When running a business in the UK, you’re bound to encounter many phrases that sound almost deliberately confusing. Terms that sound nearly contradictory are commonplace, especially in legalese and official documents.
One phrase you may come across is “letter of good standing” or “certificate of good standing”, and you might be wondering what it is and who even needs a letter of good standing. But, like most official jargon, once you break it down a bit, it’s nowhere near as confusing as it initially appears.
That’s why we’ve put together this guide which breaks down what a letter of good standing is, who needs one and how you can get one.
What Is a Letter of Good Standing?
Simply put, a letter of good standing is proof that your company is incorporated and has the authority to undertake business in the UK. The “good standing” part means that the business is registered with Companies House and has continued to file all necessary paperwork and pay all appropriate fees.
Letters of good standing are also sometimes called a “certificate of authorisations” or “certificate of existence” and are usually used to confirm:
- Your company has continued to exist since it was incorporated.
- No action is being taken to remove your business from the register of companies.
Companies House can issue businesses with a letter or certificate of good standing and will send yours to your registered office address. It is also possible to get an electronic copy, but this may not always be acceptable for applications as it doesn’t bear a signature from Companies House.
What Does a Letter of Good Standing Include?
A letter of good standing includes critical information about your company. It is proof that your business exists and is incorporated. This information includes:
- Your company name and number
- The date your company was incorporated
- The last time your company name changed (if applicable)
- A statement that your company has continuously existed since being incorporated
- A statement that Companies House is taking no action against your company to strike it off the register or dissolve it.
- A statement that your company is not in liquidation or subject to administration.
The letter also includes the registrar’s name and a statement that the certificate records the result of a search of registered information.
Sometimes, a certificate of good standing will need to have more information than the standard details; you can ask Companies House to include extra information like:
- Your registered office address
- Your business’s objects
- Your company’s directors’ names and details
- The names of your company secretary
Companies House do not allow you to request for the inclusion of shareholder details, shareholdings or capital statement in a certificate of good standing. To get proof of this, you’ll need to submit an updated confirmation statement and have Companies House certify it.
Who Needs a Letter of Good Standing?
Many companies don’t have a letter of good standing, and many won’t ever need one. Still, it’s something that some business like to have to make sure that all of their records are up to date, and they have one available should the need arise.
One of the main advantages of having a letter of good standing is for companies looking to do business abroad. Perhaps you’re looking to set up a branch of your business in a foreign country; in that case, you’ll be required to supply a certificate of good standing to the registrar in that country. The certificate will assure the registrar that your business keeps on top of its obligations and is legitimate.
There are some circumstances where you’ll need to supply a certificate of good standing in the UK. This can be with lenders and banks when taking out a loan or opening a new account. Potential investors and business partners may sometimes request to see your letter as well for reassurance.
When Do You Need a Letter of Good Standing?
While having a letter of good standing helps legitimise your business and prove your incorporation, there are certain circumstances where you’ll sometimes need to supply the letter. These circumstances include:
- Opening a business bank account
- Setting up a branch of your UK limited company abroad
- To attract investors and lenders
- To secure a loan from a bank
How Do You Get a Letter of Good Standing?
To get a letter of good standing, your business will need to be already incorporated. However, company incorporation isn’t usually a long process, so your business doesn’t need to have been established for years to be issued a letter.
But there are some circumstances where Companies House will refuse to issue a letter, and they include:
- If your company is behind with its account filing and confirmation statements
- If your company doesn’t have the required number of officers
- If you fail to provide any information required about the company, who owns it or controls it.
Once you have received your letter, it remains valid for three months from the issue date. This ensures that businesses cannot use a letter to prove their good standing and not be up to date with their filings. After three months, most organisations and authorities will request to see a more up to date letter, if one is required.
Need Help Getting a Letter of Good Standing?
Like most government applications, applying for a letter of good standing can get complicated quickly, and if you’re getting a bit lost, don’t panic.
Here at Mint Formations, we specialise in helping businesses make sure they have everything they need to focus on making their company a success. That’s why we offer a certificate of good standing service, where you can get yours by filling in a quick 30-second form with the following information:
- Company name
- Registered address
- Company number
Once we’ve got that information and you’ve made your payment, we’ll process the application and deliver your certificate to you through secure and tracked postage.
If you need help applying for a letter of good standing or need a hand getting your business set up correctly, get in touch with Mint Formations. We’ll do everything we can to take the hassle out of applications so you can focus on what matters most.
