Good standing
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A business entity which is either registered with or chartered by a government agency such as a corporation, limited liability company, limited partnership, limited liability partnership, or limited liability limited partnership is said to be in good standing if it has filed and continued to file all appropriate paperwork with the government agency which provides its charter, and has paid all fees which are due for its charter or the renewal thereof.[1] When an entity is in good standing with the chartering agency, it may obtain a certificate of good standing which indicates this to be the case.[2]
In some cases, a bank may require an entity wanting to open an account such as a checking or savings account to show a certificate of good standing from the chartering agency. Also, a corporation or other limited liability entity wishing to register in another jurisdiction as a foreign corporation (or foreign limited liability company, partnership, etc.) will have to provide to that jurisdiction a copy of a certificate of good standing from its home jurisdiction to be able to register in the new jurisdiction.
Note that being in good standing simply means the entity has kept all paperwork related to its charter and yearly renewal up to date and that all fees have been paid. It is possible for a corporation or limited liability entity to be simultaneously
- involved in an investigation for labor law violations
- subjected to an audit for unpaid payroll taxes
- having its property seized for unpaid state and federal income taxes
- delinquent on its property taxes
- under suspicion for securities fraud
- in bankruptcy
- being sued for causing people to die due to its products being defective, and
- have the entire board of directors indicted for suspected criminal behavior
among other things, but as long as the paperwork and fees are current with the chartering authority, the entity will still be in "good standing."
References
- ↑ Maryland Department of Assessments and Taxation
- ↑ Colorado Secretary of State
