to order long form certificates
in the state of incorporation listing all amendments. This will essentially provide
a certified list that the other party can use to compare against certified copies
of the charter that is being presented, in order to assure that the entire charter
is being presented.
- Delaware issues long form certificates but this
is not true in all states. Check with the secretary
of state ahead of time when you require a long form good standing or a long
form legal existence certificate. Some states may take 5-7 business days to issue
- It is important to note that long form certificates
may not be immediately available. Some states take 3-5 days to issue the certificate
due to research time.
- Good standing or legal existence certificates
are generally considered to be outdated after 30 days. It is best practice to
order good standing certificates no earlier than a few weeks before the closing
to assure that they will not need to be reordered.
Good standing may be preliminarily checked
online at many secretary of state's web site available at LeapLaw's Corporate
Connection and LLC
Connection. If the secretary of state's web site does not provide a "good
standing" status for the company, you can check to see if all annual reports
are on file. If they are, you can be reasonably assured that the company is in
good standing. Good standing status in the state of incorporation and all the
states where the company is qualified to do business should be checked as soon
as practicable and very early in the transaction so that time is allowed to cure
Good standing or legal existence certificates may
also be ordered directly online with some secretaries of state or via Virtual Paralegal Services.
Ordering Good Standing
Good standing or legal existence certificates
may be ordered via Virtual Paralegal Services. LeapLaw's Corporate
Connection and LLC
Connection provides direct links to Colorado, Georgia, Hawaii, Indiana, Ohio,
Utah. These states currently offer access to good standing certificates online.
For a list of states that make good standings available online see LeapLaw's Corporate
Connection and LLC
Down Good Standing
Since good standing certificates are often
ordered a few weeks before a closing. A "bring-down good standing" may
be requested the day of the closing only for the state of incorporation. This
is a report is typically a fax from the secretary of state stating that the company has remained in good standing from the date
of the good standing certificate to and as of the closing date.
Practice Tip: It is possible that good standing was checked and the company
falls out of good standing between the time good standing status was checked and
the time of the closing if an annual report is due in the meantime. For instance,
many annual reports are due on or before 12/31. If a good standing is sought in
January, for instance, the company may have fallen out of good standing if the
annual report was not filed or recorded.
if the Company is Not in Good Standing?
The typical reason
a company is not in good standing is for failure to file required annual reports.
In order to restore the company to good standing usually entails filing all back
annual reports and paying the necessary filing fees and penalties.
Best Practice Tips:
- If good standing status is not available
on the results page at the secretary of state's web site, checking to assure that
all annual reports have been filed may provide reasonable assurance that the company
is in good standing. Calling the secretary of state directly or running a status
check through Virtual Paralegal Services will render even greater assurance.
Legal existence is confirmed when a record is returned in response to your inquiry.
You may want to look for additional identifiable information such as recognizable
officer names or business address, in order to assure that you have the right
- When a company is not in good standing, a legal existence
certificate may suffice until the company is restored to good standing.
filing annual reports is necessary to bring the company back into good standing
it is important to file the annual report and order the good standing certificate
simultaneously. Otherwise, the annual report may be lost in processing and without
proof of filing, the state will still not issue the good standing certificate.
LeapLaw's 50 state pages to determine if annual reports are required for the
Good Standing Certificates
Some states, such as Delaware,
issue one good standing certificate that includes a statement as to tax good standing.
If corporate or franchise taxes are not collected by the secretary of state, the
good standing certificate will typically not certify to tax status. A separate
tax clearance certificate or certificate of tax good standing must be obtained.
For more information regarding tax good standing certificates, see LeapLaw's Tax
Good Standing Best Practice Summary.
Related Best Practice Summaries
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