Avoid those “call the carrier” moments: Find out if you need to qualify to do business outside your state

Avoid those “call the carrier” moments: Find out if you need to qualify to do business outside your state

In a recent webinar on qualifying to do business in foreign states, Florida attorney Alan Aronson shared this thought: “If you keep on disregarding the potential consequences of failing to qualify, I recommend you have your insurance carrier on speed dial.”

Why? Because companies that fail to qualify risk a host of potentially adverse consequences, ranging from monetary fines and penalties to breach of contract claims, issues regarding the enforceability of existing contracts, the inability to initiate litigation or file a counterclaim, financial statement ramifications and even personal liability for directors and officers.

Aronson also noted that it can be difficult for companies to determine whether they need to qualify because qualification requirements are expressed in the negative (what activities do not require qualification), and because requirements differ from state to state.

Qualifying to do business in other states is a “cornerstone of good corporate governance,” Aronson said, adding “unless you have a real, compelling reason not to qualify, it’s not worth the risk.”

The webinar, “State Foreign Qualification; Pitfalls for the Unwary” is available online. Click here to view.

The CSC® 50-State Guide to Qualification

Determining whether to qualify to do business in a foreign state can be a complex and time-consuming task, but it needs to be done in order to avoid the harsh consequences of making the wrong decision. Qualifying to Do Business in Another State: The CSC® 50-State Guide to Qualification is a comprehensive toolbox that can help you make that determination.

This easy-to-read handbook provides you with the information you need to make the important decisions about qualifying in states where you plan to do business, and includes case studies that can help you understand which types of business activities trigger the qualification requirement.

The book begins with a look at the Model Business Corporation Act (MBCA), which serves as a template for most states’ laws governing foreign corporations’ business activities within their borders. It next examines the activities listed in the MBCA that are not subject to regulation, and then those activities that require a foreign corporation to register to business. There is also a discussion of how Internet and e-commerce activity could trigger qualification requirements.

There are detailed instructions for qualifying to do business in foreign states as well as registration procedures for charitable organizations. The appendix contains a list of qualification forms for all 50 states and the District of Columbia, with forms on the companion CD-ROM.

The handbook also includes a comprehensive scope of annotated qualification statutes for all jurisdictions, giving readers easy access to the current statutes and relevant case notes that relate to doing business in a foreign state.

Two easy-to-use charts summarize the activities that do not constitute doing business and the consequences of failing to qualify. Both charts include comments and citations.

2017 Edition

Each year, the Qualification Handbook is updated with new case illustrations and important legislative changes. In this Edition, new case examples have been incorporated to further illustrate the activities that do and do not trigger qualification requirements. In particular, Chapter 4, “Corporate Internet and E-Commerce Activity,” includes a discussion of fresh case law regarding Internet activity, touching on matters such as email, social media, and geoblocking. Changes to qualification statutes for all 50 states and the District of Columbia have also been captured in the book’s statutory section.

The 2017 Edition of Qualifying to do Business in Another State is available as a softbound book or as an ebook, compatible with dedicated e-reader devices, computers, tablets and smartphones that use e-reader software or applications. It is also available on the LexisNexis Digital Library.

To learn more about the 2016 Edition of Qualifying to do Business in Another State, call 1.800.533.1637 or visit us online at www.lexisnexis.com/csc.