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A person or organization in good standing is regarded as having no financial obligations. A business entity that is in good standing has unabated powers to conduct its activities, which can include business endeavors. Similarly, a person who is in good standing within an organization or educational institution may take advantage of the benefits of membership or enrollment.
In the USA, 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. 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.
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. unemployment, and/or trust-fund taxes
- having its property seized for unpaid state and federal income taxes
- delinquent on its property taxes
- convicted of multiple felony crimes
- 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
As long as the paperwork and fees are current with the chartering authority, the entity will still be in "good standing."
In the United Kingdom, Certificates of Good Standing are issued by Companies House to confirm the continuous existence of a company since incorporation and the absence of any pending action to remove the company from the register of companies. This can either be to allow a company to conduct business abroad (by ensuring other regulatory agencies are satisfied that the company has complied with applicable requirements) or to provide further guarantee to lenders or other parties entering into financial agreements.
In membership organizations, or voluntary associations, there may be criteria for becoming a member and maintaining membership. Such criteria may include payment of dues or attendance of meetings. Failure to meet these criteria may result in loss of "good standing" within the organization or loss of membership in the organization altogether. Unless the organization defines "good standing" and what causes a member to lose good standing, a member has all the rights of membership even if in arrears in payment of dues.
In some cases, good standing will be used as a criterion to help prevent fraudulent applications for important documents. For instance, when applying for a British passport, your application must be countersigned by a personal acquaintance who "has ‘good standing’ in your community".
- "Definition of in good standing". Oxford Living Dictionaries. Oxford University Press. Archived from the original on October 16, 2017. Retrieved 16 October 2017.
- "Corporate Compliance: The Consequences of Losing Good Standing Status". Wolters Kluwer. CT Corporation. 21 March 2016. Retrieved 16 October 2017.
- "4 Reasons to Stay in Good Standing for Business Compliance". Wolters Kluwer. CT Corporation. 25 September 2017. Retrieved 16 October 2017.
- See, e.g., "Status Descriptions". State Bar of Georgia. Retrieved 16 October 2017., ""Members in good standing" defined". International Society of Ethnobiology. Retrieved 16 October 2017., "Academic Standing for Undergraduates (Good Standing, Probation and Disqualified Status)". California State University Northridge. Retrieved 16 October 2017.
- Maryland Department of Assessments and Taxation Archived 2009-02-05 at the Wayback Machine
- Colorado Secretary of State
- Catchpole, Henry (7 July 2014). "What a Certificate of Good Standing is and how to get one". inform direct. Retrieved 21 September 2015.
- Robert, Henry M.; et al. (2011). Robert's Rules of Order Newly Revised (11th ed.). Philadelphia, PA: Da Capo Press. p. 6. ISBN 978-0-306-82020-5.
- "Countersigning passport applications and photos". www.gov.uk.