Corporate Practice Perspectives: Navigating Foreign Qualification Requirements in 2026

Annie: Hello, everyone, and welcome to today's webinar, "Corporate Practice Perspectives: Navigating Foreign Qualification Requirements in 2026." My name is Annie Triboletti. I will be your moderator kicking things off today.

This session is part of our Corporate Practice Perspectives webinar series. In today's fast-changing corporate environment, staying ahead of legal and administrative challenges is more important than ever. This series brings together experts to share practical insights that help professionals navigate complex processes, avoid common pitfalls, and stay compliant in an evolving regulatory landscape. We invite you to explore the full series of webinars and register for all sessions of interest.

So joining us for our session today are Miranda Groom and Helena Ledic. Miranda is a team leader of Client Service at the Salem, Oregon office for CSC. She leads a team of vendor management specialists who maintain the integrity of our business license knowledge. Miranda also helps the oversight of international registered agent management. Helena is an associate general counsel for CSC in the Chicago office. She's an attorney with experience in negotiating commercial contracts, corporate governance, compliance, security, and privacy. Helena speaks on best practices regarding corporate and financial filings.

So with that, I'd like to welcome Miranda and Helena.

Helena: Thank you, Annie. And this is Helena speaking here. And before we jump into the presentation, let me tell you a little bit about CSC. We're a privately held and professionally managed company with more than 8,000 employees on 5 continents in 140 jurisdictions. And we provide expert service and technology solutions across all phases of the business and investment life cycle.

Among all that we do, we help form entities and maintain compliance and execute secured transaction work. For alternative asset managers, we provide administrative and outsourcing solutions. We also provide a comprehensive suite of services across a broad range of capital markets transactions, regions, and asset classes. We're the trusted partner for more than 10,000 law firms, 90% of the Fortune 500 and the Best 100 Global Brands. We are the business behind business.

So, here, we have a map of our offices throughout the world. As you can see, if you peer in really closely to your screen, there is a little icon that happens to have a star. That is our Wilmington headquarters, Delaware. As Annie mentioned earlier, I'm located in Chicago. And then, Miranda, let's hear from you. Where are you at?

Miranda: Well, if you look all the way west across the United States, I'm up there in the Pacific Northwest in Salem, Oregon.

Helena: Terrific. So let's talk about what we're actually going to cover today. So we're talking foreign qualifications. So the first thing what we're going to do is we're going to talk about what triggers qualifications, both what actually does and what typically doesn't. We're going to go into some considerations for those qualifications, common challenges that we see across a number of states that are the most common where we get foreign quals in, and then we'll cover additional resources. So now let's jump into what actually triggers qualification, and Miranda is going to get us started off.

Miranda: What is a qualification? Do you have an existing domestic corporation that's incorporated in a particular state and now you want to do business in another state? That is going to require you to file separate filings and make the payment on taxes or fees with those respective authorities.

Let's run through some of those activities that generally do not require qualification. Some of those things include if you need to engage in litigation. If you're holding a board or director meeting or other internal activities in a foreign state. Maintaining a bank account. Maintaining an office or an agency for the transfer of securities. If you're selling through independent contractors or soliciting orders by mail or other channels. Creating or acquiring indebtedness and securing or collecting debts. If you own real or personal property. It also does not require a qualification if you're dealing with an isolated transaction completed within 30 days. Now some states can extend that time period. If you're dealing with interstate commerce or responding to state-declared emergencies.

Helena: And this is really important for our audience to know is that every state is different. And just because you see on this list isolated transactions completed within 30 days, that's not the case in every state. So that's why it is so important to look at that "Doing Business Outside Your State" guide, that we'll tell you about a little bit later on, to give you a little bit more context. But remember, every state is different.

So now if you look at this slide, you can see that we put corporate activities that generally require qualification, and we put that "require" in bold font over there. So these are the things that typically do require, unlike what Miranda spoke about on the other slide, the previous slide. So here we've got CPAs that are practicing in a given state. If you advertise in a state, and it used to be newspaper advertising, or maybe it was just in the Yellow Pages or something, but now it's online targeted advertising. Construction in a given state. Sales, third-party sales. And then, of course, merging with another entity that's already qualified.

Now, Miranda, tell us a little bit about banking from your perspective of what you're seeing.

Miranda: Yeah, great point, because banking is part of this list. And what's important to know is that when we're talking about qualifying in a foreign state, we're typically talking about the agencies like the secretary of state, the business division, commercial recordings, whatever that agency's equivalent name is in that state. But when we start getting into banking, that registration and qualification may not be with those agencies. It actually may be with a different department, the department of banking, or whatever that equivalent is called in that state. So knowing where to file is also part of getting it right.

Now let's get into some of the general consequences for failing to qualify. Some of the items we have highlighted here are needing access to the courts for civil matters. So if you are not qualified in a particular state, that's going to limit you in your ability to defend an action in a court. There are also monetary penalties on corporations, fines, fees, taxes, etc. There are penalties on individuals, which can be fines, fees, etc. But it also can include criminal misdemeanors. I know California and Ohio are a couple of states that will impose a criminal sanction against individuals that are not qualified in a particular state.

There's also the refusal of a business license. A lot of the times to get a business license in a lower municipality, they're going to look back on the secretary of state record and make sure that you're qualified in that particular state. And then we are going to share a little more about California and some of their restrictions later on in the presentation.

Helena: And now what we're going to do is we're going to jump into some of the considerations for qualifications. And Miranda is going to get us started with that.

Miranda: Okay. So the first thing you're going to want to do is make sure that your name is available. And what does that take? It can include various ways of checking that, whether it's a verbal confirmation by calling the state, whether it's checking their online systems and making sure that the name is available that way. But once you've confirmed it's available, now what do you do?

There are a couple options you can do to protect that name then for you to file that qualification in the future. There's an option of a name registration, and then there's an option to do a name reservation. They're two very different filings, and it's important to understand the difference between the two.

Name registration usually covers one year on behalf of a corporation, and it's not available in every state. So that's an important factor there with name registration. Name reservation is available in every state. However, the length of time that you can reserve the name varies from state to state, anywhere from 30 days up to 6 months and then you have to continually renew that, depending on how long it takes you to get to that qualification phase.

Helena: So let's now talk about actually choosing the name. And sometimes this is not as easy as you think because states have got statutory provisions that affect name selections. So it's very important to know that there is a difference between restricted words and prohibited words.

So, for example, a prohibited word will typically be a word of profanity or something like that. And the states say absolutely not. You cannot put that word in the name of an entity. Boom, that's it. And there's no way around that.

But then there are restricted words, and restricted words can still potentially be used within a given state for a name, but you typically have to have the approval of the secretary of state. And you also may need the approval of whatever that regulatory body is for that word with that state. So some examples of this that are restricted words that can't be used are words such as bank or trust. And some states might even outright restrict them entirely. Credit union, insurance, things like that. But for some states, they might say, "Hey, it's restricted, but the secretary of state has to approve it." But then also the commissioner of say financial regulation or banking or whatever it should be at that state, and then you might be able to use those words.

So just keep that in mind is if it's prohibited, you can't get around that whatsoever. If it's restricted, you might be able to use it. Now some of these words I mentioned, like bank, finance, and remember bank can be spelled with that K or with the C, trust, insurance, credit union, those are words that are often restricted. But you'll also see words such as doctor, physician, engineer, certainly the word university. So if you wanted to do something like open up University Bookstore, in some states that's going to be prohibited because the word "university" isn't allowed. Also other words that are very often prohibited, not just restricted, are words of government agencies, such as IRS or FBI.

And then, you also need to look at every state individually because they may have certain restrictions. For example, the word "Disney" cannot be used in the state of Florida. So, for example, I could not open up Helena's Disney T-shirts LLC. That would not work in Florida. So it's so important to get that information of what those restricted and prohibited words are for a given state.

So the other thing that's important to know is that your name cannot be deceptively similar to another entity in that given state. And a good example of this is you want to form ABC LLC, and maybe you call it The ABC LLC, but there's already an entity out there that's called An ABC LLC. And so depending on your state, they may say that that is deceptively similar and would cause confusion to the public and that's not going to be allowed. And what you really need to know is, at the end of the day, the secretary of state makes the decision on whatever name that you pick, whether or not that will actually be approved. So keep that in mind.

And no matter what Miranda and I are talking about today, we're not jumping into trademark issues anything. So keep that in mind is if you've got an entity and you've got a name that perhaps or you'll be facing the public in some fashion, be really, really careful with that so that you don't end up having any trademark infringement issues.

Miranda: All right. Let's get into more about if it's not available. And this example here is if it's deceptively similar to other entities of record, not speaking to restricted or prohibited words, as a Helena had mentioned earlier.

One thing that CSC could help with is checking for that name availability. And some of the items you want to look for are: What is the name of that conflicting corporation? What's the date of their incorporation? Who is their registered agent?

And then two of the most very important things is to understand does this state allow for consent to use the name by the conflicting corporation? Or do they then need to file a fictitious name to force the name in the state? And an example of that is our very own name, Corporation Service Company. When we qualified in the state of California it was not available. So we are known in the state of California as Corporation Service Company dba CSC Lawyers Incorporating Company.

Okay. So use of a fictitious name might get a little bit long and dicey when you're trying to figure out what to use. But let's go back to consent to use a name. This might be the easier process if you own the entity that conflicts. And that happens a lot. Let's say you have an entity, ABC I, II, III. You own them all. And the state allows you to give consent to yourself.

Some states have a form that you can complete. Other states simply require you to draft something, on your company letterhead, giving consent to yourself. That letter must be signed by a member, manager, or authorized person of that company. Or if it's a corporation, it would be an officer. If it's an LP, it would be a general partner.

All right. Now we've moved through the name availability. We have figured out whether you need a consent to use the name or you need to force the name or the name is completely available, and you've moved to your next step. That next step is then obtaining supporting documents. Most foreign states during the qualification process are going to require you, at the bare minimum, to provide a certificate of good standing. And that might be called various things depending on the state where it's obtained. Certificate of existence is another term that they use. But really it's just verifying the validity of that entity in that home state and that it's in good standing.

There are some states in order to qualify that are going to require you to obtain certified copies of all docs on file. They want to see the entire filing history. Some of those states would be Arizona, Illinois, Nevada, or Virginia. And it's important to note that obtaining all docs on file sometimes is not a 24-hour turnaround time. Sometimes it can take several weeks. Depending on the age of the entity, some states have images still in archives. New York is one of those states where if you're trying to pull images prior to 2002, you may have to wait a few weeks to get that. So it's important to know these things and making sure that you are gathering what you need well ahead of time before you plan to do business in a particular state.

Helena: Just like a domestic entity, that foreign entity has to have a registered agent. So any of those foreign qualified entities do. And that, in fact, is how CSC got its start back in 1899 is we were a registered agent. And so we would receive and forward process. We have to be present in that physical location in that jurisdiction. And then also we can do things like sometimes the registered agents will get annual reports sent to them and things like that, that they end up forwarding on to that entity.

So I do want to point out that the registered agent is expected to be available during customary business hours. So that's something that's really important to know is if your registered agent, perhaps it might be the actual entity itself, somebody there, but if they're not available because they're on vacation for a couple of weeks at a time, that is not going to end up being generally an acceptable circumstance. So that registered agent should be available during business hours. And even during the pandemic, CSC always had its offices open throughout the country so that they could receive that service of process if that came through. And then even if you were to see the CSC office in Wilmington, Delaware, our registered agent office has got a completely separate entrance from the employee entrance. And it's got its own little circular driveway so that someone can very easily come in, come to the door, do service process, and then be on their way.

So now let's jump into some of these common challenges, and we're going to get into some of the states where we see some particular things. But before we actually get into that, at the beginning of our webinar, there was this popup that you could click on, where you talked about what some of these challenges were and how you actually managed taking care of your foreign entities. And we had options on there of in-house legal management software, or registered agent platforms, spreadsheet, or even worse a word processing document, or if you use CSC services.

So Miranda, what is it that you see from our customers. When you're dealing with people, how are they keeping track of all of this?

Miranda: Well, all of those options that you said are tools that people are using. And the thing I've noticed about those tools, what stands out to me is that they're all self-managed tools that can pose gaps of knowing when and keeping up with compliance. The risk to compliance is going to lead to penalties, and that is where CSC can help with those services.

Helena: So let's talk a little bit about best practices, and let's get started with Delaware because that's where we see so many filings. And what I've heard from our customer service leaders, from people like Miranda, is that when we get into Q4, Delaware rejects actually more than 50% of filings. And it's often that the execution date is left blank, or perhaps there might be inconsistencies. Maybe people started to fill out paperwork ahead of time and they weren't sure if they were going with a corporation or an LLC, and they left that off and so it wasn't filled out.

And, of course, if you have an inconsistent use of your registered agent name or address, that will end up also causing a rejection. So CSC moved its offices a number of years ago. And when it did that, if you had an old PDF copy on your, desktop that you would always use for documents or for your filings, it would end up being is that was no longer our address. And then that would end up being rejected. So that's something to really keep in mind. And, of course, make sure that everything is signed.

So what about in New York? Filings will be rejected from New York State if you fail to include the county. That's got to be in there. That SOP address, that service of process address has to be included. So if you're using CSC, it would be our address that we have in Albany. The naming capacity of that signer has got to be typed below the signature line. You can't do any care of for a registered agent. So CSC or XYZ care of registered agent, that's going to cause a rejection in New York. And of course, for New York, you have to include that backer over there, and then the entity's name has got to be on that backer.

Miranda: An additional requirement in New York is publishing, and you must publish after forming or qualifying of an LLC or an LP in New York 120 days after filing. That publication must run once a week for six consecutive weeks in two papers. There will be requirements needed for that publication notice, as listed here, the entity name, purpose, place of business, etc. And then once the publication has run its course, there is an additional requirement in New York, and that's what's called a certificate of publication. And then that is resubmitted back to the state to confirm that you've met that publication requirement. CSC, as a convenience to our clients, we complete that process to make sure that you're fully compliant there in New York. There are a couple states that also and maybe more actually, now that I think about it, but two that stand out that have publishing requirements after qualifying would be Arizona and Pennsylvania.

Another common state that people qualify in is Illinois. And Illinois has a lot of requirements in their qualification process. So we wanted to talk about a few of these here. Getting it right and knowing how to file something the first time is going to make sure that you are in compliance. So some of those things during the qualification process is to have a place principal place of business for all types of entities in Illinois, and CSC's address cannot be used for that.

The signer of the title must be on the LLC or the corporation document, and there's not a place on the document for it, for the title. It's just a signature line. So you have to write it in.

Consideration cannot be left blank. Item 10a through 10d cannot be lift left blank. Even if you don't have assets or liabilities to report at that time, you have to complete that with a zero.

Number five on the qualification form cannot be left blank. And that's where it's going to ask you to list all the different states that you're qualified in. It's a very small line, very easy to overlook, but you have to write them out. The stocks must be listed exactly as they are on the home state's formation documents.

And the general purpose language needs to be a complete general purpose statement. It can't just be any and all activity. So something like to engage in any lawful act or activity for which a corporation may be organized under the laws of this state is what is required in Illinois.

Another popular state to qualify in is California, and California has gone through quite a bit of changes over the last couple years. They launched a new platform and moved all of their qualification work to online. And so at this time, the only thing you can submit over the counter are self-drafted documents. Everything else must be filed online. And if you do choose to submit those self-drafted documents, it must include a wet signature. And what is meant by that is it has to look like your actual signature. You have to write it out. Docusign is not permitted. But then you can send a scanned copy in to be submitted. So it doesn't actually have to be an original. It just needs to look like your handwriting.

If a state form is used, then one thing that we will do here is we'll take that form and we have to manually key it into the state's online portal because, as I mentioned before, qualifications are required to be submitted online. If you're listing CSC a agent, and this is back to what I spoke to earlier, forcing a fictitious name, you must list it out as it is qualified in California, and that is "Corporation Service Company which will do business in California as CSC-Lawyers Incorporation Service."

Another requirement in California is 90 days after qualifying, you have to file your first statement of information. And there is a new section for a labor judgment, and it must be completed.

If filing online, just know that a purpose cannot be over 50 characters. There is limitation, and this does include spacing and punctuation.

And while we don't have a slide about it, I just thought I would mention that Nevada is launching a new platform. That is a new trend that states are identifying that online is a more convenient and easier way for everybody to go. And then just know that when those online platforms are launched, rules, requirements, and all of that may change in that process, like they did for California making these mandatory.

Helena: So at this point, what we wanted to do was we wanted to take you to some of the additional resources that CSC has. So we're going to jump into that. I do want to point out that if you happen to be a CSC customer, you have access to our forms and then what are called the Procedural Summaries from CSC. And I want to point this out on this screen over here. And again, you do have to be a customer of ours to be able to get in here. But forms can change very frequently. I have heard from Miranda and her team, for example, Illinois forms can change practically overnight. You have no notice. CSC scrapes all the different states' websites and looks for new forms if there have been any updates. So if you are going to be working with a particular form from a state that you may not know very well or you may not know that kind of form, don't just rely upon doing a web search out there. It might pull up something a little bit older. Either go to the state's website or come to ours. So you can see that there's that link there for forms.

The other thing that we happen to have over here is we have what are called the Procedural Summaries. And I'm going to show you a little bit more on the next slide coming up. But what you can see is over here the example what we're doing is a Florida for-profit incorporation formation over here. So while it's not a qualification, it's a formation. But I'll jump into what it is that we discuss.

So now while this over here is an older screenshot over here, this will let you know what the filing fees are. And again, this is a formation, not a qualification. But you can see, at the time, that happened to be the filing fee.

And then the other thing is if you were actually looking at this on the CSC website, under the Procedural Summaries, and as you scroll down, you can see that publication required. There would be a line for that. So remember when Miranda pointed out New York and then mentioned, I believe, it was also Arizona and Pennsylvania, you would see that for that given state that was listed there. And remember when I talked about the different words that might be restricted or prohibited, you get all those words happen to be listed over there.

So if you're wondering about something, being able to go into Procedural Summaries is a great way that you can find out the answer to it. And if you reach out to our customer service professionals, like Miranda, and they don't know the answer off the top of their head, they will come into Procedural Summaries themselves, and then they'll double-check that for you.

The other thing I want to point out is kind of the whole point of our presentation over here is because we were talking about foreign qualification. Well, every year CSC publishes a guide that's called "Doing Business Outside Your State." We affectionately refer to it as DBOYS. And that comes out every year in the summer, somewhere right around fourth of July. It's after the spring legislative sessions have met. And that will go through the analysis to help you determine whether or not you need to do qualifications. So when Miranda went through what are some of the most common reasons that do trigger qualifications, that guide will go through all of those. And this is completely free to get. It happens to be in your Resource widget over there, so in the audience console. You can download it. I really, really recommend that you grab a copy of this. And if you don't do it today, you can always download it from our website later. But it's right here for you to be able to download. And you just need to have a business or an educational institution email address to be able to download it if you do that in the future.

We also have some book resources for you. So we have partnered with LexisNexis to do some publishing of different guides. And if you go to LexisNexis' website, these are available for purchase. The one that I really do want to call out is that first one that's listed at the top, the "Qualifying Your Business in Another State: The CSC 50-State Guide to Qualification." That is listed over there. That definitely goes much more in depth into some of the reasons for qualification. It lists the actual statutes, case law. There are annotations in there. So it really goes more in depth into different things to be able to look at. And again, those are for purchase, available at the LexisNexis website.