Also known as:certificate of incorporation and good standing · incorporation · good standing · good standing certificate · corporate good standing
Written by attorneys · grounded in primary & secondary sources — see below
A representation in an acquisition agreement affirming that the target entity has been properly formed under the laws of its state of incorporation and remains authorized to conduct business by staying current on all required state filings and fees.
Sources & Authorities· 24 primary sources
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Cases
Statutes
How it applies
Common Examples
6
Professional Services Corporation Status
Indigo Textiles retained a medical practice group to provide on-site employee health screenings. When a patient sued for negligent care, the practice defended by showing it had been duly incorporated in its home state and remained current on all annual reports and fees. The court applied the professional standard of care only after confirming the entity's incorporation and good standing satisfied the threshold requirement for exercising the skill normally possessed by members of the profession in similar communities.
General Jurisdiction Challenge
Infinity Bank sued Innovate Pharmaceuticals in State A for an unrelated commercial dispute. Innovate moved to dismiss for lack of general jurisdiction, pointing out that it was incorporated in State B and maintained its principal place of business there. The court examined the target's incorporation and good standing certificates from State B to confirm it was not at home in State A despite substantial sales activity.
Ira Irving's will left his residuary estate to an inter vivos trust that had never been funded. The trust document had been executed years earlier. The probate court validated the pour-over devise after the estate produced the trustee's certificate confirming the trust entity's due incorporation and continued good standing under state law.
Unrelated Claim Jurisdiction
Ironclad Industries faced a product liability suit in State C for injuries occurring in State D. The plaintiff argued extensive sales created general jurisdiction. Ironclad produced its articles of incorporation and current good standing certificate from State A, its state of incorporation and principal place of business, defeating the jurisdictional claim.
Unattested Writing Devise
Isla Ireland's will directed that certain assets be distributed according to a separate unattested schedule. The schedule listed property to be added to an existing trust. The court upheld the devise once the trustee supplied proof of the trust's incorporation and good standing, satisfying the statutory permission for such writings.
Continuous Sales Jurisdiction
Iris Irons sued a manufacturer in State E for all claims after suffering injury from a product purchased there. The manufacturer responded with its certificate of incorporation and proof of good standing from State F. The court held that continuous sales alone could not support general jurisdiction when the defendant was at home only in its state of incorporation.
Common questions
Frequently Asked
3
What does the incorporation and good standing representation typically cover in an acquisition agreement?+
It covers both due formation under state law and the target's ongoing authorization to do business through current payment of fees and filings.
Supporting sources
Why do buyers require a good standing certificate as part of due diligence?+
The certificate confirms the target remains authorized to operate and has not been administratively dissolved, reducing the risk of hidden formation defects.
Supporting sources
Does the representation extend to subsidiaries?+
Yes, the standard formulation requires the same due incorporation and good standing status for the target and all of its subsidiaries.
Supporting sources
488 A.2d 858 (Del. 1985)Business Associations
…by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation. If any such provision is made in the certificate of incorporation, the powers and duties conferred or imposed upon the board of directors by this chapter shall be exercised or performed to…