What is "good standing"?
A company in good standing is registered, pays fees, and complies with rules. It can get a certificate confirming this. In California they’re the same. Certificates of good standing are also certificates of existence or compliance. For a university, a letter of good standing means a student is registered and not suspended.
Importance of Good Standing
Good standing is important for various reasons. Without it, a company risks punishment. It is needed for loans, mergers, and other business transactions. Good financial practices for nonprofits also demonstrate good standing. Directors must govern properly. Individual good standing brings community respect and reliability in financial transactions.
Details of Good Standing
The specifics on good standing depend on a company’s structure and location. All companies must accomplish regulatory and licensing requirements and pay fees to maintain good standing. For a university, a letter of good standing indicates a student’s registration and disciplinary status.
Consequences of Not Being in Good Standing
When a company is not in good standing, it loses its rights, powers, and privileges to do business in California. This can hinder business operations and legal standing. Directors should be cautious about the company’s standing to prevent adverse consequences.