In the early days of interstate commerce in America (late 1800s/early 1900s), there was no standardized way to verify if a company was legitimate when doing business across state lines.
This led to hilarious (and costly) situations where:
The Ghost Company Scam
Con artists would create companies, let them fall into bad standing or even dissolve them entirely, but continue using the old paperwork to do business in other states. Since there was no way to quickly verify corporate status across state lines, these “zombie corporations” could rack up debts, sign contracts, and disappear before anyone realized the company had been legally dead for months or even years.
The Certificate Arms Race
When states finally started issuing Certificates of Good Standing in the late 1800s, they became so fancy and elaborate (with seals, ribbons, embossed stamps, and ornate calligraphy) that they looked more like royal proclamations than business documents. States competed to make theirs the most impressive – Delaware famously went overboard with a multi-colored seal featuring ships, farmers, and a soldier, all to certify that “Acme Widget Company is allowed to sell widgets.”
The Ironic Twist
The state that became the incorporation capital of America (Delaware) did so partly by making it easier to stay in good standing – essentially commoditizing the very certificate that was supposed to prove you met high standards. Today, over 60% of Fortune 500 companies are Delaware corporations, not because Delaware has the strictest requirements, but because they made compliance the most convenient!
The ultimate irony? A document designed to prove legitimacy became a rubber stamp so routine that most business people have never actually seen their own certificate of good standing – their lawyer just files it away with all the other corporate paperwork nobody reads.
Time to Build?
Then try out our data extraction API. The API is easy to use and can extract company names, entity numbers, registration dates, and compliance status from certificates of good standing with 99%+ accuracy. Click the card below to see a demo and read more about the API.
Certificate of Good Standing OCR API
Extract company names, entity numbers, registration dates, and compliance status from certificates of good standing with 99%+ accuracy. Automate entity verification and corporate compliance documentation for legal firms, financial institutions, and business registration workflows.
