Foreign Corporations in Ohio: Licensing and Legal Standing
Foreign Corporations in Ohio: Licensing and Legal Standing
Introduction
Ohio, like many other states, requires "foreign corporations"—business entities incorporated outside the state but seeking to conduct business within Ohio—to adhere to specific legal requirements. These regulations ensure that such corporations operate on a level playing field with Ohio-incorporated businesses and are accountable under Ohio law. Two key aspects of Ohio corporate law that foreign corporations must navigate are obtaining a license to transact business in the state and understanding their standing to file lawsuits in Ohio courts.
Licensing Requirements for Foreign Corporations
Under Ohio Revised Code (ORC) Chapter 1703, foreign corporations must obtain a license before transacting business in Ohio. This process involves several steps:
Certificate of Authority: The foreign corporation must apply for a Certificate of Authority from the Ohio Secretary of State. This certificate grants the corporation the legal right to conduct business in Ohio. The application typically requires:
A completed application form.
A certificate of good standing from the state of incorporation.
Designation of a statutory agent in Ohio to receive legal notices.
Payment of the required fees.
Compliance with State Regulations: Once licensed, foreign corporations must comply with Ohio laws and regulations, including annual reporting and tax obligations. This ensures ongoing compliance and maintains the corporation's good standing in Ohio.
Transacting Business in Ohio
Not all activities constitute "transacting business" under Ohio law. Activities such as holding board meetings, maintaining bank accounts, or conducting isolated transactions do not typically require a foreign corporation to obtain a license. For example, a corporation is not required to register before filing suit if the company is merely attempting to collect a debt. (See, Bosl v. First Fin. Inv. Fund I, “Given that appellees were not "transacting business," but merely attempting to collect a debt, by hiring a domestic law firm to file suit, they were not required to register with the Ohio Secretary of State before filing suit against appellant, R.C. 1705.54.”)
Comments