Chapter 13 - Qualification of foreign corporations
Texas - steps in withdrawing qualification
#1 ascertain franchise tax account status #2 bring franchise tax account current, if it is delinquent #3 once franchise tax account is current, request formal Certificate of Account Status from Texas Comptroller #4 download/complete Texas Form 608 - Certificate of Withdrawal or Registration from SoS website #5 file Texas form 608 and official Certificate of Tax Account Status with Secretary of State
Texas document to become qualified to transact business in the state
Application for Registration of a Foreign For-Profit Corporation
Delaware document to become qualified to transact business in the state
Qualification Certificate of a Foreign Corporation
Texas resource for information on requirements to become qualified to transact business
Texas Business Organizations Code
transacting business
a foreign corporation's engaging in activities for which the state requires permission (qualification)
revocation
action by a state withdrawing a foreign corporation's authority to do business in that state. Normally triggered by some unlawful act by the corporation or its failure to comply with the state's laws
to do business lawfully in other states, a foreign corporation must obtain
authority; that is, be qualified to do business in the states. This helps protect the states' citizens, ensuring that they have some basic information about corporation and are able to sue the corporation and serve its registered agent in the state
how does a corporation's board of directors initiate the process of qualification in other states?
by passing a resolution (or act by written consent) authorizing the officers to take the necessary action to enable the corporation to transact business elsewhere
certificate of good standing (or certificate of existence)
certifies that the corporation is in compliance with that state's regulations
foreign corporation
corporation doing business in a state other than the state in which it was incorporated
domestic corporation
corporation doing business in the state in which it was incorporated
withdrawal of a foreign corporation - requirement of providing forwarding address
corporation must provide an address so that the secretary of state can forward any process for any lawsuit filed later against the corporation
service of process on corporation's registered agent in another state...
counts the same as if it had been served on a registered agent in corporation's home state
Texas Business Organizations Code
does not define what transacting business is, but the Code does define what transacting business is not
what filing an application for withdrawal (or certificate of withdrawal) of a foreign corporation accomplishes
ensures the corporation is no longer subject to service of process, taxes, or annual reporting
examples of omissions by corporation that can trigger revocation
failure to file annual reports failure to pay taxes failure to have a registered agent in the state
Most states require a foreign corporation desiring to do business in those states to:
file an application to transact business in the state appoint a registered agent for service of process pay the appropriate filing fee and taxes
examples of fees and taxes assessed by other state
flat annual sales tax or tax based on the amount of business conducted in the foreign state that year
what a foreign corporation should do when it ceases doing business in another state
formally withdraw from doing business as a foreign corporation in that state
corporate changes - filing requirement in a foreign state
generally, must also file a certified copy of the amended articles or amend its qualification certificate (or application for registration) in any state in which it transacts business as a foreign corporation changing registered agent or registered office is less complicated, usually requiring only a simplified form
Potential consequences of a foreign corporation's doing business in another state without properly qualifying
may result in fines or refusal to allow the corporation to maintain a legal action in the state
does a corporation have a legal existence beyond the borders of its state of incorporation
no legal existence beyond the borders of its state of incorporation
effects of not qualifying to do business in Texas
possible court action by Texas Attorney General Prohibition of corporation from filing a lawsuit in Texas arising out of corporation's business in Texas Personal liability for corporation's debts, obligations, or liabilities
qualifying to transact business
process for seeking permission from foreign jurisdiction to do business therein
withdrawal
process of cancelling authority to do business in a foreign state
state's process for revoking a corporation's authority to transact business in the state
provides delinquency notice corporation is then given a period in which to cure the default. If it does not do so, the secretary of state will revoke its authority to transact business in the state in many states (including Texas), a corporation may apply to be reinstates, especially if revocation resulted for an administrative reason (e.g., failing to file reports or pay taxes)
what a foreign corporation must do to lawfully transact business in a state other than the state of its incorporation
qualify, or be authorized
what usually constitutes "transacting business"
repeated, systematic, and continuing business in the foreign state
what governmental official recognizes corporate status in each state?
secretary of state
What laws govern the types of business in which a foreign corporation may engage in the other state?
the foreign corporation will be subject to that other state's laws that restrict the kinds of business a domestic corporation can engage in
what laws govern a foreign corporation's internal affairs (e.g., amending bylaws, giving notice of meetings)
the law of its state of incorporation
filing of annual reports with other states
usually required
failing to qualify to conduct business in Texas does not affect
validity of contracts entered into by the foreign entity the foreign corporation's right to defend itself in a lawsuit in a Texas court