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The Perplexing World of Uniform Commercial Code Demystified! Pt 4: UCC Filings – The Importance of Performing a Search to Reflect

SearchFor the fourth installment in our series on The Perplexing World of Uniform Commercial Code Demystified, we’d like to talk about the Importance of Performing a Search to Reflect after filing your UCC1 Financing Statement or UCC3 Amendment.

Despite your best efforts in preparing your UCC1 or UCC3 to perfection, the filing jurisdiction could very easily make a typo causing the filing to be mis-indexed when recording it into their database.  Why is this a problem for a Secured Party?  Just a small typo can make all the difference when searching for outstanding liens against the Debtor Name.  As a potential new Lender (Secured Party), an existing lien may not be reported.  As the existing Secured Party, your “first in line” position may not be reported even though your Financing Statement was on record before anyone else’s.  How about an Amendment or Assignment?  Was it filed against the proper UCC1?  Were all the Secured Parties recorded?  Was the Assignment done as a Partial or Full? Are you concerned yet?

So how do you ensure a typo was not made causing your filing to be mis-indexed?  Each time you file a UCC1 or a UCC3 with changes, request a Search to Reflect upon Thru Date Reached.  If an indexing error occurred, it can be found right away and corrected, rather than down the road when it’s potentially too late.

You can file a UCC and request a Search to Reflect nationwide with us today by sending us your filing and request to Orders@incserv.com.  Please give us a call if you have any questions or would like additional information.   We look forward to hearing from you and stay-tuned for our next segment on Due Diligence Searches!

Lucy Rose, Project Manager, Product Research and Development

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The Quarterly Users Meeting – Part II

PartThis is the second part of a two part blog.  Read the first part here, where I discuss increased state involvement in the small commercial registered agent community.

Each quarter, the State of Delaware holds a meeting between the administrators at the Division of Corporations and online agents (the Users of state services).  Through these meetings, agents learn about changes on the horizon with the State, and the State learns about issues agents face in delivering services to the legal community.  When we discuss the “Delaware Advantage” in corporate law, these meetings are a part of what helps set Delaware apart from other states.

Legislative Changes:  Sustainability and Transparency Standards Act

Many new legislative changes were reviewed.  One that I found particularly interesting was HB 310, the Certification of Adoption of Sustainability and Transparency Standards Act.  This Act provides a means to allow entities to file documents with the state related to their efforts of Sustainability and Transparency.  In this way, a good corporate citizen may want to file documents with the state to certify their corporate citizenship.  The state will launch a searchable database for these filings on October 1, available to agents and to the public in general later in the summer.

Legislative Changes:  Updates to LLC Law

There were quite a few changes to Delaware LLC Law which take into effect on August 1.  An excellent summary article can be found here (thanks to Richards Layton and Finger for writing, and also thanks to Harvard Law School for publishing).  There are three important changes associated with this act:

  • Allows for an LLC to be split. Careful as this can multiply costs of filing and maintenance.
  • Allows for the creation of a Public Benefit LLC (similar to Public Benefit Corporations).
  • Allows for the creation of registered series LLCs, which seeks to improve some of the series LLC laws.

Josh Twilley, President

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The ever changing corporate world!

Ever

Statutes, Administrative Rules, Processes and Procedures are ever evolving.  It is our job as a premier service provider to make sure we are staying “in the know”!

Incserv staff takes pride in working with internal and external sources to ensure we are staying in front of the changes which potentially affect us and our clients.  It is even part of our company goals to complete a designated amount of training hours each year.

Our involvement in organizations, such as NPRRA (National Public Records Retrievers Association) NCAPA (National Capital Area Paralegal Association), Central Delaware Chamber of Commerce, and the Delaware Paralegal Association ensure we are receiving industry wide information and staying true to industry standards.  Also, our business relationships with Attorneys and other service companies have allowed us to coordinate training sessions with them to broaden our service offerings and knowledge of services we already provide.

As an online registered agent, we maintain a close relationship with the Delaware Secretary of State and this has allowed us to attend Quarterly meetings which are comprised of the Deputy Secretary of State, department heads from the Division of Corporations, other employees from the division, representatives from the agent community and even the Secretary of State attends.  It is a meeting the state hosts to provide updates from each department and any statute changes which have been approved and will take place.  In addition to these quarterly meetings, there is a yearly Strategic Planning Conference where information is shared, training sessions are offered and guest speakers talk about how our industry impacts the state and even the rest of the country/world.  We have also participated in Training sessions, the state has offered on a quarterly basis.  This only strengthens our knowledge of the state database and administrative rules so we can better service our clients.

When you reach out to your Customer Service Representative at Incserv, you can trust they have continued their education and make it a priority to understand the corporate statute in Delaware and other states in order to provide the best customer service available.

Rose Redman, Quality Assurance and Employee Development Manager

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The Perplexing World of Uniform Commercial Code Demystified: UCC Filings – who authorizes a UCC filing.

UCCFor the third installment in our series on The Perplexing World of Uniform Commercial Code Demystified, we’d like to talk about who authorizes a UCC filing.

Accurate preparation of a UCC filing is very important; the name listed within the document is the name that will be indexed in the records office of filing.  Below are some important things to remember when preparing UCC filings (all states have different requirements, below are Delaware centered; reach out to us if you have any questions about other states):

Section 9-509 of the Delaware UCC law provides that a party may file such a financing statement only if the debtor authorizes the filing: either expressly in an authenticated record or, more commonly, by executing a security agreement. By authenticating or becoming bound as debtor by a security agreement, a debtor or new debtor authorizes the filing of an initial financing statement, and an amendment, covering:

(1) the collateral described in the security agreement; and

(2) property that becomes collateral under Section 9-315(a)(2), whether or not the security agreement expressly covers proceeds.

Additionally, the below specifically relates to a UCC Termination Filing (UCC-3):

The secured party has 20 days to either terminate the filing or send a termination statement to the debtor that the debtor can then file. If this does not happen within the 20-day timeframe, the debtor may file a UCC-3 termination statement.

When you send your UCC filings to Incserv, we will review the documents for complete information; we are not able to review for accuracy of information provided.

You can file a UCC and request a Search to Reflect nationwide with us today by sending us your requests to Orders@incserv.com.  Please give us a call if you have any questions or would like additional information.   Keep an eye out for the next installments where we will discuss UCC searches.

Karen Elliott, Assistant Vice President Client Development

 

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DC Entity Revocation and Trade Name Cancellation Deadline

DC, District of ColumbiaAll entities registered to do business in the District of Columbia (DC) are required to file a Two-Year Report by April 1st the year after the initial registration and every two years thereafter.

Two-Year reports not received by September 3rd will be revoked Tuesday, September 4, 2018.  If the entity’s authority to do business is revoked, it will need to file a reinstatement application, in addition to the delinquent report, incurring additional fees of $300 for the reinstatement (not including the $100 penalty assessed for the late filing of the two-year report).

Additionally, all trade name registrations expiring in 2018 must be renewed by September 3, 2018 to avoid cancellation of the trade name on Tuesday, September 4, 2018.  Renewal forms may be found on the DCRA website at https://eservices.dcra.dc.gov/DocumentManagementSystem?title=Corporations. All trade name renewal applications must be submitted over-the-counter.

In 2017, there were approximately 40,000 entities revoked in DC. Don’t make the list in 2018! Let Incserv help you to stay in compliance! Don’t want to be bothered with deadlines again?  Sign up for our Annual Report Filing Service (ARFS).  Contact one of our DC office representatives for more information on ARFS and to assist with your filing needs by simply emailing us at dcorders@incserv.com or calling 202.386.7575 or 877.531.1131.

Deirdre Davis-Washington, Assistant Vice President

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Jurisdictional Closures for September 2018

ClosuresPlease see the list below for Jurisdictional Closures for September.  Dates and information are subject to change.

Date: Holiday: State:
Sept 3rd Labor Day All national, state and local offices are closed

Please check out our blog posts throughout the month for any last minute changes or updates from these or any other state or local office.

If you have any questions or need assistance, feel free to contact us at 800-346-4646 or via email at info@incserv.com.

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Why Delaware? A Lesson in Chance-ry

Delaware1960s America reveled in the cultural phenomenon known as the British Invasion. Although the Rolling Stones and The Who played into the spectacle, no one held more influence on Americans or American pop culture like The Beatles. But what many people do not know is there was another British Invasion that happened hundreds of years prior. This invasion was less bloody than war-like attacks and less romantic than dreamy boys from England with their swooning accents. This invasion, known as the Court of Chancery, would change the dynamic of the American court systems forever and make Delaware a legend on the legal stage.

The earliest form of Chancery Courts date back to the 1400s in England where common law was the traditional practice. Common law bases judicial decisions on precedence-past similar cases- to yield similar outcomes. Even then, the English realized there was a crucial need to separate common law cases from those pertaining to businesses, trusts, and land laws; thus, Chancery courts were born. Ironically enough, over time the desire to systemize the Chancery Courts became so widespread that it lost the purpose for which it was founded and Parliament decided to disband the court system in England.

Flash forward to the 1700s in America, colonies were forming all along the eastern seaboard and establishing their own set of laws. At the time, most states were leaning away from their courts of chancery and consolidating judicial and chancery laws. All except Delaware. As the first state, Delaware had originally decided that courts would hear all types of cases: “Delaware never had an institutionalized chancery during the colonial period… so equity was never founded on royal prerogative” (Quillen). Because of this foundation, the Chancery court was not swayed by politics, and equity was never in competition with common law. Therefore, the division of the court systems thrived and has been a huge part of Delaware’s economic success.

Over time, the need to adapt to meet the needs of a developing America, has resulted in many cases in which new legislation was written. For example, Maclary versus Reznor called for “fiduciary relationships between parties to disclose facts that may influence the other party” (Quillen) ergo the need for UCC searches became prevalent in Delaware. Every time a case challenged the current statutes, it helped tailor this very unique court into the power house it is today. In so many words, the Delaware Chancery Court was literally founded and has been thriving on chance since its very existence.

To this day, the Chancery court remains a steadfast reason why businesses decide to incorporate in Delaware. Sure many people believe it is Delaware’s cost-effectiveness and/or “tax-free shopping” that bring so many people to incorporate or qualify here, but the root of why incorporating in Delaware is beneficial goes deeper than that. Because the courts are separate from that of the courts of common law, cases involving businesses can be heard more quickly thus ensuring swift but thorough results. Ultimately, the first “British Invasion” is the cause for one of Delaware’s greatest claims to fame!

Amanda Archambault, Registered Agent Associate

Works Cited
Quillen, William T., and Michael Hanrahan. “A Short History of the Court of Chancery.” Delaware Courts, The Widener University School of Law, 2013, courts.delaware.gov/chancery/history.aspx. Accessed 30 July 2018.
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Don’t Forget! – Delaware September 1st deadline approaching

September

The Delaware 2nd quarter taxes for Corporations are due on or before September 1, 2018.

Taxes can be paid by:

Calling Incserv to assist (800.346.4646)

Going directly to the state website.

Sign up for ARFS now to allow Incserv to keep you in good standing; let us do the remembering for you!

 Karen Elliott, Assistant Vice President of Client Development

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The Perplexing World of Uniform Commercial Code Demystified! Pt 2: UCC Filings – the “proper” way to complete a UCC-1 Financing Statement

UCCFor the second installment in our series on The Perplexing World of Uniform Commercial Code Demystified, we’d like to talk about the “proper” way to complete the debtor name on a UCC-1 Financing Statement.

Perfecting the name of an organization or individual in a UCC-1 Financing Statement is very important in the protection of your security interest.  Unperfected UCC filings can be deceptive and catastrophic.

If the debtor is an organization, the name listed in 1a should match the last filed public record as filed with the Secretary of State where the entity is formed.  For instance, if the corporation is filed under the name: ABC Services, Inc. the name in 1a should be listed as the same.  It should not be listed as: ABC Services Corp.  If the organization files for a name change, the UCC-1 should be updated to reflect the change in the debtor name, via a UCC-3 Amendment.

If the debtor is an individual, the name listed in 1b should match the individual’s unexpired driver’s license or ID card.  If the individual does not have one of these two identifications, the UCC-1 should list the debtors first and last name.  For instance, if the driver’s license or ID card lists the person’s name as Karen Elizabeth Elliott, the UCC-1 should include first, middle and last name.  It should not be listed as: Karen Elliott or Karen E. Elliott.

You can file a UCC and request a Search to Reflect nationwide with us today by sending us your requests to Orders@incserv.com.  Please give us a call if you have any questions or would like additional information.   Keep an eye out for the next installment on who prepares a UCC filing.

Karen Elliott, Assistant Vice President Client Development