compliance certificate

compliance certificate
England, Wales
A certificate accompanying the financial statements given by a borrower to a lender (usually annually and semi-annually) under the terms of a facility agreement.
The form of certificate is usually attached to the facility agreement as a schedule.
Typically, the certificate:
- Sets out details of financial covenants contained in the facility agreement as at a certain date or for a certain period.
- States whether the borrower has complied with the financial covenants.
The certificate may also confirm that no event of default has occurred, or if an event of default has occurred, the nature of that default and any steps being taken to remedy it.
It is dated and generally signed by two directors of the borrower. For audited financial statements, a lender may also require the borrower's auditors to report on and/or sign the certificate.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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