Alerts

Prepare for Seasonal Setbacks

Some state offices are scheduled to be closed on December 31. Where this is the case, the last day to file corporate and UCC documents in 2018 may be December 28. Last minute jurisdictional office closings, reduced staff, and seasonal high volume will impact filing capabilities further, potentially resulting in delays in both filing and turnaround time.

In most jurisdictions, filings are not effective on the date postmarked or initially submitted. Rather, filings are typically effective on the date received in correct form. In some jurisdictions filings are not effective until they are actually processed by the filing office.

If possible, for date critical corporate documents:

  • Pre-clear complex filings, such as mergers.
  • Obtain all necessary tax clearances in advance for mergers, dissolutions, and withdraws.
  • Take advantage of delayed effective date provisions in jurisdictions where they are permitted.
  • Utilize expedited filing options (when available).

A list of office closings is maintained at:
https://www.capitolservices.com/state-office-closings/

Mergers, Conversions, and Dissolutions

Keeping up with the requirements for mergers, conversions, and dissolutions is pivotal for entities looking to modify their current operating procedures.

Being a timely year end matter, Capitol Services’ corporate experts put together a list of the top 5 most frequently asked questions and their answers to help you better navigate these topics.

Q: Do all states allow for conversions?
A: No, there are still a number of states that have no provision in their statute for the conversion from one entity type to another. Still others restrict it to some types of conversions and not others.

Q: What is “redomestication”?
A: This is the term that some states use when an entity converts from one state or country to another.

Q: Is tax clearance required from this merger, conversion, or dissolution?
A: This varies greatly by state and entity type. Our customer service representatives can help you navigate the requirements of each jurisdiction.

Q: May I list a delayed effective date on my filing?
A: This, too, varies by jurisdiction and filing type. We can help.

Q: What needs to be done in the foreign jurisdictions when a company merges, converts, or dissolves in the home state?
A: Filings will need to be made in each state in which the company is qualified to evidence the merger, conversion, or dissolution. We can guide you as to what filings are required in the relevant jurisdictions.

Capitol Services is always happy to help with any other questions you may have.

The Special Agreement

In the most common type of agent representation, a jurisdiction requires an entity to appoint a registered agent in its formation or qualification documents filed with the secretary of state (or equivalent office). In the second type of agent representation, a governmental agency, such as a state insurance or contractor’s board, requires an entity to appoint a registered agent in connection with registration or licensing procedures. This appointment is separate from, or in addition to, the appointment with the secretary of state.

A third, less common type of representation is the appointment of agent for service of process in connection with a special agreement. Examples of special agreements include loan/credit agreements, guaranties, leases, and employment contracts. Special agreements include the requirement to appoint a process agent in a particular jurisdiction as well as identify such agent and its address. Many special agreements include foreign parties. Requiring a local agent for service of process ensures that a U.S.-based party can serve a foreign party in the U.S. in the event of default or breach.

Special agreement representation requires a written appointment between the entity requiring representation and Capitol Services. We can help you navigate the requirements under your special agreement and provide a lender acceptance letter when necessary. For more information about special agreement representation, or any other type of agent representation, please contact our Registered Agent department.

Certification: Benefits and Limitations

A state certified UCC search has its utility. In order to confirm that you’ve filed under the correct individual or entity name, it is important to run a certified search-to-reflect, using the state’s standard search logic, to ensure that your filing appears within the results of the search. If it does not, it’s important to address the issue with the clerk’s office (if the error is of an indexing nature) or through amendment (if the error was made by the filer). Here, however, is where the benefits of a certified search might end.

Oftentimes, state certified logic is very strict – offering limited results based on findings that are close to (if not identical to) the search string entered. If you are utilizing certified results for your due diligence searching, you might be doing yourself (and your client) a disservice. A wildcard, due diligence, or broad-form search enables the searcher to cast a wide net and find more results. This searcher may be able to uncover similar names or misspellings of the correct name. More importantly, a searcher hunting with a broad-form search tool may be able to find hidden but effective UCC liens that are mis-indexed as well as hidden but effective Federal Tax liens filed by the IRS under truncated versions of the correct name.

Searchers often have a sense of false comfort when they see a seal of certification. There is certainly no guarantee that certified results are correct. The certified statement provided by the clerk’s office typically attests to the mere fact that a search string was entered into the state database on a certain day at a certain time and provided the following results set. This in no way guarantees the accuracy of the results. Beyond the commonly seen mis-indexings that may fail to reflect, programming changes made to the state database may generate results that are contrary to the state’s own published search logic. A filer who did their job correctly and filed under the correct name is safe, notwithstanding a state database glitch resulting in an incomplete, certified search report.

Use all of the tools in your search arsenal to ensure you are giving yourself the very best opportunity to find any and all activity related to your debtor. Some extra hunting during the due diligence process can stave off a bankruptcy proceeding surprise – and a major headache.

Same Great Company. Bold New Look.

We’ve got big news to share with you. To commemorate our 40th year, we are introducing a new look that is as innovative as our client solutions and a refreshed website that’s as client-focused as our people. Capitol Services wants to provide you with a web experience that not only features new and improved online support, but also reflects our company, our values, and most importantly, our people. After all, it’s our people who really make us different. The result is a user experience built just for you and designed to focus on your day-to-day business needs.

While we hope you find the new website to be a valuable additional resource, we remain committed to delivering personalized attention to every client, every day – just as we have for four decades.

EXPLORE THE WEBSITE

New Bills Enacted in Several States

A variety of bills have been enacted in the past several months. Effective April 18, 2018, Tennessee authorized the Secretary of State to accept electronic transmission of LLC documents. A few weeks later, on May 8, 2018, Utah enacted the Benefit LLC Act, which permits the formation of LLCs for general public benefit, and changed the term “certificate of good standing” to “certificate of existence.” West Virginia began recognizing foreign series LLCs on June 8, 2018. Effective July 1, 2018, filings submitted by entities registered in Illinois are not to be subject to additional expedited fees solely because they are submitted electronically.

Lastly, Arizona adopted the Uniform LLC Act, which applies to LLCs and registered foreign LLCs formed, converted, or domesticated after September 1, 2019. However, LLCs formed, converted, or domesticated prior to September 1, 2019, may elect to be subjected to the requirements. The requirements of the Uniform LLC Act will apply to all LLCs and registered foreign LLCs after September 1, 2020.