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Certificate of Incumbency

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    Certificate of Incumbency

    What is a Certificate of Incumbency? When is it required?

    People are often surprised by the volume of closing documents that are prepared by a lawyer in order to transfer a business. In continuing with this series of discussions regarding several important closing documents, we will discuss the closing document known as the ‘Certificate of Incumbency’.

    Certificate of Incumbency

    A Certificate of Incumbency is required where the seller is a corporation. This certificate is prepared by the secretary of the corporation and confirms the name of the person who occupies the positions of president and director of the corporation. It further contains a sample of the signature of the persons who occupy these positions.

    Certificate of Incumbency - Kalfa Law

    This document essentially confirms the names and signatures of the persons who have signing authority on behalf of the Corporation.

    In this way, the purchaser can be comforted in knowing that the individual who is signing the selling documents has the permission and the authority to sell the business.

    The document eradicates the concern from many purchasers that occurs where several persons are involved in a business. This is often the case in a family business. The purchaser wants to be assured that one brother who is selling the business has the consent to do so from the other family members, giving the seller the authority to effect this transaction. A certificate of incumbency thus provides comfort to the purchaser by attesting to the authority of the individual to sign documents on behalf of the corporation and sell the business.

    The purchaser’s lawyer then compares the name(s) and signatures of the signatories listed on the Certificate of Incumbency with those of the signatories on the initial purchase agreement and the resulting bill of sale on closing. The purchaser then can take solace knowing that the business has been properly sold to him or her and that there will not be other family members who later claim ownership of the business.

    A Certificate of Incumbency is provided by the seller corporation to the purchaser on the closing date. A good lawyer acting for the purchaser will require a Certificate of Incumbency to be prepared by the Vendor as it will provide assurances as to the authorization of the transaction.


    What is a certificate of incumbency?
    The certificate of incumbency attests to the authority of the person who signs the documents of sale on behalf of a Corporation.
    When is a certificate of incumbency necessary?
    A certificate of incumbency is necessary when the seller or purchaser is a corporation.
    When is the certificate of incumbency provided?
    A Certificate of Incumbency is provided along with all other closing documents on the closing date.

    -Shira Kalfa, BA, JD, Partner and Founder

    Shira Kalfa is the founding partner of Kalfa Law. Shira’s practice is focused in corporate-commercial and tax law including corporate reorganizations, corporate restructuring, mergers and acquisitions, commercial financing, secured lending and transactional law. Shira graduated from York University achieving the highest academic accolade of Summa Cum Laude in 2012. She graduated from Western Law in 2015, with a specialization in business law. Shira is licensed to practice by the Law Society of Ontario. She is also a member of the Ontario Bar Association, the Canadian Tax FoundationWomen’s Law Association of Ontario, and the Toronto Jewish Law Society. 

    © Kalfa Law, 2020

    The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.

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