When companies contract with each other, both parties need to be sure that each representative has the authority to sign on behalf of their organization. Otherwise, a company may perform on an invalid contract, leaving them with no recourse to claim for breach of contract when the other party does not fulfill their side. A Certificate of Incumbency prevents this from happening and ensures that all parties have the full authority needed to make an agreement.
While a fairly standard document, a Certificate of Incumbency needs to be properly drafted or your company may unintentionally limit or expand an officer’s authority beyond what was intended. A corporate lawyer from Priori's vetted network can help you ensure that all your documentation for any contract is in place from the Certificate of Incumbency to the agreement itself.
What Is a Certificate of Incumbency?
A Certificate of Incumbency, also known as an Incumbency Certificate, a Register of Directors, or a Secretary Certificate, is a legal document that names all the current officers and directors of a corporations or the members and managers of an LLC, as well as their position, the extent of their authority, and their term. This document is drafted by the registered agent on record with the state, and gives legal status to the signing officers of the company, ensuring them legal authority to enter into certain agreements on behalf the company. A Certificate of Incumbency generally names people like the president, CEO, treasurer, secretary, and other upper-level managers who can sign contracts obligating the company to performance.
When Is a Certificate of Incumbency Necessary?
A Certificate of Incumbency may be used any time an organization, person, or government agency wants to confirm the authority of an officer or gather more information on the incumbents of a corporation. Foreign transactions almost always require an Incumbency Certificate, but anyone from a sub-contractor to an attorney to another company may require a Certificate of Incumbency when signing a contract to ensure that the agreement is legally binding.
Certificates of Incumbency and Minute Books
Sometimes a Certificate of Incumbency will be used as a means of confirming the validity of a company’s Minute Book. The Minute Book is a written document containing a history of all key corporate records and documents, such as corporate articles, bylaws, directors' resolutions, shareholders' resolutions, annual reports, minutes of shareholders' meetings and directors' meetings, and any other company resolutions. The Minute Book forms a vital part of a company’s governing documents, and auditors and government agencies sometimes use expanded Certificates of Incumbency to confirm that all signatory officers uphold the accuracy and completeness of the Minute Book.
You can review and download a free sample template Certificate of Incumbency in Priori's Legal Document & Form Learning Center and have an attorney from Priori's vetted network customize it for your needs.
FAQ
Does an Incumbency Certificate need to be notarized?
Not generally. If the registered agent of a company has signed the Incumbency Certificate, it should be legally valid.
How can I change a Certificate of Incumbency?
This will depend on to which organization you submit the Certificate of Incumbency. Generally, there will be defined processes in place to amend the Certificate of Incumbency, but a company’s registered officer can generally revoke an old Certificate of Incumbency and replace it with a new one at any time. Also, when the term of an officer or member expires, a new one will need to replace the current named officer.