OBTAINING CERTIFICATES PERMITTING FOREIGN CORPORATIONS TO DO BUSINESS AND MAINTAIN AN ACTION IN NEW YORK OR NEW JERSEY.
Almost every State in the Union, and especially the States of New York, New Jersey, Pennsylvania, Massachusetts, Connecticut, etc., require foreign corporations, that is, corporations formed under the laws of other States, to procure a license or certificate to do business within such State, and in default thereof penalties or fines are imposed.
In considering the necessity of such license the first question is to ascertain whether the corporation is transacting its business in a manner which could be interpreted as “doing business” in its legal sense, and this means generally filling all orders obtained in that State when more than two or three incidental orders have been obtained or the maintaining of a place of business in such State. The difficulties in obtaining the certificates are not great but the details are technical and the expense ranges from $10 upwards, depending upon the laws under which the company is incorporated, there being retaliatory laws in some States. The average expense is about $25, and the certificates are generally good for an indefinite period; the only annual requirements being a formal report which does not involve the giving of the details of the corporation’s business and there is no annual taxation unless the corporation has both property and is doing business within such State.
In many cases where valid claims exist in favor of a corporation of another State against a New York debtor, a serious obstacle arises where the foreign corporation has not obtained a certificate to do business in this State, and, therefore, cannot maintain the action. By the statutes as last amended this prohibition covers also any one to whom such foreign corporation has assigned the claim for collection. The provisions of the New York corporation law in this matter are easily complied with. There has to be a sworn copy of the charter of such foreign corporation and the designation of some person on whom process can be served.
The objection to complying with the statute in this respect is the possible liability to taxation after the corporation gets its name on the State Register. All that is taxable in New York State is the amount of capital used in the State, and this would be so small as to be unimportant provided, of course, that the proper returns to the tax departments at Albany and New York are made out each year. This, we understand can be done in ordinary cases, at a charge of $10, for the two reports, one to Albany and one to New York, and this sum is a very small tax to pay for what must be the advantages of selling lumber and maintaining the legal rights connected with such sales in New York State.
Opinion No. 17.