COMPANY STRUCTURE AND REGISTRATION PROCEDURES IN THE BVI
What is a Certificate of Good Standing?
A Certificate of Good Standing is an official document, issued by the Registrar of Companies, confirming that a particular company legally exists, has complied with all administrative requirements pertaining to its continued registration and has paid all government dues, and, therefore, is "in good standing" in the Companies Register as of the given date. In its form, the Certificate of Good Standing largely resembles the initial Certificate of Incorporation of the company.
The Certificate of Good Standing (CGS) is used to formally confirm the continued legal existence of an offshore company after some time has already passed since it´s registration. The Certificate of Good Standing confirms that the status of an independent legal entity (a juridical person) has not been revoked or became void for the particular offshore company, that this company has not been merged, filed for dissolution, or been struck-off.
Most commonly banks tend to regularly ask their clients to present a fresh Certificate of Good Standing for their offshore companies, as soon as the companies are one year and older. You may also be asked for a CGS by any other party with whom You happen to do business. A Certificate of Good Standing can be requested and obtained from the Registrar of Companies, as and when required. This is a common service, provided by the Registered Agent. As the Certificate of Good Standing is basically a "snapshot" of the legal health of the company at a given moment in time, ordering of a CGS in advance, without a special need, is rather pointless.
If, over time, the offshore company has not been properly maintained or has not paid its renewal fees, it loses its status of good standing and, ultimately, risks being struck-off by the Registrar. For such companies, it would be impossible to obtain the Certificate of Good Standing until all fees are paid and their status restored – this may be a costly and time consuming process.
Some prudent owners of offshore companies would use to request Certificates of Good Standing for their own companies, as it is a good method of checking if their Registered Agent has done its job and in properly maintaining the company.