Posted by Jill Corbett on Tue, Jun 18, 2013
by Don Beaulac, National Corporate Research, Ltd.
When drawing up any document for filing in New York it is important that all the elements required by the relevant section of that particular law be present, as any omission would probably result in rejection. Of equal importance is having the completed document executed by the proper individual whose title is acceptable to, or specified in, the statute.
Corporations
- Certificates of Incorporation must be signed by at least one incorporator, with the name of the incorporator typed or printed beneath the signature. The name and address of the incorporator must always be stated, either beneath the signature, or in an article specifically written for this purpose in the body of the document.
- All other corporate certificates must be signed by an officer, director, authorized person or attorney-in-fact, unless otherwise specified in the section providing for such certificate.
Limited Liability Companies
- Articles of Organization must be signed by an organizer.
- All other LLC certificates must be signed by a member, manager, authorized person or attorney-in-fact.
Limited Partnerships
- Certificates of Limited Partnership must be signed by all of the general partners.
- Certificates of Amendment must be signed by at least one general partner and by each other general partner designated in the Certificate of Amendment as a new general partner.
- In a situation where a sole general partner withdraws and a new general partner is admitted, if the date of withdrawal is in the future, both must sign. If the date of withdrawal is in the past, only the new general partner must sign.
- All other LP certificates must be signed by at least one general partner.
- Any certificate may be signed by an attorney-in-fact.
Certificates of Assumed Name
- For a corporation—must be signed by an officer, authorized person or attorney-in-fact.
- For a limited liability company—must be signed by a member, manager, authorized person or attorney-in-fact.
- For a limited partnership—must be signed by a general partner, authorized person or attorney-in-fact.
In addition, the following general rules may be helpful:
- The name and title of the signer must be printed or typed beneath or opposite any signature.
- Conformed signatures (typed signatures) are acceptable for any filing.
- Execution by an attorney-in-fact will require that the following be noted beneath the signature: the name of the person for whom the attorney-in-fact is acting and the relationship of that person to the entity being filed.
- In those cases where the execution of a document can go through several levels, the signature block can often look like the following:
ABC Limited Partnership
By: XYZ, LLC, General Partner
By: /S/ Tom Jones
--------------------
Tom Jones, Authorized Person
Whether a document to be filed with the New York Department of State is simple and basic or complex in nature, proper execution is essential and the above tips may help prevent delays and rejection.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Teri Mayor on Mon, Jun 10, 2013
by Teri Mayor, National Corporate Research, Ltd.
A U.S. company desiring to do business in Puerto Rico may choose to form a subsidiary entity as a domestic Puerto Rico company or register the U.S. company to do business in Puerto Rico. To determine the best option, the company should consult an attorney familiar with tax laws and the company’s business, structure and activities.
The purpose of this article is to provide information on the filing procedures for corporations and LLCs in Puerto Rico, whether a company is forming a new Puerto Rican entity or authorizing the U.S. company to do business there. The Puerto Rico General Corporations Act of 2009 indicates that it takes the General Corporation Law of Delaware as a model, so the laws in Puerto Rico will likely be familiar to those who form business entities in the United States. Still, there are differences in the filing requirements and procedures that can be significant.
Checking for Name Availability
As in Delaware, a corporation or LLC in Puerto Rico must have a name which can be distinguished from the names of other registered entities. The name will need to reflect certain corporate indicators:
- For a Corporation: Corporation, Corp., Incorporated, Inc., CRL, SRL (Note that abbreviations of like import used in other countries may also be used, but the company must then add “Corporation” or “Corp.” to the end of its name, with no change of the corporate name implied)
- For an LLC: Limited Liability Company, Compania de Responsabilidad Limitada, L.L.C., LLC, C.R.L., or CRL
Puerto Rico has a website that allows for a search of the entity name which can help determine if the name to be used is available. However, it is important to realize that the website does not reflect all filings at the time it is searched. Filings which have been submitted over the counter face a significant backlog in processing and it can often take several weeks or more for a filing such as a name amendment to be processed and appear on the online records.
Expansion of Online Filing Services
In recent months, Puerto Rico has made many more types of filings available online, including formation, qualification to do business, amendments and annual reports. Electronic filings provide more immediate evidence, (usually available upon filing) and the information for the company is usually updated on the website within a few days. Yet, because not all filings can be done online, and because there is still a significant backlog of over the counter filings that were submitted before online filing was possible, the website will not necessarily reflect the current name of all companies. Keep in mind a possible conflict could be missed on a search of the website.
Completing the Forms
Incorporation: As in Delaware, the company must file a Certificate of Incorporation which requires such basic information as the name of the corporation, the registered agent and office in Puerto Rico, the number and value of the authorized shares, the purposes (a general purpose clause may be used) and the name and address of the incorporator.
In addition, there are requirements not found in a standard Delaware Certificate of Incorporation form. If the faculties of the incorporators will end upon the filing of the Certificate of Incorporation, the names of the directors who will act until the first meeting of members must also be provided. Also, the corporation must choose whether its term of existence will be perpetual, indefinite or if it will end on a specific date. In addition to these required matters, a corporation may wish to include other provisions regarding directors’ and shareholders’ liability, rights, etc.
LLC Formation: In addition to the company name and the name and address of the registered agent (which is the required information for a Delaware limited liability company), companies wishing to form an LLC in Puerto Rico must also include a statement of purposes, the name and address of each person authorized to file the certificate of formation, the name and address of the people who will act as administrators until the first meeting of members and the term of existence. Other optional clauses may also be included.
Certificate of Authorization to Do Business of a Foreign Corporation or of a Limited Liability Company: In addition to the basic information that is usually requested on these types of applications, Puerto Rico is somewhat unusual in that it also requires the company to list its current assets and liabilities in the certificate.
Filing the Forms:
As mentioned above, it is now possible to file these certificates online in Puerto Rico. The person filing must be one of the following:
- Employee or owner of the company
- Certified Public Accountant
- Attorney
- Paralegal
In certain cases, however, the filing must be submitted over the counter. Puerto Rico’s online system automatically inserts a comma directly before the corporate indicator in the company name (i.e. ABC Company, Inc.). If the name of the company does not include this comma, the online filing system cannot be used. Similarly, the online filing system only allows the name to be displayed on the certificate in all capital letters. If the company does not wish this formatting for the name on its certificate, it must submit the filing over the counter. If the filing is not submitted online, an original signature is required.
Puerto Rico’s basic process for forming or registering entities is very similar to other U.S. states, and as the new online filing system develops and becomes more widely used, the process should become simpler, quicker and more straightforward.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Jill Corbett on Tue, Jun 04, 2013
by Andy Chen, NCR National Corporate Research (Hong Kong) Limited
The Heritage Foundation and Wall Street Journal’s 2012 Index of Economic Freedom[1] (the “Index”) ranked Hong Kong as the freest economy in the world ahead of other leading global financial centers such as Singapore, Switzerland, Ireland and the United States for the 19th consecutive year. The Index’s number one rating of Hong Kong emphasized the jurisdiction’s “simple and efficient” tax system for both salary and corporate taxes, which makes it easier to carry on international business activities from within the territory.
Highlights of Hong Kong’s Territorial Tax System
Hong Kong has a territorial tax system where a company’s profits are only subject to tax in Hong Kong if it has, or is deemed to have, a source from within the territory. The top profits tax rate (for a HK private limited company with profits derived from a local source) is 16.5%.[2] Additional advantages of Hong Kong’s simplified tax system include:
There are no taxes on dividends, interest or capital gains.- Any distribution made by a HK private limited company to parties outside of Hong Kong is free of withholding tax.
- Hong Kong’s estate duty was abolished in 2006.
There are many applications of the territorial tax concept in the operation of international business transactions. For instance, a Hong Kong trading company which purchases finished goods (e.g. OEM garments or electronics, raw materials, etc.) from mainland China and sells wholesale to buyers in Brazil will be exempt from Hong Kong’s profits tax if the trading company can demonstrate to the Hong Kong Inland Revenue Department (“IRD”) that the source of trading profits was acquired via offshore sources (i.e. in Brazil). In practice, the IRD will look at the totality of facts including the flow of paper, flow of goods/services and flow of money before determining whether the profits of a trading company were derived from a place outside of Hong Kong.
Factors That Can Result in Taxation of Profits of an HK Trading Company
Generally speaking, some of the factors resulting in the profits of a Hong Kong trading company being considered taxable in Hong Kong include, but are not limited to:
- The contracts of purchase and sale are effected in Hong Kong
- The sale is made to a Hong Kong customer
- The effecting of the purchase and sale contracts does not require traveling outside of Hong Kong but is carried out in Hong Kong by use of telephone, fax, e-mail or other electronic means including the internet
Why Hong Kong is Often the Jurisdiction of Choice for International Business
An advance ruling for profits tax purposes on the source of profit can be obtained from the IRD should a trading company wish to seek clarity in its business operations. The certainty that such a ruling can provide to enterprises involved in international business transactions, combined with the advantages of the territorial tax system, make Hong Kong an especially attractive jurisdiction in which to do business.
Author Andy Chen is the General Manager of NCR National Corporate Research (Hong Kong) Limited (“NCR Hong Kong”), a wholly-owned subsidiary of NCR located in Hong Kong. NCR Hong Kong provides a full range of company formation, secretarial and related services, as well as corporate service support for the full implementation and ongoing administration of international tax structures related to Hong Kong private limited companies. For more information about NCR’s Hong Kong services, click here.
This article is provided for general informational purposes only and should not be considered or relied on for tax or legal advice. Please seek competent tax and legal advice for your specific transaction requirements.
Posted by Jill Corbett on Wed, May 29, 2013
by Don Beaulac, National Corporate Research, Ltd.
If a corporation, limited liability company or limited partnership already on file with the New York Department of State wishes to conduct activities under a name other than its true legal name, a certificate of assumed name, otherwise known as a “d/b/a,” which complies with Section 130 of the General Business Law, must be filed. All other entities, such as general partnerships, sole proprietorships and limited liability partnerships, file assumed name certificates directly with the county clerk in each county in which the entity will conduct or transact business.
Tips for Preparing Assumed Name Filings in New York
When preparing an assumed name filing, keep the following helpful hints in mind:
- The name of the entity filing
the assumed name must exactly match the name on file with the Department of State and the law of this state under which the entity was formed or authorized must be stated. If applicable, include the fictitious name the entity has agreed to use in New York.
- Assumed names are not protected in New York and the same assumed name can be filed multiple times by different entities.
- The address of the entity’s principal place of business and the address of each location where business will be carried on or transacted under the assumed name must be set forth only in terms of a number and street, and city, state and zip code, with no “attention of” or “c/o” or reference to any person or entity.
- The county or counties in which the entity intends to do business under the assumed name must be stated.
- The fee for filing a certificate of assumed name is $25, however, the Department of State collects the following additional county clerk fees for each county in which a corporation intends to transact business:
- For each county within New York City (New York, Bronx, Queens, Kings and Richmond counties) ……$100
- For each county outside of New York City …... $25
- The certificate of assumed name must be signed by an officer of a corporation, a general partner of a limited partnership, a member or manager of a limited liability company and, in all cases, may also be signed by an authorized person or attorney-in-fact.
Keeping these important points in mind when preparing an assumed name filing in New York can minimize the possibility of rejection and help ensure a timely filing.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Jill Corbett on Tue, May 21, 2013
by Despina Shields, National Corporate Research, Ltd.
When the amendments to Article 9 of the Uniform Commercial Code become effective in most states on July 1, 2013, the majority of states will require the new national UCC forms. Many states will provide a short grace period where they will continue to accept the old forms, but some may not.
In many respects, the new forms do not appear to be substantially different from the ones they are replacing. There are, however, important changes that everyone in the UCC filing and search community should become familiar with in order to avoid confusion, filing delays and unintended actions that could affect the effectiveness of UCC financing statements.
New National UCC1 Financing Statement Form
Removal of Fields for Entity Debtor Organizational Info
The first thing to notice is the complete removal of fields 1e, 1f, and 1g in the debtor name section. These fields pertained to information about entity debtors, such as the type of organization, jurisdiction of organization and organizational identification number. In many jurisdictions, these were required fields in order for the filing office to accept and file the UCC. After July 1, 2013, filers will no longer need to provide this information in the jurisdictions where the amendments become effective. This should make the preparation process easier – especially for foreign (non-U.S.) debtors.
New Labels for Individual Debtor Names
Another adjustment to the debtor name section of the new UCC forms is the labeling of the fields for an individual debtor. These fields are now labeled “Individual’s Surname,” “First Personal Name” and “Additional Name(s)/Initial(s)”. In most states, it will be necessary to consult an individuals unexpired state issued driver’s license or unexpired state issued ID card for this information. On occasion, it may not be clear on the ID card which is the surname and which name is the first personal name since Department of Motor Vehicle records have different format/layout protocols when presenting an individual’s name on either the state issued ID card or driver’s license. When unsure about the correct surname and first personal name, the filer always has the option of adding several different versions of the debtor’s name in the additional debtor name fields that are provided.
Handling Individual Debtor Names That Are Too Long (New Feature)
The new UCC1 form allows the filer to place a long individual debtor surname on the Addendum form if it will not fit in the “Individual’s Surname” field. When utilizing this option, the filer must check the box in the debtor name section indicating that the name is being placed in box 10 on the addendum form and the debtor name field must be left blank on the UCC1 form.
Field Relocations between Addendum and UCC1 Forms along with Language Changes
A design change to reduce the number of pages submitted has shifted the Public-Finance Transaction, Manufactured-Home Transaction and Transmitting Utility designations from the Addendum form to field 6a on the UCC1 form. In addition to this shift, the checkbox indicating “This FINANCING STATEMENT is to be filed (for record) (or recorded) in the REAL ESTATE RECORDS (if applicable)” is relocated from the UCC1 form to the new addendum form.
The trust and decedent’s designations have been moved from the Addendum to the UCC1 form and are now in section five. In addition, the language was changed from “Debtor is a __ Trust or ___Trustee acting with respect to property held in trust” to “Collateral is held in a Trust”. The emphasis has shifted from the debtor being a trust to the collateral being held in a trust.
New UCC3 Amendment Form
The UCC3 Amendment form has fewer changes than the UCC1. For those that file many UCC3 amendments, you may notice the assignment checkbox has been moved and placed between the Termination and Continuation check boxes. (This change was made to help filers from accidentally checking “termination” when meaning to check “continuation”.)
New UCC3 Amendment Addendum Form
A significant change has been made to the amendment addendum form with the addition of a new field. The new field, field thirteen, was created so that when amendments are “…to be filed in the real estate records or in any other filing office where the name of a current debtor is required for indexing purposes…” the UCC3 can be aligned with the correct UCC1 already on record. This field is for cross-referencing purposes only. It is NOT to be used to add, delete or change a debtor name.
New UCC5 Information Statement Form
This form initially was labeled a Correction Statement then, subsequently, a Statement of Claim form. This form has been renamed again to accurately reflect its purpose, which is to “inform” third parties searching the UCC public records. Besides the new name, either the Debtor or Secured Party may now file the UCC5 Information Statement. When either party would like to place additional information on the public record to inform third parties that a “RECORD IS INACCURATE”, RECORD WAS WRONGFULLY FILED” or “RECORD FILED BY PERSON NOT ENTITLES TO DO SO”, a party on the record may file a UCC5 Information Statement. While either a debtor and/or secured party may make a UCC5 filing, neither party is required to do so. In addition, the filing of this form continues to have no legal effect on the financing statement. The UCC Information Statement is for information purposes only.
Familiarize Yourself with the New Forms in Advance
All the new UCC forms will appear familiar to filers and searchers because many of the same fields and requirements still exist. Note that while some changes may appear minor, it is important to spend some time becoming familiar with what has changed and where fields now appear. Finally, many states will offer a grace period by accepting both old and new forms for a limited time before limiting acceptance to only the new forms. Some states have adopted the new law but will only accept the old forms. Other states have not yet enacted the legislation and if they do not enact in time for the July 1, 2013 effective date, only the old/existing forms will be accepted in these jurisdictions.
To remain current on the latest news about the Article 9 Amendments, visit the UCC Article 9 Amendments page of the National Corporate Research website. The resources offered on this page include a detailed chart showing the status of the amendments in each state, along with significant non-uniformities in either the enacted or pending legislation.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Jill Corbett on Tue, May 14, 2013
by Don Beaulac, National Corporate Research, Ltd.
Any non-U.S. entity seeking to file an Application for Authority to do business in New York must include with the application a recent certificate from an authorized official in the jurisdiction of its incorporation/formation stating that the entity is in existence.
The evidence of existence from jurisdictions outside the United States is usually in the form of a one page certificate and the look of these “Good Standing Certificates” will vary from country to country. (See NCR’s previous blog posting, “International Public Records and Due Diligence: Part Two, Good Standing Certificates”) Some have an attached English translation. Others are vertically split, with the foreign language on one side and the English on the other, or horizontally split to the same effect. Some have the English translation directly below the foreign language line by line throughout the text. A few jurisdictions issue status certificates/good standings that are encoded with the words “copy” appearing multiple times on the face of the document when it is copied, scanned or faxed.
Those jurisdictions that do not issue this type of documentation will, instead, provide a certified copy of all documents on file or an extract from the company registration. The New York Department of State requires that certified copies used for this purpose must be accompanied by a translation under oath.
Tips to Avoid Delays and Rejection
To help avoid delays in qualifying non-U.S. entities in New York, keep the following in mind:
- The name of the entity and the date of incorporation/formation as stated in the qualification must be exactly the same as those found in the English translation of the documentation from the foreign jurisdiction.
- Qualifying entities whose names have a non-U.S. ending such as B.V., S.A. and S.p.a., will have to insert language agreeing to use an ending indicative of form (Inc., LLC, L.P.) for use in New York.
- The New York Department of State will accept “encoded” good standing certificates previously described as long as the name of the entity and date of incorporation/formation are not obscured by such markings.
- The address for service of process as set forth in the qualification must be within the United States or its possessions/territories.
Taking these factors into account before presenting non-U.S. qualifications for filing in New York will help to minimize the chances that your document will be rejected.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Teri Mayor on Tue, May 07, 2013
PART THREE: UCC Search
by Teri Mayor, National Corporate Research, Ltd.
The examination of a potential target in a merger or acquisition or a borrower in a financial transaction requires looking at many documents, both private and public, to obtain an accurate picture of a company’s value. Three documents that are part of the public record in the United States and that can be considered to be the foundation documents of a legal opinion regarding the formation, registration and existence of an entity along with the encumbrances attached to the company’s personal property are:
- the certified copy of the company’s charter documents, with amendments, if any
- the Certificate of Good Standing; and
- the UCC search
You cannot always get an exact equivalent of these documents for companies formed outside the United States. In some cases, there is no public record equivalent; in others, there are similar documents but the costs and time frame may create issues. In some countries, you can obtain much more information than would be available in the U.S.
Part One of this article discussed the certified copy of a company’s charter documents. Part Two discussed the Certificate of Good Standing. This part discusses the UCC search and what kind of equivalents can be obtained outside the U.S.
Uniform Commercial Code: Only in U.S. and U.S. Territories
The Uniform Commercial Code only applies to the U.S. and its territories (Puerto Rico, Guam, Northern Marianas, etc.) Other countries do not have a Uniform Commercial Code and the term “UCC search” has no meaning. In many countries, there is a system of public notification of secured transactions affecting personal property, but what gets registered can depend on the types of lien or the collateral covered. It’s important to be aware of the differences and how they can affect the information you will receive. It’s also important to note that there are countries where this information is not public record at all.
Canada’s Personal Property Security Act (PPSA)
Some countries have a system of registration for secured transactions that is quite similar to the U.S. system. Canada registers secured transactions under the Personal Property Security Act (PPSA), which shares many similarities with the Uniform Commercial Code. The PPSA covers a broad range of personal property and, like the U.S., includes all types of liens against tangible and intangible personal property and fixtures. In fact, it’s even a little broader since motor vehicle liens are also filed under the PPSA. The type of transaction does not affect whether a PPSA is filed. Each province in Canada has its own version of the PPSA except Quebec, which has its own system for recording liens on personal property. Other jurisdictions that have recently adopted a PPSA statue are Australia and New Zealand, which based their laws on the Canadian system.
Registration of Charges in Common Law Countries
Most other common law countries are based on the United Kingdom’s system. The United Kingdom (U.K.), Hong Kong and Singapore, as well as British “offshore” jurisdictions like the Cayman Islands and British Virgin Islands all feature the “registration of charges.” We’ll look at U.K. as an example of this type of system, but note that there can be wide variations among various systems for recording charges.
Under the charge system, the registration of charges occurs for company debtors only. A charge is defined as the security a company gives for a loan. Previously, an extensive listing of property types were listed in the statute as requiring registration, but a recent change to the law, which went into effect on April 6, 2013, now indicates that charges on all property are registered with a few exceptions (rent security deposits, Lloyd’s trust deeds and charges excluded by other legislation). Charges can be searched at the U.K. Companies House and are found with the corporate registration documents. An abstract detailing the particulars of the charge can be obtained online.
Pledge Systems in Civil Law Countries
Many civil law countries also have a system whereby most liens are publicly registered. In many cases, these countries have a “pledge” system rather than “charges” like common law countries. In pledge systems, the possession of the collateral often determines whether a secured transaction is registered or not. Mexico has a pledge system where any movable transferable asset can be pledged and the two most common forms of secured transactions are registered. They are the “Non-Possessory Pledge,” where the borrower maintains possession and operation of the pledged asset, and the “Guarantee Trust,” where the borrower (settlor) transfers title to a trustee in order to secure payment and priority of an obligation. In case of default, the lender (beneficiary) can request the trustee to execute the trust’s assets to pay the outstanding debt. In Mexico, there are other types of transactions that are not registered; possessory pledges where the secured party maintains possession of the asset and the aval, where a third party guarantees repayment in case of default. Mexico, like many South American countries, registers these transactions locally and searches can be very expensive and time consuming to do.
Systems Based on Collateral Type
In many countries, the collateral determines whether a lien is registered. For example, in Spain, security interests in specific goods are commonly registered in the Register of Mortgages and Pledges. Interest in receivables may be registered but it is not a common practice and security interests in cash are not registered at all. So, a search will provide some information, but will not provide a complete picture of indebtedness.
In other countries, such as Germany and Japan, very few or no liens are registered and it is impossible to do anything equivalent to a U.S. UCC search.
Do Your Homework to Ensure You Know What You’re Getting!
So, as you can see, depending on the jurisdiction, what types of liens are a part of the public record can vary depending on the type of collateral, the type of transaction or the type of debtor. Determining what is actually filed and whether another route will be required to verify the absence of other liens on the collateral is a necessary first step before relying on what is returned on a search of the public records in another country.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Teri Mayor on Mon, Apr 29, 2013
PART TWO: Certificate of Good Standing
by Teri Mayor, National Corporate Research, Ltd.
The examination of a potential target in a merger or acquisition or a borrower in a financial transaction requires looking many documents, both private and public, to obtain an accurate picture of a company’s value. Three documents that are part of the public record in the United States and that can be considered to be the foundation documents of a legal opinion regarding the formation, registration and existence of an entity along with the encumbrances attached to the company’s personal property are:
the certified copy of the company’s charter documents, with amendments, if any- the Certificate of Good Standing; and
- the UCC search
You cannot always get an exact equivalent of these documents for companies formed outside the United States. In some cases, there is no public record equivalent; in others, there are similar documents but the costs and time frame may create issues. In some countries, you can obtain much more information than would be available in the U.S.
Part One of this article discussed the certified copy of a company’s charter documents. The focus of this article is on the Certificate of Good Standing.
Good Standing Certificate Not Always Available
The Good Standing Certificate in the U.S. is a key part of a basic “due formation, valid existence and good standing” opinion and a standard piece to any type of more specialized opinion. People are sometimes surprised to learn that this key piece of documentation can be difficult to get outside the U.S., as it does not exist in a great many countries. There are certificates that have similar import and are usually obtained when a “Certificate of Good Standing” is requested, but it is a misnomer to say they are “Certificates of Good Standing.” In some countries, there is no equivalent at all. In other countries, you can obtain a certificate that relates the pertinent facts, but may not seem official to American eyes, or it does not indicate that the company is currently in existence. Finally, the certificate may be issued or certified by a private professional rather than a government official.
The “Extract”
Common law countries are a little more likely to offer Certificates of Good Standing, but not all do. In some common-law countries and most civil law jurisdictions, you are more likely to find the “extract.” This does not really resemble the U.S. Certificate of Good Standing, but does perform a similar function in that it is issued by the corporate registrar and does show that the company has duly registered. However, it generally looks more like a printout and often does not make any specific statements regarding the status of the entity. It does often provide the list of documents filed by the company, though, from which it is possible to determine if the company has made the required filings and not filed a dissolution or withdrawal. Although they do not attest to the status of an entity, extracts are often more informative than what can be obtained from the public record in the U.S., often including complete director, officer and shareholder information as well as the purposes and activities of the corporation.
In some cases, extracts can be certified by a government official and those are often more easily accepted in the U.S. In others, such as Australia, there is no certification, what is acceptable is simply a printout of the registrar’s database. While this is perfectly acceptable in Australia, it can sometimes seem unofficial and unacceptable outside the country. A way to “certify” the printout has been developed, similar to the certification process for plain copies when certified are not available—attorneys will notarize a statement that the printout is an official record for the entity and then have that statement apostilled.
Good Standing Issued by a Private Individual
In some countries, such as India and Germany, where there is no government issued good standing available, private professionals may provide an opinion letter as to the good standing of an entity. In India, Private Company Secretaries issue a “Certificate of Good Standing” which is much more involved than the U.S. version. The Secretary (which is a professional position requiring certification and special training) reviews not only the registrar’s records, but also the records of the tax department, labor department and other required licenses, in order to attest to a company’s status, existence and compliance with the law. A Company Secretary’s training, along with the penalties attendant for misrepresentation, makes a certificate like this acceptable in India for due diligence purposes and it will most likely be accepted in the U.S. for the same purpose.
When obtaining Certificates of Good Standing from countries outside the U.S., you will need to take into account that a definitive indication of the company’s status may not be available. Instead, you may need to determine from your knowledge of the filing requirements and documents listed whether or not the company has appropriately complied with the jurisdiction’s requirements and continues as an active entity there. As with certified copies, you must also take into account whether further authentication by apostille will be required and whether the certificate will need to be translated.
Look for Part Three of this article where the international equivalents of UCC searches will be discussed.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Teri Mayor on Mon, Apr 22, 2013
PART ONE: Certified Copies of Company Formation Documents
by Teri Mayor, National Corporate Research, Ltd.
The examination of a potential target in a merger or acquisition or a borrower in a financial transaction requires looking at many documents, both private and public, to obtain an accurate picture of a company’s value. Three documents that are part of the public record in the United States and that can be considered to be the foundation documents of a legal opinion regarding the formation, registration and existence of an entity along with the encumbrances attached to the company’s personal property are:
- the certified copy of the company’s charter documents, with amendments, if any
- the Certificate of Good Standing; and
- the UCC search
You cannot always get an exact equivalent of these documents for companies formed outside theU.S.In some cases, there is no public record equivalent; in others, there are similar documents but the costs and time frame may create issues. In some countries, you can obtain much more information than would be available in theU.S.
The focus of this article is on the certified copy. Certified copies of a company’s charter documents show that the entity is legally formed and registered and can provide information concerning the structure and other details about the company.
Certification Available by Notary Only
Outside theUnited States, a copy of a company’s formation documents, certified by the corporate registrar to be a true copy, is not always available. In many countries, such as inIreland,New Zealandand theNetherlands, plain copies are quick and easy to obtain but the companies registrar does not certify them to be a true copy. For example, in bothIrelandandNew Zealand, a copy of the registration documents can be obtained online, but certification is usually done by a notary or attorney, rather than an official from the Companies Office. For use abroad, you may need to have that certification further apostilled or authenticated depending on the requirements of the deal and whether the country is a part of the Hague Convention.
The Extract
In other countries, the equivalent of a company’s charter documents is either not filed or copies cannot be obtained; Japan, Germany and Finland are three such countries. In these cases, the registrar issues an “extract” which lists the information used to register the company. Often, this extract can be plain or certified by the registrar. What is included varies, but the name, date of formation, stock structure, location, and purpose of the entity are usually provided. In these countries, there are actual legal papers drawn up to form the entity, so it’s not that the “Articles of Incorporation” or “Memorandum and Articles of Association” don’t exist. These documents are just not filed publicly. Due diligence practice in these countries does require review of these documents, but they are generally requested from the company itself, along with an extract from the company registrar showing the company was properly registered.
Registered Agent Provides Certified Copies
In some offshore jurisdictions, the registered agent for the company, either instead of or in addition to the registrar, can provide certified copies. In the Cayman Islands andAnguilla, for example, the company’s registered agent must be contacted in order to obtain certified copies of charter documents. The agent will then contact the company itself to get its permission prior to releasing these documents to a third party. When you need copies for an entity in the Caymans orAnguilla, make sure the company is aware that you will be making this request to help things flow more smoothly and quickly. These jurisdictions and other offshore jurisdictions, such as theBahamasand theBritish Virgin Islandsoffer either “registry certified” or “agent certified” copies. If the document must be further authenticated by apostille, registry certified copies will be required.
Beware of Terminology Differences
Terminology can be tricky once outside theUnited Statesand it’s important to state exactly what you are looking for. In the U.S., it is common to refer to the company’s formation documents, and any subsequent amendments, as its “Certificate of Incorporation.” In many common-law jurisdictions outside theU.S., such asHong Kong,Singaporeand the Caymans, the term Certificate of Incorporation has a very different meaning. The formation document is the “Articles and Memorandum of Association” and the “Certificate of Incorporation” is instead a certificate issued by the registrar upon registration of the entity. In some countries, such asSingapore, if you request a Certificate of Incorporation, you will be told that can only be issued to the company itself. However certified copies of the companies formation documents are readily available to any party.
Time Frame and Costs:
When working internationally, the timeframe and costs to obtain certified copies are often much greater than what is found in theU.S., especially when corporate registries are not national but local, as is true in many South American countries. Other factors, such as the need to translate documents that are not in English and the need for further authentication of the those documents by apostille or legalization, can also increase the costs and turnaround time to obtain these documents. It is not unusual for a request to take weeks and cost several hundred dollars.
As you can see, while review of a company’s formation and governing documents is standard in due diligence around the world, what can be obtained from the public record varies greatly. Understanding the general differences and terminology, as well as being prepared for much higher costs and longer turnaround times, will help you to obtain what you need and avoid unpleasant surprises.
Look for Parts 2 and 3 of this article where the international equivalents of Certificates of Good Standing and UCC searches will be discussed in more detail.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
Posted by Jill Corbett on Mon, Apr 15, 2013
Part 2 – Domestic and Foreign Not-For-Profit Corporations
by Don Beaulac, National Corporate Research, Ltd.
New York's Not-For-Profit Corporation Law (NPCL) contains essentially the same listing of restricted words previously noted in Part 1 of this article , which dealt with obtaining consent from the New York Commissioner of Education for domestic and foreign business entities. 
Keep in mind, however, that even not-for-profit corporations whose names do not contain restricted words may have a purpose or purposes considered by the Department of State to require Education Department consent when filings are submitted. (Note that not-for-profits in New York cannot have an all-purpose clause.) Secondary or incidental purposes such as providing training and/or instruction and holding classes, seminars and lectures may trigger the same response.
When is a Corporate Ending Required?
Also to be considered, in addition to the purpose issue, is whether or not a corporate name requires a corporate ending, as name, purposes and type are closely intertwined and may affect each other in unanticipated ways. (See Incorporating a New York Not-For-Profit Corporation: Purpose Problem)
Section 301(a)(1) of the NPCL indicates that the name of a domestic or foreign corporation:
Shall, unless the corporation is formed for charitable or religious purposes, or for purposes for which the approval of the commissioner of social services or the public health and health planning council is required, or is a bar association, contain the word “corporation”, “incorporated” or “limited” or an abbreviation of one such words; or, in the case of a foreign corporation, it shall, for use in this state, add at the end of its name one of such words or an abbreviation thereof.[i]
If the purposes of a corporation require Education consent then they are not considered strictly charitable as there is an educational aspect and the name will need a corporate ending. So, in general, any corporation requiring education consent will also need a corporate ending. Delays will occur if Education issues a consent without a corporate ending and the Department of State rules that one is needed as the name of the corporation must be identical throughout the document and all official attachments.
Types of Organizations That Must Be Chartered by the Board of Regents
In general, the following types of organizations must be chartered by the Board of Regents and cannot be filed with the New York Department of State:
- a college, university or other institution of higher education
- a nursery, elementary, secondary or charter school
- a library, archives, museum or historical society with collections
- a public television or public radio station
As previously discussed in Part 1 of this article, entities with educational purposes that do not require a Regents charter may be filed with the Department of State with the prior consent of the Commissioner of Education.
Activities Requiring Consent From the Education Department
New York not-for-profit Corporations whose activities involve the following will always need Education Department consent:
- Alumni associations, booster clubs and “Friends of “ organizations
- Historical societies
- Historical preservation
- Medical research
- Promoting or fostering the arts in any way
In connection with the last item above (promoting or fostering the arts in any way), the following is an example of how one aspect of this process can affect another… Operating a theater, producing and/or performing plays, giving concerts and readings and holding dance reviews and art exhibitions would all be defined as “fostering the arts” and a not-for-profit corporation engaged in any of these activities would need Commissioner of Education consent and a corporate ending. Moreover, all of these activities are considered business purposes and would result in the corporation to be classified as a Type C corporation (See Incorporating a New York Not-For-Profit Corporation: Purpose Problem). A corporation of this type would also have to set forth a public or quasi-public objective separate and apart from its purpose clause.
Tips to Keep in Mind When Drafting New York Not-For-Profit Documents
When drafting the documents for a New York not-for-profit, if it is possible you will need Education Department consent, keep the following in mind:
- Submit the filing to the Department of State as a first step as it is important that the proposed purposes be acceptable to the filing office before submitting the document to the Education Department.
- Be as specific as possible with the purpose clause. Doing so will give the staff at the Education Department greater insight as to the activities being pursued and can quite possibly shorten processing time.
For both business and not-for-profit entities, obtaining consent from the Commissioner of Education prior to filing can be a complicated and time-consuming process. You can avoid delays and unpleasant surprises by keeping in mind the words and activities that trigger the requirement for Education consent, knowing when corporate endings are required and by avoiding all-purpose clauses. Hopefully, the information provided in this two-part article will make the process easier for you.
[i] New York Not-For-Profit Corporation Law § 301(a)(1)
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.