Registered agent: Difference between revisions
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=== Registered agent service providers === |
=== Registered agent service providers === |
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Almost any person or business entity may legally act as a registered agent. It can be provided e.g. |
Almost any person or business entity may legally act as a registered agent. It can be provided by, ''e.g.'', [[attorney]]s or [[CPA]]s. However, the service is usually provided by (or through) commercial registered agent service companies. There are many service companies that perform or contract registered agent services. If a business is operating in multiple states, it can retain the services of a national registered agent service provider with the ability to represent it in all states. The "Big Four" national service providers are Incorp, CSC, CT and NRAI.<ref>Jennifer Reuting, ''Limited Liability Companies for Dummies'', Wiley Publishing Inc, 2008, pages 85-86.</ref> |
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==Designating a registered agent== |
==Designating a registered agent== |
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Revision as of 21:14, 5 August 2008
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In the United States, a registered agent is a business or individual designated to receive service of process (SOP) when a business entity is a party in a legal action such as a lawsuit or summons.[1] In some states the function is also referred to as a resident agent or statutory agent, however most states have changed their statutes call this function "registered agent." The Registered agent for a business entity can be an individual or more often a third party such as the organization's lawyer or a service company. Failure to properly maintain a registered agent can affect a company negatively.[1]
The function of a registered agent
Most businesses are not individuals but instead business entities such as corporations or Limited Liability Companies (LLCs). This is because there are substantive liability protections as well as tax advantages to being "incorporated" as opposed to being "self-employed".
Most jurisdictions in the United States require that any business entity that is formed or doing business within their borders designate and maintain a "Registered Agent"[2]. This person may be known as the "Resident Agent"[3] or "Statutory Agent"[4], depending on the laws of the individual jurisdiction in which the business entity is registered. The purpose of a Registered Agent is to provide a legal address (not a P.O. Box) within that jurisdiction where there are persons available during normal business hours to facilitate legal service of process being served in the event of a legal action or lawsuit[5]. Generally, the registered agent is also where the state government sends all official documents required each year for tax and legal purposes such as franchise tax notices and annual reports. It is the registered agent's job to forward these suits and notices to the entity itself[6]. Registered Agents generally will also notify business entities if their state government filing status is in "Good Standing" or not. The reason that these notifications are a desired function of a registered agent is that it is difficult for a business entity to keep track of legislative changes and report due dates for multiple jurisidictions given the disparate laws of different states.
Penalties for not maintaining a registered agent generally will cause a jurisdiction to revoke a business’s corporate or LLC legal status as well as in some cases, assess additional penalty fees on the entity.
If a Registered Agent fails to perform their function, it can have dire consequences for the business entity. For example, if a customer fell inside a store and sued the store, and the store's registered agent failed to notify the business entity of a summons to appear in court to respond to the lawsuit, then when the case went to trial, nobody would appear to defend the store and the customer would win by a default judgment. Additionally, the store would likely not be able to get the judgment overturned on appeal because they had been properly served. This is one of the most common reasons that business entities generally will utilize a third party as their Registered Agent be it a commercial service company, an attorney, or in some cases, a CPA.
The person at the business entity that maintains contact with the registered agent is the corporate secretary or governance officer.
Who can perform the function of a registered agent?
In some states a business entity is legally allowed to act as its own registered agent, but other jurisdictions may require that a business entity designate a third party as their registered agent[7].
Attributes of third-party registered agents
- An outside registered agent provides an anonymity shield, protecting a business from exposing its clients, vendors or neighbors to any legal proceedings.
- An outside registered Agent puts a layer of privacy between the principals of a business and the public. For example, many businesses harvest “junk mail” lists from the databases of State offices. Having an actual registered agent greatly reduces the amount of “junk mail” businesses receive.
- As the Registered Agent name and address is one of public record, generally, the registered agent legal address will be the one listed in all official public documents.
- An outside Registered Agent allows business entities to freely change their location at any time, without filing being required to file costly changes of address with the state they are registered in each time they move.
- Commercial registered agents generally have systems to keep track of filing, notification and publishing requirements of business entities which can save businesses hundreds or even thousands of dollars in late penalties were they to miss a required government filing. These are referred to as "Compliance Managers", "Tax Calendars" and/or "Compliance Calendars".
- Generally most commercial service providers have "Form Libraries" of forms and other documents required to file business entities in different jurisdictions - or to keep the business entity in compliance or "Good Standing".
- Some commercial registered agents provide real-time notice of any litigation, and forward all official documents directly to the companies they represent.
Registered agent service providers
Almost any person or business entity may legally act as a registered agent. It can be provided by, e.g., attorneys or CPAs. However, the service is usually provided by (or through) commercial registered agent service companies. There are many service companies that perform or contract registered agent services. If a business is operating in multiple states, it can retain the services of a national registered agent service provider with the ability to represent it in all states. The "Big Four" national service providers are Incorp, CSC, CT and NRAI.[8]
Designating a registered agent
The registered agent for a business entity is generally assigned in the formation documents filed in a jurisdiction when the entity is originally created. For example, if you were forming a corporation in the State of Nevada or Delaware, you would designate the registered agent along with their address on the articles of incorporation that you file with the Nevada Secretary of State or Delaware Secretary of State respectively. If the agent can't physically sign the articles themselves, some states such as Nevada provide that you may assign the agent using a separate "Registered Agent Acceptance" with the appropriate acceptance and signature.[9] A representative of the business or the individual accepting responsibility as registered agent must sign to accept the responsibility of acting as agent. In most states it is a crime to knowingly file a false document with a Secretary of State office. The penalties vary widely. For example, in Nevada it is a Class "D" felony to forge this signature, but in other states such as Michigan, it is only a misdemeanor.
Registered agent information
Information about entities that may be willing to act as registered agents/resident agents by state is usually maintained by the respective Secretary of State. Most states also offer free access to their databases to find a business entity's registered agent.
Model Registered Agents Act
The Model Registered Agents Act is an effort spearheaded by the American Bar Association and the International Association of Commercial Administrators - Business Organization Section (BOS) to standardize business entity laws as they relate to annual reports, registered agents and other laws and forms used to file business entities.[10] The problem this effort seeks to alleviate is the fact that disparate laws, filing requirements and forms in all of the US jurisdictions where business entities are filed creates a quagmire for any company seeking to register to do business in those jurisdictions. By adopting a common set of laws, rules and forms - as well as an XML standard for electronic filing, the Model Registered Agents Act seeks to vastly simplify the process of filing and maintaining a business entity in any jurisdiction adopting it.
A primary factor in motivating the industry to regulation and adoption of the act is that in November 2006, The United States Department of the Treasury Financial Crimes Enforcement Network (FinCEN) released a report scrutinizing the registered agent and incorporating industry's albeit unknowing facilitation of financial crimes (money laundering, tax evasion, terror funding, fraud, etc.) and recommended that stricter controls and monitoring be imposed on business entities.[11] These recommendations were a component of current federal "anti-terror" legislation that is being considered, however these provisions were removed after protest from various Secretary of State offices and to give the industry an opportunity to enact its own regulation.
Government listings
Official state government listings of entities that may be willing to act as registered agents/resident agents by state:
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References
- ^ a b Colley, John L. (2003). Corporate Governance. McGraw-Hill Professional. p. 35. ISBN 0071403469.
- ^ e.g., Code of Virginia, Section 13.1-634; Pennsylvania law refers only to the "agent who maintains the registered office for the corporation", 15 Pa.Consol.Stat. §108(a), but this person is customarily referred to as the "agent".
- ^ e.g., Code of Maryland, Corporations and Associations Article, Section § 2-108.
- ^ e.g., Arizona Revised Statutes, Section 10-501.
- ^ e.g., California Corporations Code, Section 1701.
- ^ e.g., Code of Virginia, Section 13.1-634(B).
- ^ e.g., D.C. Code Section 29-101.10.
- ^ Jennifer Reuting, Limited Liability Companies for Dummies, Wiley Publishing Inc, 2008, pages 85-86.
- ^ Example of "Registered Agent Acceptance" form (Nevada)
- ^ "Model Registered Agents Act" (pdf). Draft of May 24, 2006. National Conference of Comissioners on Uniform State Laws. 2006. Retrieved 2007-06-06.
- ^ "The Role of Domestic Shell Companies in Financial Crimes and Money Laundering: Limited Liability Companies" (pdf). Department of the Treasury - Financial Crimes Enforcement Network. 2006. Retrieved 2007-06-06.
See also
- List of Secretaries of State, who in the United States provide information about available registered agents in each state