1. Service of Process
2. Choosing a Registered Agent
3. Failing to Receive Information
4. Risk of Bad Standing
5. Fines and Penalties

What is statutory representation? This is a process where a company gets representation through an agent, otherwise known as a registered agent. Registered agents can be an individual or company that receives legal documents on behalf of a corporation or LLC. Such documents can come in the following forms:

  1. Legal documents
  2. Service of process
  3. State communications

Each LLC or corporation must have a registered agent that resides in the state where the business operates. Failure to appoint registered agents may result in severe fines or penalties. Registered agents and statutory agents are synonymous because the agents must be appointed via statute. With that, the primary reason that most companies hire consultants is because they know the consequences of failing to respond to service of process documents. Owners may act as an agent, as well as anyone within the company.

Service of Process

Service of process is the notice of an impending lawsuit that has been filed against the business. The service of process usually involves sending notice to the defendant, which is the company. A registered agent receives the service of process and relays it to the company. When the documents are served to the agent, the courts legally receive jurisdiction over the LLC or corporation.

In the case of legal documentation in the form of service of process, you may only have three days at best to respond to a court summons. In addition, not having a registered agent doesn’t mean that the company cannot face a lawsuit. Rather, the court can get jurisdiction in another fashion, but your business would not receive adequate notice of the lawsuit, and you would not be able to build a defense in enough time.

Choosing a Registered Agent

When creating an LLC or corporation, you must choose a registered agent, and you cannot complete the process until you choose an appropriate agent. This mandate also applies to registering the business in a different state. With that, having a registered agent is not enough at the time of the registration process. You must have a registered agent in the home state and each state where you operate your business. It’s also important to note that many states mandate that current agent information be included on the annual report of an LLC or corporation.

All states require you to file the necessary changes if you must choose another agent. If you fail to maintain the status of your registered agents, your business could be at risk.

Failing to Receive Information

If your company is sued with no registered agent in place to receive the paperwork and relay it to you, the plaintiff could proceed with the lawsuit without you, and a default judgment could be rendered against your business. Such a scenario could happen even if the lawsuit was frivolous in nature. Therefore, the judgment could be enforced against your business, and it may be too late to reverse the damage.

Registered agents are important because they help you maintain important aspects of your business while ensuring that your business remains compliant with the court system and state officials. If your agent does not have the proper contact information on file, vital response windows could be missed if the documents get lost or delayed. This also includes other important documents, such as tax reminders and annual reports.

Risk of Bad Standing

Your company’s good standing could be in jeopardy if you don’t have a registered agent. Therefore, it is also vital that you pay annual registered agent fees. Failure to do so could result in the resignation of your agent. If this occurs, the company is in automatic jeopardy with state authorities, and you risk losing your legal standing.

For instance, officials could prevent you from commencing a lawsuit in the state where the business resides, also including other states. Moreover, you could be prevented from getting the necessary financing for your business. To return to good standing status, you must submit additional paperwork and fees, and you may have to file new documentation.

Fines and Penalties

In addition to court paperwork, state paperwork also comes with time-sensitive responses. Failure to respond in enough time could result in severe penalties from state officials. Incorrect contact information may lead to late fees, accruing interest, and other hurdles. The penalties could come in the following forms:

  1. Inability to enter legal agreements
  2. Revocation of licenses
  3. Gaining access to the court system in your state

The worst-case scenario would be the dissolution of your company, which means you lose your limited liability protections.

To learn more about statutory representation or registered agent requirements for your business, you can post your job on UpCounsel’s website. UpCounsel’s attorneys will give you vital tips on maintaining your LLC or corporation, while ensuring that you pay the necessary registered agent fees on time. Moreover, they will fight your case in court if you must respond to a court summons, while also helping to build a viable case.