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The incumbency certificate is a legal document that identifies the directors, officers, and, sometimes, even the key shareholders of a company. It is also called the certificate of incumbency or officer's certificate.
In essence, it is a document that verifies that a particular person is authorized to hold a particular position which is stated in the document.
Incumbency certificates verify the identity of individuals who are authorized to enter into legally binding transactions on behalf of a company. In the certificate, these individuals are commonly identified and could be mentioned in the document:
When opening a business account, banks and financial institutions often require an incumbency certificate. This is to verify that the person claiming to be an authorized signatory for a company is indeed authorized. In addition, they will also know who the decision-makers of a company are.
Along with banks, an incumbency certificate is also useful when a company wants to involve legal counsel in its affairs. The lawyers will need to know the identities of those they will be working with and the best way to do so is through a certificate of incumbency.
The certificate may also be required during a merger or acquisition when the executive board needs to be restructured.
Finally, while working with international companies and organisations, the Certificate of Incumbency would be required for making any overseas deals.
In business, it is important for all parties involved to verify their identities. By using the Incumbency Certificate, companies can ensure that the person they are dealing with is an official representative.
In the event of any misconduct or oversight in the company, the individuals listed on the certificate would be the first to be questioned.
The secretary of the company drafts and issues the Certificate of Incumbency document as per the local laws. The document can be notarized by a public notary, but this tends to vary depending on the state or country. Therefore, ensure that you are familiar with your local regulations.
Furthermore, the document should include the seal of the company to indicate that it is an authentic and verified company document.
Normally, the certificate of incumbency contains the following information:
Once a Certificate of Incumbency has been issued, it is then stored in the company's Minute Book.
A minute book is a record in which all the decisions of the directors of a company are registered. A minute book contains records of minutes of meetings, resolutions passed, and important documents such as the corporate articles, bylaws, reports, and of course the minutes for any shareholders and directors meetings that might be held.
In short, all the important records and documents of a company are maintained in a company’s Minute Book. This is usually maintained by the company's corporate secretary.
Though the format of an Incumbency Certificate will vary, a typical document looks like the following:
CERTIFICATE OF INCUMBENCY
The undersigned, Secretary/Assistant Secretary of __________________________ a __________________ corporation (hereinafter "Corporation"), hereby certifies as follows:
NAME, SIGNATURE, and TITLE
__________________________ __________________________ __________________________