In an intriguing case that emphasizes the critical role the Secretary of State plays in governing foreign entities’ ability to conduct business, a change in judicial judgment was recently observed. As per Section 1312 (a) of the Business Corporation Law (BCL), international corporations, partnerships, and limited liability companies authorized to take ‘affirmative part in doing business’ in New York are required to first register with the Secretary of State.
Previously, any failure to acquire the needed registration led not only to the deprivation of the legal capability to assertively access New York’s courts but also to the potential dismissal of any action commenced by the respective foreign entity.
In a significant decision, a complaint that was formerly dismissed “with prejudice” due to the violation of New York’s BCL § 1312 (a) has been modified in a manner that allows unregistered foreign corporations to register with the state. The modification grants foreign entities a kind of grace period that goes beyond the formerly quite stringent rules and regulations. For more information, see the report by Freiberger Haber LLP relating to this case.
This modification to the interpretation of BCL § 1312 could potentially have wide-reaching implications for international corporations looking to do business in New York, changing how they approach this registration requirement. Further judicial developments in this area will be closely watched.
As matters unfold, foreign corporations intending to conduct business in New York should remain aware of the need to register with the Secretary of State under BCL § 1312 (a) for the purpose of avoiding potential legal stumbling blocks and maximizing their ability to access the justice system.