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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 agent is also referred to as a resident agent[2] or statutory agent,[3] but most states have changed their statutes and now call this function "registered agent"[4]. The registered agent for a business entity may be an individual member of the company, 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 (and substantial) 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".[5] This person may be known as the "Resident Agent"[6] or "Statutory Agent",[7] 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.[8] Generally, the registered agent is also the person to whom the state government sends all official documents required each year for tax and legal purposes, such as franchise tax notices and annual report forms. It is the registered agent's job to forward these suit documents and notices to the entity itself.[9] 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

Different states have different requirements for registered agents. Typically, the agent must be a legal resident of the state in question or, in states that allow entities to serve a registered agents, an entity authorized to do business in the state.[10] All states allow a corporate officer of the corporation to serve, and all allow the corporation's lawyer to serve. Some allow business entities to serve as registered agents for other entities.[11] 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 its registered agent.[12]

Advantages of designating a third-party registered agent

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. Some national service providers are CT (aka "CT Corporation" or "The Corporation Trust Company"), Corporation Service Company (aka "CSC"), National Registered Agents, Inc. (aka "NRAI"), and InCorp Services, Inc. (aka "InCorp"). CT and CSC have been in business for over 100 years, since the first corporations were formed in the United States.

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.[13] For example, a person forming a corporation in the State of Nevada or Delaware, would designate the registered agent along with the agent's address on the articles of incorporation filed with the Nevada Secretary of State or Delaware Secretary of State respectively. If the agent cannot sign the articles himself of herself, some states such as Nevada provide that the registered agent may be designated using a separate "Registered Agent Acceptance" with the appropriate acceptance and signature.[14] 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 the office of the Secretary of Statel the penalties vary widely. For example, in Nevada it is a Class "D" felony to forge this signature, but in 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 (MoRAA) is an effort spearheaded by the American Bar Association Business Law Section and the International Association of Commercial Administrators (IACA) - 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.[15] The National Conference of Commissions on Uniform State Laws (NCCUSL) organized a drafting committee composed of commissions, ABA, and IACA representatives who drafted the act's language. NCCUSL adopted MoRAA at its 2006 annual meeting. Eight states, (Idaho, Montana, North Dakota, South Dakota, Utah, Arkansas, Maine, and Nevada)have adopted the model act. 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, the Model Registered Agents Act seeks to create a uniform and simple process of filing and maintaining a business entity in any jurisdiction adopting it.

Government listings

Some state business entity laws name the Secretary of State's office or business entity filing office as the registered agent of last resort, in the event the named registered agent can't be found. By law, service may be made on the office if the entities registered agent can not be found. However, the plaintiff must demonstrate that it made a good faith effort to service the registered agent before it may serve the Secretary of State. The state laws vary in how to complete service on the Secretary of State and the amount of fees charged. Some of the states that may have this statutory provision are listed below. MoRAA eliminited this provision but some of the states that adopted MoRAA maintained this provision.

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References

  1. ^ a b Colley, John L. (2003). Corporate Governance. McGraw-Hill Professional. p. 35. ISBN 0071403469.
  2. ^ E.g., Nevada Revised Statutes § 14.020.
  3. ^ E.g., Ohio Revised Code § 1701.07.
  4. ^ A. C. E., Inc., www.FloridaRecordsSubpoena.com: Florida Registered Agent.
  5. ^ 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".
  6. ^ e.g., Code of Maryland, Corporations and Associations Article, Section § 2-108.
  7. ^ e.g., Arizona Revised Statutes, Section 10-501.
  8. ^ e.g., California Corporations Code, Section 1701.
  9. ^ e.g., Code of Virginia, Section 13.1-634(B).
  10. ^ E.g., New Hampshire Revised Statutes § 293-A:5.01(1)(i): "An individual who resides in this state . . . " or an entity.
  11. ^ E.g., Virginia Code § 13.1-634.
  12. ^ E.g., D.C. Code Section 29-101.10.
  13. ^ E.g., Maryland Code, Corporations and Associations, § 4A-204(a)(3) requires the articles of organization of a limited liability company to include "the name and address of its resident agent".
  14. ^ Example of "Registered Agent Acceptance" form (Nevada).
  15. ^ "Model Registered Agents Act" (pdf). Draft of May 24, 2006. National Conference of Comissioners on Uniform State Laws. 2006. Retrieved 2007-06-06.

See also