Josh Twilley No Comments

Independent Manager: What is it and when does a business need on?

An independent manager (IM) is an individual that sits on a company’s board but has no other relationship or function with the company. Typically, they are appointed at the request of a third party (most often a lender) to ensure that the other managers are not operating in a way that might undermine the debt, or the lender’s rights. 

What does an independent manager do?

Most importantly, an IM weighs in on major decisions and board votes that require unanimous approval. For example, imagine a company wants to file for bankruptcy to essentially “wipe the slate clean.” That company, though, also has a $10 million loan that is not fully paid off. The independent manager representing the interests of the lender would have a hard time signing off on a bankruptcy declaration. In fact, he or she wouldn’t and the vote would fail to earn unanimous approval. 

Ultimately, the IM will follow the company’s operating agreement to the letter. 

 

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What types of companies usually need independent managers?

They are almost always LLCs that exist for the purpose of owning real estate. (Note: LLCs have independent managers. Corporations have independent directors.) 

If a company requires a registered agent in addition to an IM, it’s usually simpler if both are secured through the same service provider. 

Who qualifies to be an independent manager?

An independent manager is a named person that gets written into a company’s operating agreement. Here at Incserv, we typically provide our clients with an experienced senior team member to serve as an independent manager. There are no state or federal licensing requirements. 

How long does an independent manager sit on a board?

Most often, an independent manager will sit on the company’s board for the term of the loan. Once the debt is fully repaid, the lender doesn’t really have any more material interest in the company and the independent manager’s services are no longer needed. 

How does the process start? 

The lender will request that the business find an independent manager. Most of the time, the business will contact their attorney’s paralegal who will provide a list of potential independent managers. The business will select an independent manager, generally based on a combination of experience, speed, existing relationship, and price, as well as agreement with the lender.  The independent manager has to sign off on the fact that they have no material or financial relationship with the organization. 

As always, none of the contents of this blog post should be taken as legal or financial advice. Always consult your attorney and advisors! 

Have questions? We’re here to help. Contact Incserv at 800.346.4646 or info@incserv.com.

Rose Redman No Comments

How to Get a Certificate of Incumbency

A certificate of incumbency, also sometimes referred to as a statement of incumbency or incumbency certificate, is an official document that may include the following information:

  • When and where the company was formed, as well as the state file number
  • Registered Agent details for the company
  • Names and titles of company officials
  • Shareholder names, titles, and stock ownership details
  • Status in the jurisdiction of formation

 Most often, corporations and LLCs secure them on an as needed basis for third parties who require formal documentation verifying corporate information. For example, a bank may want to verify officer and director information as part of the loan application process.

 

certificate of incumbency certificate of incumbency

 

How to secure a certificate of incumbency

The process is quite simple. The organization reaches out to its registered agent with the proper documentation that the registered agent can use to pull necessary information. That documentation can be an annual report filing or an internal document showing officers and directors such as minutes, bylaws, resolutions, etc. From there, the registered agent can typically turn back the certificate of incumbency within a day.

Many times, a certificate of good standing from the jurisdiction of record is also obtained and attached as further proof. The document is then notarized and delivered to the requesting institution.

Keep in mind that a new certificate of incumbency is required for each legally binding transaction. And as long as we’re your registered agent, we’ll be able to handle certificates of incumbency whenever you need. 

Need a certificate of incumbency? 

Incserv is here to help! Contact us at 800-346-4646 or via our contact form.

Gennine Cooper No Comments

April 16th – Emancipation Day

All District of Columbia government offices are closed on Friday, April 16th  in observance of Emancipation Day. Although our Washington, DC office will be open during regular business hours, DC specific services are limited.

The following District services will be available: UCC searches with copy retrieval, corporate status searches and name availability.

The following District services will not be available: corporate filings, document retrievals, business license services, UCC filings, apostilles and notary certifications.

Federal Agency and Foreign Embassy services are not affected by this closing.

District offices will resume normal business hours on Monday, April 19th.

If you have questions or concerns, please contact our Washington, DC office at 202.386.7575, 877.531.1131 or dcorders@incserv.com.

 

April Incserv color logo

Gennine Cooper No Comments

Good Friday – April 2, 2021

On Friday, April 2, 2021, some jurisdictions will be closed in observance of Good Friday. However, Incserv is open and will be available between the hours of 8:30 AM – 5:00 PM (ET).

Incserv has electronic access to many jurisdictions and will be able to perform electronic searches, filings and document retrievals, as such access allows.

If you have any questions or concerns, please contact our office at 302.531.0855, 800.346.4646 or orders@incserv.com.

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Rose Redman No Comments

How (And When) to Pay Your Delaware Franchise Tax

Incorporating a business in Delaware has many advantages. Most articles on the web point to tax advantages, but there’s more to it than that. Companies appreciate the state’s effort to keep the “Delaware corporation statute modern and up-to-date” and the “quality of Delaware courts and judges.” As a result, the Delaware Secretary of State imposes an annual tax for the privilege of incorporating in the state. This tax is known as the Delaware Franchise Tax and it accounts for about a third of the state’s annual revenue. 

Learn more about Delaware franchise tax meeting delaware

Delaware Franchise Tax Basics

The Delaware Franchise Tax must be paid annually by any business legally incorporated in the state. Deadlines and calculated amounts differ by entity type: 

  • For Delaware corporations, the tax is due on March 1. The minimum tax amount is $175. The maximum tax amount is $200,000. The actual amount owed is determined by a company’s stock structure. The more shares a company is authorized to issue, the higher their calculated Delaware Franchise Tax. Delaware corporations must also submit an annual report at the expense of $50. 
  • For LLCs, LPs & General Partnerships, the Delaware Franchise Tax a flat tax of $300 is due on June 1 of each year. An annual report is not currently required.
  • For Foreign Corporations, which are defined as companies registered in any state but doing business in Delaware, a Delaware Franchise Tax of $50 plus an annual report is due on June 30.
  • For non-profit organizations registered in Delaware, the Delaware Franchise Tax is due on March 1 in the amount of $25. An annual report is required as well. 

Side note: the annual reports referenced above typically include the company’s address, phone number, general stock and financial information, the name and address of at least one officer and the names and addresses of all directors. 

How Do Companies Pay Their Delaware Franchise Tax? 

Taking care of headaches like paying the Delaware Franchise Tax is something we love doing for our clients. You can get started with our Franchise Tax Order Form, or, feel free to give us a call at 800-346-4646. /end-sales-pitch.

What Happens if you Forget to Pay Your Delaware Franchise Tax?

Businesses that forget to pay their Delaware Franchise Taxes can run afoul in a few different ways. Failing to file by your assigned deadline means your business falls out of good standing. The state will assess a $200 penalty. Interest at the rate 1.5% is accrued monthly, on the 6th of each month. If a business fails to file and pay their Delaware Franchise Tax for two consecutive years, they are declared void. They’ll incur more fees and be forced to pay an additional renewal filing to get back in good standing with the state. 

As always, the contents of this article should not be considered legal or financial advice. Have more questions about independent managers? We’re here to help.