What is a Certificate of Incumbency?

A certificate of incumbency is a document issued by a corporation or limited liability company that shows the names of the company directors, officers, and shareholders involved in the organization.

It’s often requested and used by banks whenever a company opens an account. That way the bank can check the name of the director of the company against the certificate of incumbency to make sure that they are who they say they are, and have the legal authority to open bank accounts for the company.

What is a certificate of incumbency also known as?

Although the name 'certificate of incumbency' is known globally, it may be referred to more commonly in some countries certificate of officers, a register of directors, or a secretary certificate.

How Does A Certificate of Incumbency Work?

Typically a certificate of incumbency is issued by the corporate secretary of the business and will bear the corporate seal, as part of the company records. 

Since the company secretary keeps records, a third party can trust that the certificate is a company record as well as be assured that the information is accurate.

What's included on the certificate?

The certificate of incumbency will show the date, the company name, and all of the names of the directors and officers in higher positions in the company.

Alongside the names are everyone's positions within the company, the term of their office, if they were elected or appointed by their peers, and their signatures. It can also include the identity of key shareholders, although not always, and the registered office address.

It will often end with a signature sample for comparison purposes, which is especially important for the benefit of legally binding transactions. The signature sample means that any signature sent or needed by anyone on the certificate of incumbency can be verified.

Why Do You Need a Certificate of Incumbency?

Typically a certificate of incumbency is required whenever the company wants to have a major transaction go through a bank or to open up a bank account.

Since a company will send a representative to the bank, the bankers might request a certificate of incumbency to make sure everything matches up and that actions can be taken on the company's behalf.

So if ‘Jacob Fagan’ is the president of the company and he goes to the bank, he can give them the certificate of incumbency which will officially declare his name as the company's president.

Additionally, it will have all the information about his role, and his signature.

Once the names are matched up, then the transitions or opening of accounts can go through with no problem. 

The Certificates of Incumbency are mostly used for confirmation of identity, both by banks and attorneys.

What is Being Certified?

The main thing that is being certified is the identities of the people signing the document, and the certification allows everyone on the list to make agreements on the behalf of your business or corporation. 

Does the certificate need to be notarized?

Despite the importance of the document, you do not need witnesses or anything else such as being notarized to make the document legally valid.

Although some may choose to use a public notary to authorize their document, it does not need to be notarized, and all you need is for the secretary of your business to sign the document, and then it will be legally binding.

It's best to look at local laws to understand whether a certificate of incumbency needs to be notarized in your area, as in some parts of the world it is in fact a necessity for the certificate to be valid.

What makes up a certificate of incumbency?

Most of the document would read like an old-timey letter, which would include something like the following:

“The undersigned, [Secretary’s Name], Secretary of [Company Name]. (hereafter the "Company"), hereby attests that:

He/she is the elected and acting Secretary of the Company and is responsible for issuing and maintaining the records, minutes, and seal of the Company.

Pursuant to the Company bylaws (or Articles of Association), the people listed below hold the position set forth opposite their names with the Company, the signature appearing opposite each such officer's name is their own true signature.”

Underneath all of the signatures, names, and titles would be listed, and it would be followed by the signature of the secretary.

What does a Certificate of Incumbency Look Like?

Below is an example of what a Certificate of Incumbency looks like:

Once the document is finished and kept up to date, then it is placed in the Minute Book of the Company.

What Goes in the Minute Book?

The Minute Book for any company contains the corporate articles, bylaws, reports, and of course the minutes for any shareholder's and directors' meetings that might be held.

Any official or legal document goes into the Minute Book and will need to be kept up to date as time goes on and as new and old employees join and leave the company.

Additionally, the certificate of incumbency helps to confirm that everyone who has signed the certificate is able to uphold the accuracy of the Minute Book and confirm that the Minute Book is legitimate.  

When do you need to change the certificate?

The most common reason that a company's certificate will need to be changed is because of staff changes.

If the certificate needs to be changed for whatever reason, then there are several processes in place that will allow you to make these changes.

If someone leaves the company, then the new member of staff will need to be registered in their place, so that everything can continue to run smoothly even after a company director, for instance, leaves.

When Do You Use A Certificate of Incumbency?

As stated, the certificate of incumbency is used whenever the company sets up financial accounts.

However, it can also be used for two more reasons. 

Legal counsel

First, if your company wants to use legal counsel, the law firm will need to see the identity of who they are working with.

If an attorney is preparing a contract that details transactions between different companies, then the certificate of incumbency allow them to see what person can legally bind the company for these contracts. 

They can also establish who the registered agent for the company is. For example, corporate lawyers making decisions and transactions on the company's behalf. The certificate of incumbency also allows those corporate lawyers to know who and who not they can share vital legal information with.

Overseas deals or transactions

If your company plans to make any overseas deals or transactions, then the certificate will have to be notarized and sent along with it. This helps both parties verify one another’s identities and make sure that everything is legally binding without the need for unnecessary extra complications.

This is especially important with overseas deals when not everyone can physically be in the same room.

The importance of the certificate

Without the certificate of incumbency, it would be very hard to verify that someone is who they say they are, and that can slow down or even stop the flow of your business.

No one likes that, so it’s important to get your certificate of incumbency and keep it up to date so you can easily start your business.

Answering the question of what is a certificate of incumbency is the easy part, but the hard part is making sure you know when to use it and how to keep it up to date.

But once you are able to do that, then it’s another document that can make running your company even smoother. Without it, a lot of business decisions and steps will be made a lot more complicated.

Certificate of incumbency in Hong Kong

If you want to open a business account as a company in Hong Kong, the Certificate of Incumbency is one of the documents that you will need to make sure things run smoothly. Additional information on opening a business bank account can be found in our guide.