Back-up Certificate
(Subsidiary's Qualification to Do Business)

Summary

This template back-up certificate may be issued by the officer(s) of a material subsidiary of a company, on behalf of the subsidiary, to company counsel to certify the jurisdictions in which the subsidiary is required to be qualified to transact business. The certificate assists counsel in rendering its opinion in a securities offering. This template includes practical guidance and drafting notes. Typically, company's counsel will request such a back-up certificate if it is required (as a deliverable under the offering agreements) to deliver a legal opinion to the effect of “the company and its material subsidiaries are qualified to do business in all jurisdictions in which they require such qualification”. In practice, company counsel will draft the back-up certificate and send it to the company and/or material subsidiary for completion and execution. This back-up certificate assists with the counsel's preparation of its legal opinion by setting forth an exhaustive list of jurisdictions where the material subsidiary is required to be qualified to transact business by virtue of property ownership, employee presence, or business operations. Counsel should then ensure that the material subsidiary is qualified to do business in each such jurisdiction by ordering the appropriate good standing certificates or certificates of qualification. Companies are usually qualified to do business within a jurisdiction by incorporation within that jurisdiction (in which case, they are a domestic corporation) or by application to that jurisdiction (in which case, they are a foreign corporation). For example, a company incorporated in California seeking permission to do business in Delaware will file a "Qualification Certificate of a Foreign Corporation" in Delaware. Please note that counsel should not rely solely on this certificate to issue the requested legal opinion. It is best practice for counsel to independently verify, to the best of its ability, the jurisdictions listed in the certificate through due diligence of the material subsidiary's business and operations. This back-up certificate, unlike other closing certificates, is generally not a deliverable under the offering agreements and is not made available to parties other than the company's counsel for use in delivering its legal opinion. Representations made in this certificate will not result in personal liability for the officer(s) who make them because they are made on behalf of the material subsidiary and not in an individual capacity. For a full listing of related due diligence for securities offerings content, see Due Diligence for Securities Offerings Resource Kit. For more on IPOs generally, see Initial Public Offerings Resource Kit. For the back-up certificate for the parent company, see Back-up Certificate (Company's Qualification to Do Business). For additional information on closing documents for offerings in various contexts, see Closing Memorandum (IPO), Closing Checklist (Rule 144A and/or Regulation S Debt Offering), Closing Checklist (Secondary Offering), and Closing Checklist (Rule 144A and/or Regulation S Debt Offering).