In the Wild Wild West, salesmen would go from town to town selling all types of questionable products, such as snake oil, with claims that were unproven at best. The customers later would be unable to locate these unscrupulous salesmen because they were without a home office. One legislative solution to such problems was to require a registered agent to be named when a company incorporates. A registered agent maintains up-to-date contact information for each company to ensure the company can be legally served within the jurisdiction of the state where it is incorporated.
A registered agent maintains a contact record with the name of a person upon whom the legal notice can be forwarded after being served upon the agent. The clock starts ticking for responding to a complaint upon service to the registered agent, even if the registered agent delays or never forwards the notice to its contact person. Therefore it is critical to have a reliable registered agent which forwards notices promptly to avoid a default judgment when sued.
Designating a registered agent is required to file a Delaware LLC or Delaware corporation. The registered agent service is sometimes referred to as “statutory representation,” because the Delaware General Corporation Law and Delaware Limited Liability Company Act both require every Delaware company to maintain a Delaware registered agent at all times. The registered agent must be located in Delaware, be available during business hours to receive service of process and certain other notices from the Delaware Secretary of State directed to the company, and to retain the contact information for each company.
Aside from naming a Delaware registered agent, a Delaware company does not need to have a business office address, or even a bank account inside Delaware. A registered agent with an office in the state of Delaware satisfies a company’s statutory requirement.
The main purpose of statutory representation is to ensure timely service of legal notices. Notices are often hand-delivered by a sheriff to the office of the registered agent who, in turn, forwards the notice to its customer. Having a commercial registered agent satisfies the requirement for personal jurisdiction over companies incorporated in the state. It also ensures plaintiffs can easily serve these notices.
A company incorporated in Delaware and located in Delaware may serve as its own registered agent to fulfill the statutory representation requirement. To appoint oneself as registered agent, a street address is required of the registered agent. A P.O. Box will not be allowed as a registered agent address. Somebody of legal age must be available during reasonable business hours at that address to receive state and legal notices. Residents outside of Delaware without a company contact in Delaware must appoint a third-party registered agent within Delaware to satisfy the requirement.
Even Delaware residents often elect to hire a commercial service for this because of the inherent value in having a commercial registered agent. One advantage is the commercial registered agent’s access to the Delaware Secretary of State. A handful of commercial registered agents have special computer access to file documents directly with the Division of Corporations allowing them to receive a faster turnaround time. Self-filing directly with the state without an agent lowers the filing priority and often results in slower turnaround times by a few days. These registered agents have immediate access to good standing certificates and copies of corporate filings ensuring that customers obtain the documents they need in a timely manner.
Because the address of the registered agent is on public record, publicly listing your address may result in unwanted mail and phone calls from marketers. However, the bigger risk in “self-representing” is either being unavailable to receive service of process when a process server knocks or already having moved when your company is sued. This may result in a default judgment against your company for failure to respond, even if the legal complaint does not have merit. You should not forego your defense of a lawsuit simply by failing to respond within the statutory period, usually 20 days from the date of service.
Appointing a commercial registered agent is a small price to pay for improved notice of lawsuits, maintained privacy, reduced marketing solicitations, support with unfamiliar terminology and procedures, and quicker access to critical documents.
About the author
John Legaré Williams, Esquire practices business law through The Williams Law Firm, P.A. (www.TrustWilliams.com). He is also President of Agents and Corporations, Inc. (www.IncNow.com), a family owned and operated incorporation service that provides filing and registered agent services in Delaware to business owners from around the world. Nationally, Mr. Williams is a frequent speaker nationally on the topic of Delaware LLCs and in particular the Delaware Series LLC, the most cutting-edge entity on the market. He is active in the Delaware start-up community, launching a legal-tech start-up called www.14Rings.com designing software to help people manage the Series LLC.