UNDERSTANDING REGISTERED AGENTS FOR SERVICE OF PROCESS

Handing Papers

By: Akanksha A. Panicker

[1.0] WHAT IS A REGISTERED AGENT

An agent for service of process is an individual or third party certified with the state where the corporation or LLC is located. Such an agent can receive service of process on the corporation’s behalf. In United States business law, a registered agent is a business or person appointed to access process service (SOPs) where a business organization is a party to legal proceedings. This would include receiving matters such as a complaint or summons. The registered agent’s address could also be the State’s destination to send the papers for the interval renewal of the business company’s charter (if so required). A corporate organization’s licensed representative as an agent could be an official or employee or a third party, such as the in-house counsel or a service company. Failure to properly administer a registered agent can adversely impact a corporation.

 Many organizations opt for a third party to serve as their registered agent. However, an entity can also serve as its own registered agent, which excludes the immediate repercussions of not responding to the service. To maintain corporate status, businesses must retain a registered agent. Being on record with the state’s secretaries, this agent must also serve as a representative of the corporation for service of process. To obtain an agent for service of process, the Corporation Division of the relevant state could help determine service providers.

Generally, to address service of process or to change the agent for the same, it is required that the corporation notify the current registered process operator or notify the secretary of state. Some agencies will handle this change as one of their services.

[1.1] WHAT DO THEY DO? 

The registered agent, or agent of SOP, provides a legal address—within the jurisdiction where the company is established—where legal documents can be served during standard business hours. The registered agent’s duty is to receive and forward that SOP to the entity’s designated contact within the service bracket.

Organizations are not persons but usually fall under the umbrella of corporate entities such as businesses or limited liability partnerships (LLCs). This is because there are substantive provisions for liabilities and tax benefits of being ‘incorporated’ rather than being ‘self-employed.’ Unless the registered agent fulfills their role, dire implications for the business enterprise may be faced.

The employee in a commercial organization who retains communication with a registered agent is usually a corporate secretary or a governance-compliance officer.

[1.2] WHO IS QUALIFIED TO BE A REGISTERED AGENT?

Different states have different criteria for agents. Usually, an agent might be a natural person residing in the State involved or, in a State which enables an individual to operate as a registered agent, an organization with a business office within the State and licensed to do business in the State. However, certain States would mandate a business entity to render itself legally eligible to operate as its own registered agent if at least one of its officers is a resident of the State. Since most states allow one business entity to serve as a registered agent for others, businesses are enabled to charge a fee to act as the registered agent for other entities in a given state.

[2.0] HOW IS A REGISTERED AGENT APPOINTED?

The registered agent’s name and address will be indicated in reports, the articles of incorporation, the LLP registry statement, or the limited partnership certificate. The application for authority to be doing business in other States further would require the same. In certain instances, permission is often required from the Representative for the appointment. When a shift in the Registered Agent or their address (registered office) occurs, the state must be informed about the change.

The agent’s primary aim would be to have a legal address that is not a P.O. Box within the state jurisdiction where there are individuals accessible during regular business hours to enable legal process operations to be conducted in case of a lawsuit. Typically, the registered agent is the person to whom the state government automatically sends all the official documentation needed each year for legal action or taxation. It is the registered agent’s responsibility to forward certain suit records and notes to the company itself. Registered agents may often advise business associations on whether their state government filing status is ‘good standing.’  The justification for these notices being a feature of a registered agent is that a corporate organization can’t maintain track of regulatory amendments and disclose due dates for various jurisdictions it may conduct business in, considering the disparate legislation of different states.

Failure to retain a licensed agent may result in revoking a corporation or LLC’s legal status, the imposing of penalty fees on an individual, or both.

[2.1] WHAT IF A COMPANY DOES NOT HAVE A REGISTERED AGENT?

The States implement sanctions in case of failure to comply. Some will dissolve or rescind the authority to conduct business for entities that have not retained a registered agent or promptly notify the State of a shift in its agent or address.

The implications would be almost as significant if a registered agent fails in their job performance and does not fulfill the position’s requirements.   This can also have repercussions of costing the business considerable resources lost through default rulings or charges and legal expenses for the defense against defaults.

Business owners preparing to start up a company, LLC, LLP, or LP, should realize that they need a registered agent and pay heed to choose the registered agent before formation. Partnerships, limited partnerships, limited liability companies, corporations, and cooperatives all have registered agents in their statutes in every state.

A registered agent service can cost anywhere from USD 50 to USD 300, highly variant on the state itself. Additionally, a change in one’s registered agent can amount to costs that vary from no charge to USD 50 per state depending on the number of states the entity is registered to do business with the LLC. Since most states have laid down specific procedures to follow, charges may be observed upon following state legislation.

Most states require LLC owners to provide their LLC’s registered agent’s name and address upon formation. In some states, the question arises as to whether a commercial or noncommercial registered agent is elected. Some states refer to the professional registered agent as commercial agents and individual agents as non-commercial.

[3.0] WHAT IS THE MORAA

The Model Registered Agents Act (MORAA) aims, in its entirety, at standardizing the regulations of corporate organizations about annual returns, registered agents, and other rules and ways used to file companies under the aegis of the American Bar Association Business Law and International Association of Commercial Administrators (IACA) – Business Organization Section (BOS).

At its 2006 annual conference, the National Conference of Commissions on Uniform State Laws  NCCUSL implemented MoRAA. It was revised in 2011. Following the model act’s introduction, eleven US territories (Arkansas, the District of Columbia, Idaho, Maine, Mississippi, Montana, Nevada, North Dakota, South Dakota, Utah, Wyoming) have implemented the act. Delaware demurred from implementing the act but adopted the clause ‘commercial registered agent’ as a provision. 

The Model Registered Agents Act intends to provide a consistent and simple mechanism for the filing and maintenance of a corporation in all jurisdictions by introducing a standard collection of rules. Since each state has its own set of laws about agent regulation, there is significant variation in how this function is described in different states. 

A key component of the Model Act of Registered Agents is the classification of agents developed; the Act distinguishes commercial and non-commercial agents. A commercial agent who has lodged an official registered agent listing statement with the jurisdiction it performs in, having paid the charge involved with filing, and typically represents several companies under the same jurisdiction.

The company will profit from employing a registered agent regardless of whether they are commercial or non-commercial since they all have the same function. The main distinction between a commercial and a non-commercial agent is that the commercial agent has been licensed with the state. Its name is recorded on the Secretary of State’s directory of registered agents.

Non-commercial licensed agents are still permitted to manage several clients when working under the jurisdiction they are subject to.

[3.1] ANALYSING THE MORAA

The primary strength of the MoRAA Act is how it streamlines the rules that must be enforced on registered agents. To properly administer the business dealings for companies in various jurisdictions, getting a registered agent may be advantageous. Businesses in various states historically required to be fully informed of the disparity in registered agent businesses in separate jurisdictions, which resulted in inconsistency.

The larger concern is that these regulations impact the sort of facilities that the registered agent themselves offer. Many registered agent services function in all fifty states and may create cumbersome complications for companies seeking to do business across the same. Since the Model Registered Agents Act simplifies the legislation that these agencies ought to obey, it has reduced the states’ inconveniences that have implemented it. 

The issue of whether a licensed company is ‘commercial’ or ‘non-commercial’ may, however, be confounding for company owners who are uncertain about which to steer their businesses.  Even though both commercial and non-commercial agents provide essential services to their clients, isolating them into these two categories could be difficult to comprehend

One of the few disadvantages of the Model Act is that it only exists in a few jurisdictions. If more were in effect in all states, it would enhance registered agents’ status and the state-wide recognition of the role. However, until implemented, determining the laws governing the agents themselves will depend on the state jurisdiction and its employees.

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Source

1. Further recognized as a citizen agent, resident agent, or an agent for process

2. Information about persons or entities available to act as registered agents in a given state is maintained by the state’s Secretary of State office. Most states also offer free online database searches to identify a business entity’s registered agent. Some state business entity laws name the Secretary of State’s office or business entity filing office as the registered agent of last resort if the named registered agent can’t be found.

3. Eg:  being absent from the registered office if the process server is present, destroying or losing documents, or cannot guarantee that the company’s counsel gets notification of the lawsuit

4. Model Registered Agents Act (2006) (Last Amended, 2011)’. Uniform Law Commission.

5. International Association of Commercial Administrators. “Model Registered Agents Act – Technical Challenges of Implementation” (pdf). International Association of Commercial Administrators. pp. 4–5.

6. In 2006, the ULC authorized a project to integrate all these eight acts into the Uniform Business Organization Code, using the same type of hub-and-spoke structure used in the Uniform Commercial Code

7. MODEL REGISTERED AGENTS ACT (2006) (LAST AMENDED 2011)

Any business entity other than an individual proprietorship in every state may register an agent for three purposes: to receive service of process; establish a venue for any legal action; and for publication of notices required by the entity’s organic law.’ 

8. Secretary of State Information and Resource Directory!, https://www.e-secretaryofstate.com/ (last visited Jan 15, 2021) 

9. Currently, the Model Registered Agents Act is in effect in ten states and the District of Columbia. Here are the states where MoRAA rules and regulations are actively in place:

  1. Arkansas
  2. Idaho
  3. Maine
  4. Mississippi
  5. Montana
  6. Nevada
  7. North Dakota
  8. South Dakota
  9. Utah
  10. Wyoming
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