The California Secretary of State has issued another warning regarding misleading solicitations.

The Secretary of State’s office has been advised that letters are being sent to California corporations directing them to submit $495 and a completed form to a private company named “Business Filings Division” in order to dissolve their business entity.  A similar letter is being sent to California limited liability companies.

The letter/form does not meet the requirements of the California Corporations Code, and a corporation cannot delegate the obligation to have the Certificate of Election to Wind Up and Dissolve and the Certificate of Dissolution signed and verified by the shareholders, members, officers or directors of the corporation.

Additionally, the Certificate of Election to Wind Up and Dissolve and the Certificate of Dissolution must be submitted to the California Secretary of State’s office for filing.

If you receive one of these fraudulent solicitations, please let us know.

Also, you can mail a written complaint along with the entire solicitation (including the solicitation letter, the outer and return envelopes, and all related documents) to the California Attorney General’s office, Public Inquiry Unit, P.O. Box 944255, Sacramento, California 94244-2550.

A complaint form, which can be completed online and printed to mail, is available on the California Attorney General’s website at www.ag.ca.gov/consumers/general.php.

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“Compliance” can mean many things. This article is about what filings are required by the California Secretary of State. In other posts, we’ll be writing about corporate minutes and such.

What is due to the Sec. of State, when, and how much does it cost?

California law requires corporations and limited liability companies to update their records with the Secretary of State’s office on an annual basis.

This filing is called the Annual Statement of Information.

It is due once a year, unless you make other changes, such as your company’s business address, and the filing fee is $25.

BUT, if you miss the filing due date, the Secretary of State tacks on another $250 late fee.

We recently polled a large sampling of our clients and found that nearly half of them had missed the filing due date for the Annual Statement of Information. For them, the $25 fee turned into $275.

We want to make sure this never happens to any of our clients.

So then, let’s lay out the requirements:

Q: What is the purpose of the Annual Statement of Information?
A: It lets the Secretary of State know if you’ve changed owners, executives, company address, or your agent for service of process. The forms are a little different for corporations and LLC’s, but they are generally the same.

Q:  When is it due?
A:  It is due annually, any time in the five calendar months preceeding the anniversary of your entity formation.

For example, if your corporation or LLC formed on November 20, then you must file the Statement of Information each year, at some point in July, August, September, October, or November, but no later than 11/20.

Q:  What does it cost?
A:  As mentioned above, the filing fee is $25. Miss the date, though, and you’ll be hit with the additional fine of $250.

Q:  Don’t we also need to file Annual Minutes with the Secretary of State?
A:  No, not in California. Minutes (both annually and sometimes more frequently) are to be kept by the corporation or LLC. These are your internal records. You are not required to file them with the California Secretary of State. (Some states differ slightly in this regard, but that’s for another blog post.)

Q:  Seriously, we got a letter in the mail that said we need to file annual minutes. Are you sure?
A:  As we’ve discussed, there are private companies that sell corporate compliance services. Several have been known to be very agressive with their marketing, going so far as to send very official looking letters.

These companies offer a service that will generate Annual Minutes for you. This service may be an excellent service, but many of our clients have complained that the confusion comes from the letters’ (somewhat intimidating) suggestion that these minutes need to be filed to avoid fines. This just isn’t the case. There certainly are very important reasons to regularly update your minutes, but this is not one of them.

The Secretary of State has even issued a public warning memo, calling them “Misleading Business Solicitations.”

If you have any other questions about the Annual Statement of Information, please Contact Us. We’ll do our best to answer your questions or sort out whatever situation you may have.

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Many of our clients have asked about a very official looking letter in their mailbox, warning of the importance of making certain compliance filings, and requesting a fee for submission. These letters are from a private company and can be rather misleading.

It seems the California Secretary of State agrees that they are misleading. They were concerned enough to issue a formal notice recently titled “Customer Alert Regarding Misleading Solicitations.”

The warning lays out some of the characteristics of these letters:

Appear similar to a Secretary of State Statement of Information form;

Contain an official-looking seal;

Quote a specific statute or other law on the form to be filled out and returned;

Imply that failing to return the form and pay the requested fee may place the entity in legal jeopardy, or might cause the entity’s filings with the California Secretary of State to be in default or noncompliant status;

Contain a reference to a “file number,” “Corp Number,” “Corporation Number,” or “Control Number” that does not match the number assigned to the entity by the California Secretary of State;

Reference or quote Corporations Code sections inapplicable to the type of entity being solicited, such as Code sections applicable to corporations when soliciting a limited liability company;

Reference an “annual fee” or “annual payment” rather than a filing fee and that is in excess of the filing fee for a Statement of Information;

Provide an estimated processing time for “minutes” to be prepared and mailed to the entity;

Indicate the submitted information will be treated as private and confidential.

So, let’s be very clear: The Secretary of State is not related to these private companies. You do not need to make filings through such a business.

That said, there are annual requirements, such as the filing of the Statement of Information, for both corporations and limited liability companies. You do not want to miss the deadline on this: if you do not file it by the annual due date, the $25 filing fee gets hit with a $250 late fee.

If you have any questions about what is required and how to file it, please contact us. We’d be happy to answer your questions.

UPDATE: here is a description of complaints on the issue from the LA Better Business Bureau: Corporate Compliance Recorder

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