February 5, 2023

Volume XIII, Number 36

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February 03, 2023

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February 02, 2023

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In This Case It May Have Been Better To Have Never Registered At All

Section 2105 of the California Corporations Code prohibits a foreign corporation from transacting intrastate business in California without having first registered with the California Secretary of State.  A foreign corporation that does not transact intrastate business in the state is under no obligation to register with the Secretary of State, but nothing prohibits a foreign corporation from voluntarily registering.  To paraphrase Alfred Lord Tennyson, is it better to have registered and lost than to have never registered at all?*

Apparently not.  In Trajkovski Invest AB v. I.Am.Plus Electronics, Inc., U.S. Dist. Ct. (C.D. Cal.) Case No. 2:21-cv-04246-ODW (JEMx), I.Am.Plus filed a motion seeking relief from a judgment.  Trajkovski argued that I.Am.Plus had lost its privilege to litigate because its registration as a foreign corporation had been been forfeited.   I.Am.Plus countered that because it was not transacting intrastate business, it was under no obligation to register.  Judge Otis D. Wright, II, however, ruled that "once a foreign corporation does register, if the corporation later forfeits that registration, "[a] status of 'forfeited' applies . . . and holds the same legal consequences as a 'suspension' for a domestic corporation."  (citing MS & Sons Hosp., LLC v. DB Ins. Co., Ltd., No. CV 20-1994 JGB (SHKx), 2022 WL 1395329, at *5 (C.D. Cal. Apr. 7, 2022) (citing Alhambra-Shumway Mines, Inc. v. Alhambra Gold Mine Corp., 155 Cal. App. 2d 46, 50 (1957))).  As a result, Judge Wright declined to rule on the respondent's motion.  He did allow the respondent the opportunity to renew its motion after reinstating its status, subject to the deadlines in Rule 60(c) of the Local Rules.

In Memoriam A.H.H.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XII, Number 333
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

949-851-5428
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