Corporate transactions are once again on the rise as companies look to realize their strategic goals and put plans into action with the second quarter on the horizon. There are so many considerations for each jurisdiction when it comes to Corporate Due Diligence that our experienced researchers are steeped in, but in general there are some really good tips they had to offer for your understanding. Below are some of the best insights from our team.
It is important to note the difference between copies when diving into Corporate Due Diligence. A common question we get from our clients is: What is the difference of plain vs certified copies and how are they typically used?
- A Plain Copy of Corporate entity documents is simply a photocopy (or digital copy) of a particular business document. It’s a copy of what the state has on record.
- A Certified Copy typically includes a certification stamp and possibly even a signature or staff initials stating that the copies are a true and complete set of the documents found in that office. This indicates they have reviewed the record in its entirety and certify that what is provided is an accurate production of what they have on record for the original charter documents.
When It Matters
Here are some of the reasons for needing a copy of an entity’s records. Plain copies are sufficient in some instances, while other situations require the more formal certified version. For example, if you are just reviewing Corporate Structure, or Corporate History of Events, along with other situations Plain Copies are sufficient. However, when dealing with a business loan transaction, or opening a new business bank account, etc., you will most likely need Certified Copies.
One thing our team sees frequently are entities that fail to file their Annual (or bi-Annual) Renewals. If this simple step isn’t completed at the proper intervals the state department requires, it can lead to the entity being dissolved by the state. If this happens, it is usually quite expensive for the company to get reinstated. It’s just an easy thing that can and should be avoided. If you or your client do not want to handle this administrative task, be sure to discuss your options with a Registered Agent like us to leverage an Annual Renewal service.
Corporate Filing Recommendation
Another thing to know regarding Corporate Filings, is when you are completing the forms for a foreign entity, make sure that the addresses are accurate. The Registered Agent address should always be different than the principal place of business or address of any of the officers. The state jurisdictions will not reject it if the addresses are all the same. If the Registered Agent address is used at the principal place of business, it could mean that lenders will file a UCC in the wrong jurisdiction since UCC statutes state to file in the state of formation.
Lastly, for Corporate Due Diligence, we want to stress the importance of pulling a copy of the organic Corporate Documents. Even a plain copy is better than relying on the state website for all current and accurate information. We have seen loans almost close with the incorrect legal name listed on the security agreement because the state’s corporate lookup online showed the wrong company name. It doesn’t cost a lot to pull those records upfront or have us do so, but it sure can cost a lot if the loan closes on the wrong legal name.
If you need a dependable vendor for any Corporate Services we are ready to assist with a wide variety of solutions.