To do business outside of the jurisdiction that a corporation is registered in, your corporation may need to apply for a licence for your corporation to be formed in that jurisdiction.

When a corporation should consider extra-jurisdictional registration

First, you should consider whether your corporation is “carrying on business” within a jurisdiction other than that which it is registered under. Different jurisdictions have provided different meanings to “carry on business”. However, some indicia that may suggest that a corporation should register extra-jurisdictionally are:

  • if the corporation has an office, other address, resident agent, or local telephone in this outside jurisdiction;
  • if the corporation is collecting or charging local tax;
  • if the corporation visits that jurisdiction in order to perform work that could not otherwise be completed in the home jurisdiction;
  • if the corporation has hired people to work in that jurisdiction; and
  • if the corporation’s business name is listed in a telephone directory in that jurisdiction.
  • if all or the majority of the above indicia apply to your corporation, your business will likely be considered as firmly established in that jurisdiction and may be subject to local business registration requirements and applicable local taxes. For this reason, you may be required to register extra-jurisdictionally.

Process of registering extra-jurisdictionally

The process for filing extra-jurisdictionally varies from jurisdiction to jurisdiction. However, some of the common requirements are:   

  • an application for a name approval;
  • the filing of the registration and the applicable fees;
  • receiving some type of certificate of registration confirming that the jurisdiction has been registered in the jurisdiction;
  • the appointment of a power of attorney or a local partner who is resident in the applicable jurisdiction; and
  • the establishment of a local office (possibly). 

Furthermore, once you have been registered within the new jurisdiction, it is important for you to inform yourself about how and when to charge sales taxes for the goods and services you sell and supply to your customers.

 

Consequences of not registering extra-jurisdictionally 

A corporation’s failure to register extra-jurisdictionally can have the following consequences:

  • the corporation will be incapable of maintaining an action, suit, or other court proceeding in that jurisdiction; or
  • the directors, officers, and registered agents may be have a monetary penalty levied against them for being found guilty of contravening the extra-jurisdictional registration requirements.

In order to avoid such consequences, it is important for corporations to give careful consideration to whether they should be registering extra-jurisdictionally.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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