Certificate of Incumbency
Internal corporate records can be very complicated especially if they are not handled properly. Today we will focus on a document known as Certificate of Incumbency.
What is Certificate of Incumbency?
A corporate record which designates and authorizes an officer of the entity to act on behalf of the aforesaid entity for a very specific purpose is called Certificate of Incumbency. In other words, Certificate of Incumbency confirms that the said individual is an authorized representative of the entity and in his or her capacity may perform certain actions as designated by the document.
What is the difference between Certificate of Incumbency and Power of Attorney?
With the power of attorney a business entity designates a representative, an attorney-in-fact, to represent the best interests of the said entity in regards to a specific task. Generally, a corporate power of attorney will allow the attorney-in-fact to sign contracts on behalf of the entity, execute commercial agreements, open bank accounts, or represent the interests of the entity in court and other government bodies. This is not the case with the Certificate of Incumbency.
To gain thorough understanding about the Certificate of Incumbency let us look at the example of Sample Company Name Ltd. The aforesaid entity has a board of directors which consists of 10 people with equal voting rights. The board of directors resolved that they want to issue a power of attorney to John, a person in foreign country. In order for such Power of Attorney to be legally binding all 10 personas from the board of directors must sign the document. If only one will sign, it is can be easily disputed that the other nine directors did not authorize such document to be executed. Unfortunately, all of them are not able to do this in a short period of time due to business related matters. This is where the Certificate of Incumbency comes into play. The Board of directors can issue a resolution by unanimous consent in lieu of meeting authorizing a Certificate of Incumbency to be issued to one authorized officer of the company allowing him or her to sign the power of attorney on behalf of
the entity. This way the power of attorney will be supplemented with the Certificate of Incumbency and resolution confirming the fact of execution of the said power of attorney as the will and deed of the entity.
My company does not have any other members/shareholders/directors, but me. Will I need Certificate of Incumbency?
Whether or not you will need a Certificate of Incumbency in this case will largely depend on the requirements of the target country, where your documents shall be used. Many countries base their requirements on the establish rules which mandate the use of Certificate of Incumbency and is such case you will need the document regardless of the fact that you are the sole member, shareholder or the director of the entity.
What is the basic information which should be presented in the Certificate of Incumbency?
Minimum information in the Certificate of Incumbency should contain the following:
- Full legal name of the entity
- State and date of formation or incorporation
- Full legal address of the main office
- Full name and the title of the authorized officer to whom the Certificate of Incumbency is issued
- List of authorized actions (i.e sign documents, issue power of attorney) & the goal associated with such actions. (If you plan to open a bank account in Russia, the document should state so, otherwise the scope will be too broad and the document may be rejected or the authorized individual may take advantage of the given powers)
- Specimen signature of the authorized officer
- Letterhead of the entity.
There are a number of other items which may be added to the document if desired.
Certificate of Incumbency is only valid for the performance of specific duties and therefore have to be issued anew when another matters arise. It is a common practice to keep an accurate record of all meeting and resolutions made by the managing board of the entity which allows for the timely and accurate execution of such documents as Certificate of Incumbency.
If you require additional information or need assistance with Certificate of Incumbency please read more .Source: blog.apostille.us