Why do states require foreign corporations to qualify before transacting business there?
Requiring qualification protects a state’s citizens. It allows a state to collect important information about the corporation, such as who owns and operates the business, the nature of the business, and where the business operates in the state. States apply the same tax, reporting, and registration requirements to qualified foreign entities that they apply to domestic entities to ensure foreign entities doing business in the state don’t have an unfair advantage.
Requiring qualification also facilitates foreign corporations maintaining a registered agent in the state so that in the event of a dispute, plaintiffs in the state can serve legal paperwork to the foreign corporations more easily—called “service of process”—as opposed to tracking down officers, managers, or other authorized employees in other states.
Finally, requiring foreign corporations to qualify serves as a source of revenue for states.
Qualification also provides benefits to the foreign entity. For example, qualified entities enjoy unfettered access to the state’s courts in the event they need to file a lawsuit or enforce a contract. The documents defining corporate transactions such as loans and M&As typically include language requiring a company to be in good standing everywhere it does business. And qualifying also ensures entities avoid costly fines associated with the failure to qualify.
A valued qualification resource for all 50 states
Qualifying to Do Business in Another State: The CSC 50-State Guide to Qualification is a comprehensive toolbox to help business and legal professionals better understand foreign qualification and avoid the consequences of failing to qualify. Using case illustrations, the book provides insight and analysis of the types of activities that do and don’t trigger the qualification requirement.
The book explores the Model Business Corporation Act (MBCA), which serves as a template for most states’ laws governing foreign corporations’ business activities within their borders. It examines the activities listed in the MBCA that aren’t subject to regulation, and the activities that require a foreign corporation to register to business. There’s also a discussion of how internet and eCommerce activity could trigger qualification requirements, and a look at the consequences of doing business without qualifying.
Step-by-step instructions are provided for qualifying to do business in foreign states, as well as registration procedures for charitable organizations.
The book also includes a comprehensive scope of annotated qualification statutes for all jurisdictions, giving legal practitioners easy access to the current statutes and relevant case notes that relate to doing business in a foreign state. Statutes have been updated for the 2023 Edition.
Two charts summarize the activities that don’t constitute doing business and the consequences of failing to qualify. Both charts are up-to-date and include comments and statutory citations.
The guide also includes online access to qualification forms for all U.S. jurisdictions via the LexisNexis® Store download center. The forms appendix provides a complete list of forms and contact information for each jurisdiction’s secretary of state or equivalent agency.
The 2023 Edition of Qualifying to Do Business in Another State has been updated with new cases illustrating the activities that do and don’t trigger qualification requirements. Changes to qualification statutes for all 50 states and the District of Columbia have also been captured in the book’s statutory section.
Qualifying to Do Business in Another State is available as a softbound book or as an eBook, compatible with dedicated eReader devices, computers, tablets and smartphones that use eReader software or applications. It’s also available on the LexisNexis Digital Library.
To learn more about the 2023 Edition of Qualifying to Do Business in Another State, call 1.800.533.1637 or visit lexisnexis.com/csc.
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