Under the Revised LLC Act, a foreign limited liability company may not “transact business” in Florida until it gets a “certificate of authority” from the Secretary of State. But what does that mean? If an LLC buys office equipment from a vendor in Florida without a certificate of authority, does it run afoul of the LLC Act?
The short answer is no. Helpfully, the statute lists several activities that an LLC may conduct in Florida that do not constitute “transacting business”:
- maintaining, defending, or settling a lawsuit;
- holding managers’ meetings or members’ meetings;
- maintaining bank accounts;
- maintaining managers or agencies for the transfer, exchange, and registration of the LLC’s own securities;
- selling through independent contractors;
- soliciting or obtaining orders from people within Florida, so long as the orders require acceptance outside of Florida to become contracts;
- creating or acquiring indebtedness, mortgages, and security interests in real estate or personal property;
- collecting on debts or enforcing mortgages;
- transacting business in interstate commerce;
- conducting an isolated transaction that is completed within 30 days;
- owning or controlling a subsidiary corporation or LLC incorporated in or transacting business in Florida;
- being a limited partner in a limited partnership that is transacting business in Florida; and
- owning real estate or personal property located in Florida that produces no income (the statute makes a specific exception for income-producing property).
By the statute’s own terms, this list is not exhaustive, and other activities may also not constitute “transacting business” in Florida.
If a foreign LLC needs a certificate of authority to transact business, but does not get one, the statute also lays out a few effects. For instance, the LLC may not file a lawsuit in a Florida court, and if a lawsuit is filed, the court may stay the proceeding until the LLC obtains a certificate of authority. The LLC may defend a lawsuit, however. In addition, any contracts executed by the LLC are still valid, notwithstanding the lack of a certificate of authority. By transacting business in the state without a certificate, the LLC is deemed as a matter of law to have appointed the Secretary of State as the company’s agent for service of process. Finally, the LLC is liable to the Secretary of State for civil penalties for each year (or part thereof) that it operates without a certificate of authority.
When in doubt about whether a certificate of authority is necessary, it is probably prudent to register your foreign LLC in Florida. The Secretary of State requires applicants to complete a two-page form and submit a certificate of existence (or similar document) from the state or country where the LLC is organized, along with filing fees. Paying these minimal fees up front is far less harsh than the potential $1,000 fine that the Secretary of State can impose for failing to get the certificate.