Structure and Registration Procedures of Offshore Companies
What is a Certificate of Good Standing?
A Certificate of Good Standing (CGS) is an official document, issued by the Registry of Companies. A CGS confirms that a particular company legally exists, has complied with all the administrative requirements as to its continued registration and has paid all government duties, and, therefore, is "in good standing" vis-a-vis the Companies Register as of the date of issue. In its form and substance, the Certificate of Good Standing resembles the initial Certificate of Incorporation of the IBC.
The Certificate of Good Standing is used to formally confirm the continued legal existence of an offshore company after some time has already passed since its incorporation. The CGS confirms that the status of an independent legal entity (a juridical person) has not been revoked or became void for the particular offshore company, that this company has not merged with another firm, has not filed for dissolution and has not been struck-off.
Most banks tend to ask their clients regularly to provide a fresh Certificate of Good Standing in respect to their offshore companies. Such requirement is normal as soon as the IBC is more than one year old. Any other party, for instance, a potential business partner, may ask for a CGS to assure himself that your firm is in legal existence. The Certificate of Good Standing can be requested and obtained from the Registry of Companies, as and when required. This is a standard service, provided by the Registered Agent. As the Certificate of Good Standing is basically a "snapshot" of the legal health of the company as of a particular moment in time, there is no need or common sense to order the CGS in advance, without a special need.
If, over time, the offshore company has not been properly maintained or has not paid its renewal fees, it will lose its status of good standing and, ultimately, will be struck-off by the Registrar. For such companies, of course, the Certificate of Good Standing can not be obtained until all fees are paid and the good corporate status is restored. Reinstatement of a "bad" company is possible, but it`s a costly and time-consuming process.
Some beneficial owners of offshore companies routinely request Certificate of Good Standing for their own companies, thus checking if their Registered Agent has done the job of maintaining the IBC in good legal standing.