What is an 'Incumbency Certificate'
An incumbency certificate is an official document issued by an organization, usually a company, that lists the names its current directors, officers and, occasionally, shareholders. It specifies who holds which position within the organization. An incumbency certificate is most frequently used as confirmation of the identity of the signing authorities of a company and proves that they are authorized to enter into legally binding transactions on the company's behalf.
BREAKING DOWN 'Incumbency Certificate'Around the world, incumbency certificates go by many other names that essentially provide the same information, such as certificate of incumbency, certificate of officers, officer's certificate, register of directors or secretary's certificate. The actual name used for the document depends on local law and custom, but the content and use of the incumbency certificate are nearly always the same.
Content of Incumbency Certificate
Incumbency certificates are issued by the corporate secretary and often bear the corporate seal. The secretary is the officer in charge of keeping company records. Because of this, the incumbency certificate is an official act of the company, and third parties can reasonably rely on its accuracy.
An incumbency certificate contains all relevant particulars regarding the company's directors and officers, such as the incumbent's name, position, whether elected or appointed, and term of office. It also usually includes a signature sample for comparison purposes.
A typical incumbency certificate may be worded as follows: "The undersigned, X, Secretary of ABC Inc. (the "Company"), hereby certifies that the persons named below do hold the position set forth opposite his or her names with the Company, that the signature appearing opposite each such person's name is the true signature of such person, and that they are duly authorized to ..." This mention would then be followed by a list of the directors and officers, the date, and the secretary's signature.
Anyone who is involved in a transaction with a company and needs to confirm the stated position of an officer within the company may request an incumbency certificate from the secretary of the company. In practice, an incumbency certificate is often required by a bank or another financial institution when opening an account to ensure that the person who claims to be the authorized signatory of a company truly is.
Similarly, when attorneys are drafting contracts for transactions involving companies, they usually require an official incumbency certificate to determine who can legally bind the company in the contracts.