Certificate of Incorporation, CoI, one of the most important legal documents that any business is required to have, serves as official proof that a company has been registered and recognized by the government legally. Whether entering into a business contract, sourcing funding, or even performing due diligence, proof of the Certificate of Incorporation is essential to make sure the company is valid and operational according to the statutes governing the company. Therefore, the following article is very important for understanding why the CoI should be validated, how to validate the same, and how it may be obtained.
What is a Certificate of Incorporation?
A Certificate of Incorporation is an official document issued by the relevant government authority that confirms a company's formation. This certificate will be proof that the company has been legally incorporated and registered with the authorities. The CoI contains essential details about the company, such as:
Company Name
Date of Incorporation
Registered Office Address
Company Identification Number (CIN)
Legal Structure (e.g., Private Limited, Public Limited, etc.)
Business Type/Activity
CoI is issued when the company completes all the registration processes with the authority, such as submitting documents to the registrar of companies or the equivalent registration authority of the country concerned.
Are you interested in pursuing a career in Law? The Legal School in collaboration with IndusLaw has created unique programs for Certification in Mergers & Acquisitions for fresh law graduates as well as professionals looking to advance in their careers! Enquire now for details!
Why Do Verification of the Certificate of Incorporation?
Verifying a Certificate of Incorporation has some crucial reasons:
Establish Legitimacy: Confirms that the company is properly registered and is an approved company by the government; thus, it's a legal and legitimate entity to carry on business transactions.
Due Diligence: This is required upon entering partnerships, acquisitions, or investments. Verifying the CoI will ensure that the company has complied with local legislation and regulations.
Fraud Prevention: This is to prevent fraud entities that may try to take advantage of investors or customers through forged documents.
Compliance with the Law: The company has complied with all the requirements for registration, including filing annual returns or remitting taxes.
You need to verify the Certificate of Incorporation to avoid engaging with an unregistered or non-compliant entity, which could result in financial and legal complications.
Get Aware with Fees for Registration of Private Limited Company
Step by Step Guide to Verify a Certificate of Incorporation
To verify a company's Certificate of Incorporation, follow these steps:
Step 1. Get a CoI Copy
A CoI can be directly obtained by the company. Normally, a company, especially when engaging in other business deals, is obliged to provide the information upon request. Online government portal sites can also obtain a CoI.
Step 2. Check for Authenticity Marks
The CoI should have official government seals or watermarks, with authorized signatures. These marks are the main authenticity markers. If the document does not have these, then it is probably a fake or an outdated certificate.
Step 3. Verify the CIN Corporate Identification Number
Every company registered with the government receives a unique number, referred to as CIN, which can be used in the verification of registration. Normally, the CoI includes the number. You can check the existence of this number on government portals or databases and verify its authenticity.
Step 4. Use Government Portals for Verification
Government portals in most countries, including India, provide online databases where a company can be searched through its CIN or even the name of the company. In India, for instance, the Ministry of Corporate Affairs or MCA allows you to verify the details of a registered company by entering the CIN or company name on their website. The portal would let you know whether the company is active, dormant, or struck off registration status and much more.
Step 5. Check the Status of the Company
Once you are able to access the information about the company on the portal, make sure that its registration status is "Active" and that the incorporation information matches what is stated in the CoI. If the status is marked as "Inactive" or "Struck Off," then the company has probably closed down.
Step 6. Review the Company's Filing History
Depending on the jurisdiction, you can even access the company's filing history, including annual returns and financial statements. This may be useful in determining whether the company has complied with its legal obligations.
Get to Know How Formation of Company is done under Companies Act 2013
Risks of Not Confirming the Certificate
There are several risks associated with non-verification of the CoI. Some are:
Legal Risk: Using an unregistered company could lead to breaches of contract or even legal penalties.
Financial Losses: Such fraudulent companies may misappropriate funds or fail to fulfil their business obligations.
Damage to Reputation: Association with a non-compliant or fraudulent entity may damage your business reputation.
Learn about Stages of Incorporation of a Company
Summing Up
Verifying the Certificate of Incorporation is not just a formality; it is a necessary step in safeguarding your business interests. By conducting a thorough verification, you ensure that your business dealings are legitimate and legally sound. Whether you are starting a business, entering into a partnership, or investing, always ensure that the companies you engage with are properly incorporated and compliant with relevant laws and regulations.
Certificate of Incorporation Verification FAQs
Q1. What is a Certificate of Incorporation?
It is a legal document that proves that a company is registered with the government.
Q2. Why should I check the Certificate of Incorporation?
To ensure that the company is legally recognized and avoid fraudulent transactions.
Q3. How can I check a Certificate of Incorporation?
Look for the CIN and company information on the official government websites.
Q4. Where can I check the Certificate of Incorporation?
Online portal of the concerned government agency (for example, MCA in India).
Q5. What does the Certificate of Incorporation contain?
It contains the name of the company, CIN, date of incorporation, and type of business.
