If you will be organizing a business, or conducting business, in California, you need to know about designating an agent for service of process with the California Secretary of State.
The Agent for Service of Process
An "agent for service of process" (sometimes simplified to agent) is an individual or a corporation that is designated by a business entity for the purpose of receiving official legal documents, such as lawsuit papers, subpoenas, and other official legal documents. In many other states, this may be called a registered agent, resident agent, or statutory agent.
Why an Agent Is Needed
An agent for service of process is required by California law for every corporation, limited liability company (LLC), partnership, limited partnership, and limited liability partnership (LLP) that is:
- Organized in California (a domestic entity); or
- Organized in another state, territory, or country; and conducts business in California (a foreign entity).
An entity failing to comply with California's requirement to maintain an agent for service of process may be served through the Secretary of State.
What an Agent for Service of Process Does
The agent's duties are to:
- Maintain a street address in California (not a PO box, or a private mailbox or mail service);
- Have someone available at that address to receive service of process for the business; and
- Notify the business owner of any papers received, and forward them to the owner.
Agents sometimes offer additional services, such as preparing and filing registration documents, sending reminders when reports or license renewals are due, and keeping documents.
Who Can Be an Agent for Service of Process
An agent can be an individual person, or a corporation that provides agent services. An individual person serving as an agent must be a California resident.
The two most common practices are:
- Designating an "in-house" agent. This is typically an owner or employee of the company, using the street address of the entity's main office in California.
- Hiring an outside agent. This can be an individual, but is usually a corporation that is in the business of serving as an agent for service of process and represents multiple entities.
Choosing an Agent for Service of Process
Whether you select an agent from within your company, or hire an outside agent, it is important to select one that can be relied upon to notify you promptly when important legal papers are received.
Using an Agent Within Your Company
The agent for service of process for your business can be you, one of your co-owners, an employee, or any other adult. The advantages are saving the cost of an outside agent and immediately knowing of any lawsuits or other important matters. Disadvantages include:
- Someone must be at the designated agent's street address during regular business hours. If you are operating out of your home, a responsible adult must be there in case legal papers are served.
- Legal papers may be served in front of your clients and employees, which can be embarrassing.
- Companies will frequently obtain agent addresses from the Secretary of State and mail solicitations, so you will receive more junk mail.
Using an Outside Agent
Hiring an outside agent will be necessary if:
- Your business is organized in another state, and you will be doing business in California but do not have a regular office there; or
- You have organized your business in California, but do not maintain an office in California. (This situation is uncommon in California, but is more likely in states that offer special tax and privacy advantages to organizing a business there, such as Delaware and Nevada. California does not offer such advantages.)
The main advantages to hiring a professional outside agent are that the agent will comply with California laws regarding having a street address and your clients and employees will not be present when any legal papers are served.
Designating an Agent for Service of Process
Any entity required to have an agent for service of process must designate the agent in the initial documents filed with the Secretary of State. This will be in the Articles of Incorporation for a California corporation, the Articles of Organization for a California LLC, and the various initial registration statements required for other types of domestic and foreign entities.
Within 90 days of filing its initial registration document, the entity must file a Statement of Information (on an official Secretary of State form). Thereafter, a limited liability partnership must file a Statement of Information every two years, and all other types of entities must do so annually.
However, if there is no change in any of the information required by the Statement of Information, the entity can file a Statement of No Change instead. In addition, a Statement of Information must be filed in the event of a change of agent.
For all of these filings, if the agent is an individual person, the agent's name and physical address must be designated. If the agent is a corporation, only the name of the corporation is to be given.