If you are a “foreign” Limited Liability Company, such as a Delaware LLC, you must register in Massachusetts if you do business here. See Mass. Gen. Law c.156C, §54. That’s not difficult, but it does take a bit of effort and yearly filing fees. You must also have a registered agent within the Commonwealth. Doing business properly and following all the rules is costly, but not doing so is riskier and can be much costlier.
Other than putting your Limited Liability Company at risk, you are not really gaining anything by not filing. Whether or not you register, if your LLC does business in Massachusetts, you can still be sued in the courts of Massachusetts. You can ignore such a lawsuit at your peril. A successful plaintiff could enforce the judgment against your LLC if you have property in Massachusetts, or in your home state (see, the Full Faith and Credit Clause of the U.S. Constitution). And if you are unregistered and/or have no agent for service in the Commonwealth, the Secretary of the Commonwealth becomes your agent for service.
What are the consequences of not registering? For starters, you can be fined by the Secretary of the Commonwealth: “A foreign limited liability company doing business in the commonwealth which fails to register with the state secretary shall, for each year that such failure shall continue, be fined not more than five hundred dollars.”
But will not registering prevent your LLC from enforcing its rights and filing a breach of contract or other claim? Yes and no. Under the statute, an LLC can still defend itself in court. However, you will not be able to file suit as long as your failure continues. The statute provides that: “no action shall be maintained or recovery had by the foreign limited liability company in any of the courts of the commonwealth as long as such failure continues.”
A Minnesota LLC recently tried to challenge this statute, but the Massachusetts court ruled against it. The court ruled that the statute was valid and that a foreign LLC would have to pay the state registration fees before filing suit.
So the takeaway is clear. If you are a foreign LLC doing business in Massachusetts, do the right thing and register. If you have sue in Massachusetts or you get sued, the LLC Registration fee will be the least of your worries and expenses. This post does not address any income tax issues.
By Adam P. Whitney, 617-338-7000
CONNECT WITH ADAM
RELATED PRACTICE AREAS
ADAM’S RECENT POSTS
BREAKING DOWN THE NLRB’S NEW JOINT-EMPLOYER RULE
GUEST POST BY BRANDON SLOANE On February 26, 2020, the National Labor Relations Board (NLRB) issued a final rule clarifying the standard for determining joint-employer status under the National Labor Relations Act (NLRA). The NLRB’s ruling is significant for any...
SEE NO EVIL: CAN YOUR BUSINESS BE HELD LIABLE WHEN YOUR EMPLOYEES ENGAGE IN OR SIMPLY OVERLOOK SEX TRAFFICKING THAT OCCURS ON COMPANY PROPERTY?
GUEST POST BY BRANDON SLOANE A District of Massachusetts court decision from November of last year has helped to clarify the liability that employers can face for illegal sex trafficking that occurs on company property. Ricchio v. Bijal, inc. (Civil Action No....
BUSINESS OWNERS AND PARTNERS SHOULD BE PARANOID
Fox Moulder’s motto was “Trust No One.” Lawyers can understand this paranoia. Divorce lawyers know spouses cheat. Criminal lawyers know clients steal (and worse). You should know that your business partners and key employees that you trust the most can betray you....
NO GOOD AT GOODBYES: WHY EMPLOYMENT ATTORNEYS ARE IMPORTANT TO USE FOR CREATING SEVERANCE AGREEMENTS
GUEST POST BY BRANDON SLOANE Severance agreements, which are contracts between an employer and an employee that contain certain rules and guidelines for when an employee is terminated, may be regarded as somewhat of an afterthought by employers. An employer might...
NEW RULING FROM MASSACHUSETTS APPEALS COURT SHOWS THE IMPORTANCE OF LLC OPERATING AGREEMENT LANGUAGE
How do Limited Liability Company Operating Agreements affect the fiduciary duties owed to co-Members of the LLC? That issue was decided in the case of Butts v. Freedman, which also involved Boston Equity Advisors LLC (“BEA”) and Outcome Capital, LLC (“Outcome”). ...
GET IN TOUCH
Law Office of Adam P. Whitney265 Franklin Street, Suite 1702
Boston, MA 02110
ABOUT THE FIRM
Business Litigation and Employment Law
Outside General Counsel
Shareholder / LLC / Partnership Disputes
No attorney-client relationship is established by your use of this site. You must not send or share any confidential information about you or any legal issue without Attorney Whitney's express written permission. The content of this website may be considered advertising for legal services under the laws and rules of professional conduct. The content does not constitute legal advice. The content is for information purposes only. Legal advice cannot be provided unless you hire my firm and we perform a full review of the legal matter and the most current, applicable law. The law in your state may be different than Massachusetts, so the information in the content may be completely irrelevant if you are outside of Massachusetts.