Registered Agents – Why Your Company Should Use an Independent Registered Agent

Introduction

A few years ago, a small oil and gas company in a large city re-located its principal offices to a smaller city in the same state, but forgot to change its registered agent address at the Secretary of State’s office to reflect the move. Later, a third party filed a lawsuit against the company but could not locate its registered agent. As required, the third party checked the Secretary of State’s office to obtain the current address for the registered agent so that he could serve the summons on the oil and gas company, but the old address was of no use. Eventually, after being unable to locate and serve the oil and gas company with the lawsuit papers, the third party obtained a default judgment against the company. The oil and gas company later had to spend a substantial amount of money to vacate the default judgment, all because the company acted as its own registered agent and failed to file a change of address when it moved. best LLC service

In another case, an individual agreed to act as registered agent for a small company. A third party later filed a lawsuit against the company and hired a private process server to serve the lawsuit papers on the company. This occurred during the Christmas holiday season. Because the registered agent was an individual, the process server appeared at the person’s home with summons in hand on Christmas Eve in order to serve the lawsuit papers on the individual, knowing that he would probably be at home. Of course, this was very upsetting to the individual and his family.

Although the foregoing cases are perhaps the exception to the rule, in both instances (and in similar instances that often occur) the legal risks, liability, frustration and embarrassment experienced in such cases could have been avoided if the companies had used an independent, registered agent as their service agent. There are literally hundreds of thousands of companies conducting business in the United States. These companies range in size from small, family owned businesses to Fortune 500 companies. From a legal standpoint, these companies can be corporations, limited liability companies, limited partnerships or other types of legal entities.

One thing that they all share in common is that they are all required under state law to have a designated registered agent. Once a corporation or limited liability company is formed, the laws of the various states require the corporation or LLC to designate a registered service agent so that service of process and other official documents can be properly delivered to the company. The name and address of the registered agent of every business entity doing business in a state is maintained in the office of the Secretary of State or other applicable state agency so that the public can use such information to serve official papers on the business entity if necessary.

Many companies, and particularly small companies, often designate an officer, employee or even an owner of the business to be the registered agent who will be served with summonses and other official documents as the company’s “registered service agent.” However, this can sometimes have serious, unintended consequences. There are several compelling reasons why a company should seriously consider using an independent, professional registered agent as its statutory “service agent” within a particular state. The good news is that there are independent registered agents who will provide this service at a very low cost.

Top 5 Reasons Why You Should Use an Independent Registered Agent!!

  1. You Can Prevent Easy Discovery of Your Assets & Obtain Privacy and Anonymity
    Lawyers for people who are considering suing someone often do an “asset search” before filing the lawsuit to see if the person has identifiable assets that could be used to satisfy a judgment. In the past, one of the methods used to conduct a preliminary search for a person’s assets was to search the public records to determine whether the person acted as registered agent for any companies. In the case of small businesses, this was done because the owner of the company typically acts as the registered agent for the company because the lawyer who formed the company in the first place may have designated the owner as the registered agent for the company. If you own a business, this has probably happened to you.

In the old days, if a person wanted to locate your assets and believed that you might be the owner of one or more companies, the person could manually check the records of the Secretary of State to determine whether you were acting as registered agent for any companies. The person conducting the search (typically a plaintiff’s lawyer) knew that if your name appeared as the registered agent for one or more companies in the state, you also probably owned the company or companies because people typically do not act as registered agent for companies that they do not own. However, this old method of trying to locate the assets (i.e. the companies) owned by a person through a manual “registered agent” search of the Secretary of State’s records could be like trying to find a “needle in a haystack.” In other words, this was not a very effective way to conduct an “asset search.”

However, in today’s modern era of high-tech computer programs and search engines, many states have implemented on-line computer access to the business records that are maintained in the Secretary of State’s offices or other central record keeping agency in the state. One example of this is Oklahoma’s “Sooner Access” program that is available on the Oklahoma Secretary of State’s website. Using these programs, which are often free of charge to the public, a person can perform a “registered agent” search in a matter of minutes and locate all of the companies for which you act as registered agent. This makes it quick and easy for a lawyer or other interested person to conduct an asset search using your name. If you act as your own registered agent for companies that you own, any person can now use your name in an online search to easily and quickly identity those companies. This makes many people very uncomfortable. In fact, many view it as an invasion of privacy. However, there is hope! The problem can easily be avoided through the use of an independent registered agent. If you use an independent registered agent, a person can no longer use your name to conduct an online “registered agent” search to locate your assets, i.e. the companies that you own. An independent registered agent can thus provide you with anonymity and a level of privacy that otherwise cannot be achieved.