Alerts

Top Five Reasons to Use a Professional Registered Agent Provider

Why should you hire a professional registered agent provider? Our registered agent manager gives his top five reasons:

1. Mitigate Risk
Many business owners choose not to appoint themselves or a company representative as the registered agent due to the potential risk of legal service being mishandled. Using an experienced registered agent provider like Capitol Services can help ensure that legal service is promptly delivered to your company’s legal representatives. Additionally, many registered agent providers offer companies online access to the documents received on their behalf, making it easy for a company’s legal representatives to view past legal service.

2. Available During Business Hours
A registered agent must be available for the receipt of legal service during regular business hours. Should you appoint yourself or a company representative as the registered agent, you will need to ensure that this requirement is met. By hiring a professional registered agent provider, you will avoid this headache. The provider will be open during regular business hours to receive legal service on behalf of your company.

3. Physical Address in Every State
State laws require a company to appoint and maintain a registered agent with a physical address in each state in which it is registered to conduct business. However, many companies do not have a physical address in each state in which they conduct business to use as the registered agent address. For this reason, it is often necessary to hire a professional registered agent provider with offices in each state to act as the registered agent.

4. Keep the State Up-To-Date
It is imperative for your company’s registered agent information on file with the Secretary of State (or other state office) to always be up-to-date. If you or a company representative are appointed as the registered agent and your address changes or the representative leaves the company, you will need to make the necessary filing with the appropriate state office to update your company’s registered agent information as soon as possible. If you fail to remember to do this, you run the risk of having time-sensitive legal documents delivered to the wrong person or address. By hiring a professional registered agent provider like Capitol Services, you can avoid this headache. Should the registered agent provider’s address change in a state, it will make the necessary filing with the state to update your company’s registered agent information for you.

5. Avoid Embarrassment
Lawsuits and other legal notices are generally served on a company at its registered agent’s address. The registered agent receives the legal service (which is often delivered by a process server) on behalf of the company. It can be embarrassing for a process server (often a law enforcement officer) to show up at your residence or place of business to deliver a lawsuit. In order to avoid this embarrassment, many business owners prefer to hire a professional registered agent provider like Capitol Services rather than appointing themselves or a company representative as the registered agent.

Debtor Name Crucial for Linking Liens

There are a few central indexes that operate more like county recorder indexes—which can pose a problem for UCC Filers. Even though the Debtor name is not required on UCC-3 filings, indexes like the D.C. central index, Louisiana central index and Georgia’s Clerk’s Cooperative Authority cannot link UCC-3s to their “parent” financing statements without the inclusion of the Debtor’s name. Though not required, failure to include a reference to the Debtor’s name can result in a hidden UCC-3, unable to be found by searching parties.

Database Searches Provide
Robust Due Diligence

In those jurisdictions where state search logic is strict, a certified or limited search is ideal for confirming that your UCC filing is in compliance with Article 9, but falls short of discovering hidden liens during the due diligence process. Capitol Service has a fix for that! We have identified several jurisdictions with restricted logic and are now offering an additional Database Search product that provides a better shot at finding mis-indexed or hidden liens.

Though Double Bubble was in the wrong when filing their financing statement, if the Secretary of State had mis-indexed the filing, the burden of discovering the hidden lien would have fallen squarely on the searcher’s shoulders. Additionally, ancillary liens like Federal and State tax liens might be found within the UCC index, but follow very different rules when it comes to the Debtor name.

Tell your CSR you’d like a Database Search with your next UCC search and we’ll help give you the most robust due-diligence product possible.

Broad Search Logic Avoids Surprises

A recent UCC case has become a sobering reminder that though it’s imperative to get the Debtor’s name right when filing a financing statement, errors are inevitable. As a searcher, enhancing your due diligence and accessing resources to provide expanded search results can prepare you for what could otherwise be a big surprise at a bankruptcy hearing.

In 2012, Secured Party “Double Bubble” took a security interest in assets owned by Debtor “ISC, Inc.” In filing its financing statement, however, Double Bubble erred and put a space between the “c” and the period in “Inc .” Though more strict than most state published search logic, Wisconsin’s Department of Financial Institutions did not disclose Double Bubble’s lien when a search was run using the correct name: ISC, Inc. The space between the “c” and the period resulted in a hidden lien. Double Bubble argued that a diligent searcher would have accessed the broader search option available on the state’s website. Since Revised Article 9 was enacted, however, the diligent searcher standard has been replaced with something much stricter in most jurisdictions: the filer must get the name right, exactly right, every time to avoid a strict search logic that would otherwise render the UCC hidden and ineffective.

Though “good” case law prevailed here and upheld the statute, an uninformed prior secured creditor would have been blindsided at this hearing had they not had prior knowledge of the lien. Casting a wide net and using broad search logic within the due-diligence process has its merit.

Legislation Affects Entity Formation and Operation

Understanding each jurisdiction’s legislation as it relates to entity names is paramount for effective formation and operation of any business entity.

Florida passed amendments to its Fictitious Name Act, effective July 1, 2017. The act requires anyone doing business in Florida under a name other than the person’s legal name to register the fictitious name with the Division of Corporations of the Department of State. The amendments clarify the fictitious name registration process, by illuminating the documentation and information needed when registering a fictitious name, the time period for which a registration is valid, and the process for cancellation of the registration. Further, the legislation adds an exemption from registration for limited liability companies that already conduct business in a name that is licensed or registered and negates the need for a sworn statement when registering a fictitious name. Notably, limited partnerships, limited liability partnerships, limited liability limited partnerships, and limited liability companies should be careful when using certain words, abbreviations, and designations, as they may be prohibited unless the entity actually qualifies as that particular type of entity. Failure to comply with provisions under the Fictitious Name Act now constitutes a noncriminal violation, as opposed to the former classification of a misdemeanor. Finally, renewal of registration may be barred under certain conditions under the amendments.

Texas also passed legislation related to names of domestic and foreign entities, effective June 1, 2018. This legislation allows an entity or person to file a certified copy of a final judgment to establish the right to use the name in Texas. Names will need to be “distinguishable from” other names, instead of avoiding being “deceptively similar to” other names under the current version of the legislation. The “distinguishable from” standard will be expanded in its application to fictitious names under which foreign entities are registered. Formerly, names were only checked against names of existing filing entities, registered foreign filing entities, reserved names, and other registered names.

Online Notarizations Available in Five States

e-Notarization in Five States: What’s Next…Snapchat?

Texas recently passed HB 1217, joining Virginia, Montana, Ohio, and Nevada in allowing online electronic notarizations. The bill, to be effective January 1, 2018, allows for the commissioning of online notary publics and directs the secretary of state to develop rules to maintain electronic notarization standards. Online electronic notarizations will require the notary to verify the identity of a person creating an electronic signature at the time that the signature is taken by using two-way video and audio conference technology.

Identity may be verified by: (1) personal knowledge, or (2) remote presentation of a government-issued identification credential, credential analysis, and identity proofing. The bill limits online notarizations to documents, transactions, or signers that are tied to Texas. Examples include, but are not limited to, documents involving Texas real estate, documents that will be filed with a Texas court, and signers who are in the state at the time of the notarization. The online notary public must keep an electronic record of all electronic documents notarized for at least five years.