Key Takeaways
A certificate of incumbency is a document issued by a corporation or limited liability company that lists the names of its directors, officers, shareholders, and other key personnel, confirming their roles and authority within the organisation.
It is commonly required to open bank accounts, conduct major transactions, engage legal counsel, finalise overseas deals, apply for business loans, and obtain certain business-related visas. It may also be used for various legal and business verification purposes.
In Hong Kong, the certificate is prepared, issued, and signed by the company secretary, often bearing the company’s official seal.
If you’re trying to open a business bank account or make a significant transaction on behalf of your company in Hong Kong, you may be asked to provide several supporting documents. One of them is likely to be a certificate of incumbency.
In this article, we’ll cover everything about the certificate of incumbency, including what it is, why you need it, when it’s needed, and how to obtain it. We’ll also provide an example of what it looks like.
By the end of this article, you will have a better understanding of its use and importance in Hong Kong.
Tip: In a rush? Watch our video for all the key points.
What Is a Certificate of Incumbency?
A certificate of incumbency is an official document issued by a corporation or limited liability company (LLC) to confirm the identities and titles of authorised signatories, such as the company's current directors, officers, and shareholders. It verifies their authority to act on behalf of the business in legally binding transactions, such as opening a corporate bank account.
The certificate is an important document as it helps ensure the legitimacy of transactions under the business name. Without this document, businesses could face delays or complications in executing essential business activities like opening accounts or engaging in legal agreements.
Did you know? The Certificate of Incumbency is also known as the Incumbency Certificate, the Form of Incumbency, the Certificate of Officers, the Register of Directors, or the Secretary Certificate.
When Do You Need a Certificate of Incumbency?
A certificate of incumbency is needed in several situations, most commonly to open bank accounts, conduct legal affairs, and finalise international business deals.
Opening a Bank Account or Making a Major Transaction
A certificate of incumbency is required whenever the company wants to conduct a major transaction through a bank, such as handling large sums of money, international transfers, or significant business payments, or opening a bank account.
When a company sends a representative to the bank, the bankers may request a certificate of incumbency to verify the individual’s authority to act on the company’s behalf.
For example, if you are the company’s director and visit the bank, you can present a certificate of incumbency to confirm your role and provide proof of your authority. The certificate will also include information about your role and your signature, which the bank can use for verification.
Once the details are verified, the financial institution can proceed with the requested transactions or account setup.
Tip: Let more about the process of bank account opening in Hong Kong in out details step-by-step guide.
Legal Counsel
When engaging legal counsel, a law firm may request a certificate of incumbency to verify the identity and authority of the individuals they are working with.
For instance, if an attorney is drafting a contract involving transactions between companies, the certificate of incumbency confirms who has the legal authority to bind the company to the agreement.
It also helps establish the company's registered agent and determines who the corporate lawyers can communicate with regarding sensitive legal information.
Overseas Deals or Transactions
If your company plans to make any overseas deals, partnerships, or transactions, the certificate will have to be notarised. This helps both parties verify one another’s identities and make sure that everything is legally binding without unnecessary complications.
This is especially important with overseas deals when not everyone can physically be in the same room.
Loans Application
When applying for a business loan, a lender may request a certificate of incumbency to confirm that the applicants have the authority to commit the company to the loan agreement. This helps mitigate the risk of fraudulent applications.
If you’re pitching to an investor, they may ask for a certificate of incumbency to confirm that the director or authorised officer they’re negotiating with has the authority to commit the company to agreements.
Visa Application
A certificate of incumbency may be required for certain business-related visa applications. This document assists the embassy or consulate in confirming the applicant’s position within the company, thereby verifying their authority to travel for business purposes on behalf of the company.
Tip: Having a certificate of incumbency ready after registering your company can streamline tasks like visa applications and opening business accounts.
What Is Included in the Certificate of Incumbency?
The certificate of incumbency typically includes the following information:
- Issuing date of the certificate
- Company name and registration number
- Registered office address
- List of directors and officers, including those in higher positions such as CEO, CFO, COO, and treasurer, along with their titles
- Term of office for directors and officers
- Method of appointment for directors and officers, such as election or peer appointment
- Signature samples of all listed directors and officers for comparison, ensuring that any signature on the certificate can be verified
- Signature of the company secretary
Who Should Be Authorised in the Certificate of Incumbency
The certificate of incumbency authorises individuals who have the legal authority to act on behalf of the company, such as directors, company officers (e.g., CEO, CFO, COO), and occasionally key shareholders. These individuals are listed to confirm their roles and authority to make binding decisions for the business.
Individuals who do not have authority to act on behalf of the company, such as employees or minor shareholders, generally do not need to be included in the certificate.
Example of a Certificate of Incumbency
A certificate of incumbency is a formal document, so it should be written in a formal language similar to this format:
The undersigned, [Secretary’s Name], Secretary of [Company Name] (hereafter referred to as the "Company"), hereby attests that:
1. He/she is the duly elected and acting Secretary of the Company and is responsible for issuing and maintaining the records, minute books, and seal of the Company
2. Pursuant to the Company’s bylaws (or Articles of Association), the individuals listed below currently hold the positions stated alongside their names and have been duly appointed as of the dates specified. The signatures appearing opposite their names are true and genuine, confirming their authority to act on behalf of the Company.
[Name] [Signature] [Title] [Effective Date of Appointment]
[Signature and Seal of the Company Secretary]
[Name of the Company Secretary]
[Date]
While the format may vary by jurisdiction, it generally includes the information outlined above. Below is an example of what a certificate of incumbency in Hong Kong typically looks like:
Where to Get a Certificate of Incumbency in Hong Kong
Typically, the company itself will have to prepare and sign the certificate of incumbency through the directors or corporate secretary. To enhance its credibility, a reputable third party, such as a lawyer or a certified public accountant (CPA), may also endorse it.
In Hong Kong, the certificate of incumbency is issued by the company secretary. It bears the corporate seal, as it is considered an official legal document.
To get one, you can inform your company secretary and ensure that every piece of information is correct and up to date. Once issued, the certificate can be kept as part of the company’s minute book, which serves as a record of key corporate documents.
You can also request a Company Particulars Report from the Companies Registry’s online portal for a fee of HKD 22. This report provides comprehensive details about the company and is commonly used in place of a certificate of incumbency.
Tip: Your company secretary can be a qualified individual or a corporate service provider. You can also change the company secretary later if needed.
Can a Certificate of Incumbency Expire?
A certificate of incumbency does not expire. However, depending on the requirements of the recipient, you may need to provide one that is dated within the past three months.
Additionally, you will need to update the certificate whenever there are changes in personnel.
When Do You Need to Update the Certificate of Incumbency?
The certificate of incumbency needs to be updated whenever there are significant changes in the company’s structure, such as appointing, removing, or changing directors or key shareholders. This ensures the certificate reflects the new structure and helps prevent potential fraud or disputes regarding the authority of individuals within the organisation.
If the certificate needs to be updated, the process typically involves a board resolution approving the changes, issuing a new certificate of incumbency, and updating internal records. In some cases, you may also need to notify relevant parties or file updates with government authorities.
Conclusion
For entrepreneurs, keeping your certificate of incumbency up-to-date is essential. While understanding its purpose may be straightforward, ensuring it remains accurate as your business evolves can be challenging. However, when properly maintained, this document simplifies operations and facilitates smoother transactions and business decisions.
FAQs
What is a certificate of incumbency?
A certificate of incumbency is a document issued by a corporation that shows the names of the directors, officers, and shareholders authorised to make business decisions, like opening a bank account.
How does a certificate of incumbency work?
Why do you need a certificate of incumbency?
Does the certificate of incumbency need to be notarised?
