Incumbency CertificateExplained & Defined

Lisa Borga
Last Updated: May 13, 2022
Date Published: May 13, 2022

What is an Incumbency Certificate?

An incumbency certificate, or certificate of incumbency, is an official document that is issued by a corporation or limited liability company that contains the names of the company’s directors, board members, and other key shareholders or members of management.

This document is sometimes required and often necessary for companies to open business bank accounts.

This establishes the identity of the individual opening the account as a member of the company and shows that they are legally authorized to conduct transactions on behalf of the company.

certificate of incumbency

Incumbency Certificates Explained

A corporation or limited liability company is a distinct legal entity like a person.

However, unlike a person, it is not capable of entering into transactions or agreements on its own.

Instead, it needs members of the company to do so on its behalf.

An incumbency certificate identifies the members of the company that are able to do this.

Incumbency certificates are generally issued by a company’s corporate secretary, bear the company’s seal, and are often notarized by a public notary.

Because a corporate secretary is an individual in charge of maintaining records, third parties are able to trust that the document is an official company record and trust the information it holds.

An incumbency certificate lists the names of the company’s directors as well as other significant members of the company and their positions.

It will generally also include information about these individuals, such as whether they were elected to their positions or appointed, their term of office, and a sample of their signatures to allow for comparison.

The document will then be signed and dated by the secretary.

Why Are Incumbency Certificates Needed?

Incumbency certificates are generally needed whenever a company wishes to perform a major transaction through a financial institution or to open a business bank account.

When a representative from the company goes to the bank or other financial institution, they will likely be asked for a certificate of incumbency in order to identify the individual as someone authorized to perform legally binding agreements on behalf of the company.

For example, if the company’s president wishes to perform a major financial transaction and shows up at the bank, he or she can show an incumbency certificate to prove they are authorized to conduct such a transaction.

This will also show additional details such as their signature, which can be used for comparison to better identify them.

These documents may also be used by attorneys when preparing agreements between companies.

Before the agreement is signed, the certificate of incumbency will allow the attorney to identify which individuals are capable of entering legally binding agreements.

What Does the Document Certify?

An incumbency certificate primarily serves to certify the identities of the individuals that sign the document.

Once signed by a company’s secretary, it becomes a legally valid document that allows these individuals to enter agreements on behalf of an organization.

A certificate of incumbency is an official document.

However, with the exception of some local jurisdictions, it typically does not need to be notarized in order to be valid.

What Does a Typical Incumbency Certificate Include?

A certificate of incumbency does not need any complex legal jargon and instead reads like a formal letter.

A typical incumbency certificate will include the following:

  • A title that clearly indicates the purpose of the document, such as “Certificate of Incumbency” or “Incumbency Certificate.”
  • An introduction of the company, its legal status, region, issuing date, and a registration number if applicable.
  • A list of the names and positions of those legally representing the company, as well as other pertinent details such as whether they were elected or appointed, their term of office, and their signatures.
  • The final part of the document should include details about who drafted the document, the date, and the signature of the issuing company’s secretary.

It might look like this:

“I the undersigned, (secretary’s name) being the secretary of ABC Corporation (the “Company”), a company incorporated under the laws of the state of (state of registration), hereby certify that according to our records:

The current directors and officers of the company are:

Individual #1 President and Director

Individual #2 Secretary and Director

Individual #3 Treasurer and Director”

This would then be followed by the signatures of the individuals named as well any other pertinent details, the date, and the signature of the company’s secretary.

Once completed, the document will be placed in the company’s Minute Book and can be provided to financial institutions and others as needed to confirm the identity and positions of stated individuals.

Who Should Sign an Incumbency Certificate?

An incumbency certificate should include all individuals who are able to enter into agreements on behalf of the company and their term of office.

Common members who should be on this document include a company’s

  • CEO
  • President
  • Treasurer
  • Secretary
  • Officers
  • Key Shareholders
  • Registered Agents

In addition to the names, positions, and terms of office for those listed, a sample signature should be provided for the purposes of comparison.

This will help to prevent individuals from fraudulently impersonating those listed on the document.

Maintaining the Certificate of Incumbency

After the incumbency certificate is completed and signed, it will be stored in the company’s Minute Book, which contains the company’s bylaws, articles of incorporation, and the minutes for official meetings that are held.

The incumbency certificate will need to be periodically reviewed and updated as time passes.

Staff members are likely to come and go, and the certificate of incumbency will need to reflect this to ensure that it remains accurate and useful.

Ensuring that the certificate of incumbency is signed by those listed on the document also helps to ensure the legitimacy of the documents contained in the Minute Book.

Conclusion

An incumbency certificate makes it possible to quickly and easily identify directors as well as others with authority to enter into agreements on behalf of a corporation or limited liability company.

This allows a company to assure third parties they are allowed to enter into agreements on behalf of the company.

Key Takeaways

  • An incumbency certificate is an official document that lists the names of a company’s directors, board members, and other significant shareholders or members of management.
  • A certificate of incumbency allows a company to show which individuals are able to enter the company into legally binding agreements.
  • A certificate of incumbency is often required by financial institutions in order to conduct transactions or open accounts.

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  1. University of North Texas "Certificate of incumbancy" Page 1. May 14, 2022