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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 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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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 Quarterly Users Meeting

MeetingWe at Incorporating Services offer our services in every state, but because we have a physical office in Delaware, we receive a lot of questions about the Delaware Advantage.  Clearly, Delaware is doing something right, as evidenced by the most recent Division of Corporations annual report (keep scrolling down the report for some neat statistics).  One of the reasons Delaware is a great legal home is due to the partnership the state maintains with its registered agent community.  A great example of this partnership is the Quarterly Users Meeting.

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.

This is the start of a two part blog.  This first part focuses on the State of Delaware’s efforts to improve the agent standards for all agents, and the second part will focus on recent legislative changes.

Non-online Registered Agents and Agent Responsibility

The vast majority of corporate entities are registered with online Commercial Registered Agents (CRA).  An online CRA (such as Incorporating Services, Ltd) has a direct data line with the state of Delaware.  This allows online CRA’s to quickly file formations and retrieve documents.  Along with this privilege, online CRA’s agree to uphold certain standards of responsibility as part of the contract with the State.  Some CRA’s are not online and therefor are not held to the same standard, nor are these agents privy to the same communication channels as online CRA’s.

As a result, the state will work towards opening a channel of communication specifically for those CRA’s that are not online.  Further, the State’s legislature is working towards this end, with the submission of HB404, which seeks to codify some of these practices.  This will give the Division of Corporation more power to make sure all agents adhere to the same set of standards.

Overall, this is a great effort on the state’s part to bring all CRA’s up to a similar standard.  While this will require a lot of work on the state’s part, it demonstrates Delaware’s commitment to making sure CRA’s are acting lawfully and helping to follow Federal guidelines.  Kudos to the state.

Josh Twilley, President

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DE Foreign Corporations Annual Reports Due June 30th!

CorporationsAll foreign Corporations qualified in 2017 or before are required to file an annual report in Delaware on or before June 30th.  There are several ways to file:

  • Complete and send in the paper form that was sent to you by your registered agent of record.  Follow the instructions provided for returning the completed filing and payment.
  • Allow Incserv to file for you; send us your completed report and we will take care of having it filed with the state.
  • File online “here”.  Delaware is allowing foreign reports to be filed online.

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 Client Development

 

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June 8th – DE Secretary of State Luncheon – Cut-Off Times Altered!

Luncheon, June 8thOn Friday, June 8, 2018 an Employee Recognition Luncheon is planned for all the employees of the Delaware Secretary of State – Division of Corporations.  State services have been altered.

There will be NOSame Day” or “Must Approval” service filings after 11:30 AM (ET) on that day.

All 30 Minute and One-Hour service filings must be received prior to 10:00 AM (ET)Two-Hour service filings will need to be received prior to 9:00 AM (ET) and 24 Hour service filings must be received prior to 12:00 PM (ET).

We will be able to secure filing dates and times until 10:30 PM (ET).

To meet these deadlines, Incserv must receive all filings AT LEAST 15 MINUTES before the Delaware Secretary of State  corresponding cut-off times.

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

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Don’t Forget! – Delaware June 1st deadline approaching

Delaware, Don't Forget!The Delaware 2017 Limited Liability Company, Limited Partnership and General Partnership taxes are due on or before June 1, 2018. For more information, click here.  The Delaware 1st quarter taxes for Corporations are also due on or before June 1, 2018.

Taxes can be paid by:

Logging into Snapshot™, click here.  (LLC, LP and GP taxes can be paid in SnapShot™; quarterly taxes cannot)

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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What is needed to keep my Delaware Company in Compliance?

Delaware CompanyWith a Delaware company, you may find that you receive several payment requests from your Registered Agent for different services, and it may not be clear what those services are.  This blog helps clarify what those invoices are for.  There are two types of payments that need to be made each year.

State of Delaware Annual Franchise Tax:  Each company is required to pay an annual franchise tax to the State of Delaware.  Each year, you will receive a notice from your Registered Agent on behalf of the Delaware informing you of the tax payment requirement.

CORPORATION:  Due on or before March 1st of each year, and also requires and annual report to be filed. You will receive this notice from our office mid-end of December each year.

LLC/LP:  Due on or before June 1st of each year. You will receive this notice from your Registered Agent mid-end of April each year.

For more information, see our blog on Delaware franchise tax payments.  Click here.

Delaware Statutory Registered Agent:  This is the service fee to represent the company as the Registered Agent in Delaware. This is billed annually; typically renewing on the date of our appointment. Every company formed or qualified within most States are required to appoint a Registered Agent with the Secretary of State. A Registered Agent is the company or individual named to receive Service of Process and all official notices from the jurisdiction on behalf of the company.

For more information on the role of the Registered Agent, see our blog.

How can I make this process easier?Delaware company

There are a few ways to simplify this process and reduce the number of invoices you receive.

  • If you have multiple entities, synch all your entities to the same date. Rather than receive invoices on the anniversary of the appointment, which could be scattered throughout the year, synch these invoices to one date (e.g. January 1).  Or, you could synch the invoices to be received around the same time as your annual tax notice.
  • Sign up for our Annual Report Filing Services (ARFS). With this service, for a small annual fee, we will make sure your tax payment is made.  To learn more about this service click here.

Amy Balke, Accounting Manager

 

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Don’t Forget! – Delaware LLC, LP & GP Taxes Due June 1st

taxesDomestic and Foreign Alternative Entity Taxes Coming Due

The Delaware 2017 Limited Liability Company, Limited Partnership and General Partnership taxes are due on or before June 1, 2018. The tax is $300 per entity and there is no requirement to file an Annual Report.  Annual taxes are assessed if the entity is active in the records of the Division of Corporations anytime during January 1st through December 31st of the current tax year.  If not paid by June 1, a penalty is assessed and interest will begin to accrue.  The company will no longer be in good standing if this fee is not paid and can even be at risk of being voided.

Annual Taxes can be paid by:

Logging into Snapshot™ (https://snapshot.incserv.com/login.aspx)

Calling Incserv to assist (800.346.4646)

Going directly to the state website (https://corp.delaware.gov/paytaxes.shtml)

Incserv also provides a service for paying annual taxes for you each year, contact us and ask about ARFS for your alternative entity.

Rose Redman, Quality Assurance and Employee Development Manager