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The Five Minute Guide to Foreign Entity Registrations Under the TBOC

What key changes does the TBOC make to foreign entity registration?

• Standardizes procedures for registration across different entities
• Expands LP late filing fees to all foreign filing entities
• Expands certain corporate and LLC civil penalties to all foreign filing entities
• Provides a 90-day grace period before the foreign filing entity is charged the late fee for doing business in Texas without registering
• Standardizes the definition of "foreign" as any entity formed outside of Texas; LPs formed outside the US must now register
• Requires a foreign entity for which there exists no Texas counterpart to register as the type of entity it is in its home state, not as an "LLC"
• Authorizes revocation of registration of any foreign entity that fails to amend its name or purpose within 90 days of the change
• Expands mandatory suspension of registration to any foreign filing entity that changes its name to one unavailable for use under Texas law
• Eliminates the need to file a certificate of existence from an entity's home state
• Requires limited partnerships registered as limited liability partnerships (LLLPs) to maintain both types of registration or to pay the fines or penalties for both the LP and the LLP registration

Which foreign entities are required to register under the TBOC?

• Foreign corporations*Foreign limited partnerships*
• Foreign LLCs*
• Foreign cooperatives
• Foreign business trusts
• Foreign REITs
• Foreign public and private limited companies
• Foreign professional corporations & associations
• Any foreign entity which, if formed in Texas, would be required to file a certificate of formation
• Any foreign entity which is required to register under other Texas law

What are the consequences of failing to register under the TBOC?

• Charged a late filing fee equal to the registration fee for each year of delinquency; this would be $750 per year for a for-profit corporation
• Liable for all fees and taxes that would have been imposed by Texas law had the entity registered and filed all reports when first required
• Liable for penalties and interest for failure to pay those fees and taxes
• Enjoined from doing business in Texas
• Unable to maintain an action, suit, or proceeding in court

Is there an "amnesty period," and how can I take advantage of it to minimize TBOC penalties or fees if my company has been doing business in Texas without registering?

• Yes, there is an amnesty period. Foreign entities that transacted businesss in Texas before the TBOC went into effect and that are required to register under Chapter 9 of the TBOC are "not subject to a direct or indirect penalty as a result of failure to register under Chapter 9 if the application for registration is filed not later than the 30th day after" January 1, 2006. (TBOC §402.012).
• For any entity that is required to register, file an application for registration during the amnesty period.
• The amnesty is for TBOC fees only. Any franchise taxes or other fees owed will still be due.

What are the key TBOC changes to the application for registration?

For all entities:

• Eliminates requirement of Certificate of Existence from entity's home state
• Requires affirmative statement appointing Secretary of State for purposes of service of process, notice, or demand. (TBOC §5.251)
• Requires beginning date of doing business in Texas

• Requires information concerning the number of authorized shares and number of issued shares, itemized by classes, par value, without par value, and any series in a class
• Requires stated capital amount

• Allows the entity name to include the name of one of its limited partners
• Requires the name and address of each general partner (only one address is required per person: street or mailing, not both)

What needs to be done after an entity is registered?

Keep your registration information up to date:

• Amend the registration if the entity name, business, or activity changes, or face possible revocation of registration
• Continuously maintain a registered office and registered agent in Texas

• a change of registered office or agent,
• a certificate of withdrawal, and
• a certificate of termination

• File an early election to adopt the TBOC, and
• Amend its Certificate of Authority (Certificate of Registration) to be TBOC-compliant and correctly identify its entity type (TBOC §402.004).