Once an insurance business obtains a Certificate of Authority to transact business in a non-domicile jurisdiction, it must keep the information associated with that COA up to date. Such updates allow the Secretary of State’s office to verify that a business’ structure and governance continue to comply with their state’s laws and regulations. Additionally, it enables the SOS to contact the business in a timely manner regarding a change to its COA status changes or about legal or regulatory actions involving it. Many states allow businesses to report changes on an annual or biennial basis, but sometimes updates need to be handled differently. In these cases, the business needs to amend its Certificate of Authority. Furthermore, in states that don’t have an Annual/Biennial Return requirement, all such updates require an amendment.
Common COA Amendments
Amendments allow businesses to notify regulators about a broad range of changes to their structure, governance, and day-to-day operations. Remember, whether an amendment is required to make these changes can vary by state.
If an entity changes its legal name, the Secretary of State must be notified – along with the Department of Insurance, of course. A legal name change can only be made by filing an amendment. Furthermore, some SOS Offices require prior name approval by the state insurance department. Any state rules governing name structure still apply. For example, some states require definitive words such as “agency,” “services,” or “solutions” to follow words such as “insurance.”
Proof of the DOI’s name approval, and any other required supporting documents, should accompany the amendment application. Once the Secretary of State approves a name change, they typically send a Certificate of Name Change. This document lists the previous name, the current name, and the date the change took effect. Keep these certificates on file as proof of compliance.
Change of Domicile State
The process for changing a business entity’s domicile state is called re-domiciliation or re-domestication. One essential thing to remember is that both states must agree to the re-domestication before you start the process. How “open” regulators are to changes of domicile varies from state to state. For example, some states allow certain business structures (usually corporations) to re-domesticate but prohibit others from doing so.
If both states are willing, the business needs to request a Certificate of Authority and a certified copy of its Articles of Formation. Submit these documents to the new domicile state’s Secretary of State’s Office along with Articles of Domestication. Some jurisdictions also require additional filings such as newspaper publications, lists of Directors & Officers (Managers & Members for LLCs), or statements of information. Once the SOS approves the new domestication, the business’ registration in the old state must either be dissolved or changed to a foreign registration.
Shares Information Update
Some states base their annual return fees on the number of shares a company offers. If an amendment changes the number of shares – in particular, if it increases the number of shares – the SOS may collect the difference in fees for any reporting periods since the change took effect. If the number of shares decreases, reporting that change promptly can avoid unnecessary expenses.
Change of Business Purpose
Obviously, businesses evolve over time to follow changing markets. Remember, though, that the purpose of a business often determines whether it needs to register with the Secretary of State’s Office, so leaders should revisit this question any time there is a significant change to the business plan.
Typically, a business should report if the change moves the business into a different NAICS code. If there is a question about whether a change is significant enough to warrant an amendment, contact the Secretary of State’s Office(s) involved and ask.
Change of Business Structure
People sometimes believe that changing a business’ structure from, for example, Inc. to LLC, is simply another kind of name change. In fact, changing the structure of a business — a process known as conversion — impacts every aspect of its licensing and compliance. In particular, it can have serious tax implications.
The steps needed to convert properly vary by jurisdiction, but most foreign SOS Offices follow the lead of the business’ domicile state. (Note, however, that attorneys and regulators sometimes use the term “conversion” to describe other types of business changes. If there’s any question about what someone means when they say “conversion,” ask.)
In most states, entities report address changes on Annual Returns; but if a state doesn’t require returns, look for an address change form on the SOS website. Don’t forget that some SOS Offices also track email addresses. In fact, many regulators prefer to communicate by email to help keep operating costs down.
Unfortunately, email addresses often change more frequently than physical or mailing addresses, so stay on top of these changes. It’s also a good idea to use an email address with a business domain rather than a personal email address with a commercial domain such as gmail.com or yahoo.com.
Director & Officer Information Update
Not every state tracks D&O information. For those who do (and don’t utilize annual returns), a letter written on company letterhead is usually sufficient documentation. Be sure to include the full name of the company and its registration number and list all changes to governance information. Cite any relevant section of state code or law pertaining to the change as well. Finally, an officer or director needs to sign and date the letter. Regulators may also refer to this type of change as a Transfer of Authority.
Registered Agent Information Update
Failing to maintain a registered agent is one of the most common reasons that entities lose their good standing. One of the great things about using a commercial resident agent service is that they usually notify the SOS of changes to RA contact information for their clients. Many services even absorb any state fees.
Businesses that don’t use a commercial service or whose vendor doesn’t handle notifications, need to report any change to the contact information within 30 days of the change. Generally, this includes their name, physical address, and mailing address. Because of the 30-day window, most states have a special form to update RA information.
Period of Duration Change
The period of duration is how long a business entity exists before dissolution. Formation articles often list the period as “perpetual” or “until terminated/dissolved according to law,” but a specific date may also be used. There are two situations that require a period of duration amendment. The first is when a business changes the period listed in its Articles of Incorporation/Formation for whatever reason.
The second occurs when a business comes to the end of its listed period. As the dissolution date approaches, some Secretary of State’s Offices notify the entity in writing. If the entity plans to continue doing business, it must file an amendment to its Certificate of Authority. Otherwise, its status changes to inactive. At that point, a reinstatement or reapplication is required.
How to Amend a Certificate of Authority
It’s important to know that you can’t submit an amendment unless your Certificate of Authority is “in good standing.” If it isn’t, you must first submit any past-due annual reports or tax filings, that apply for reinstatement.
Any amendment needs to be processed in your domicile state first. If your resident state is different from your domicile state, submit the amendment there next. Afterward, you can file the amendment in the remaining states where the business holds a Certificate of Authority, along with proof of your domicile state’s approval of the change.
Regulators typically have state-specific forms for the various types of amendments. Some SOS Offices provide an online portal to submit amendments electronically. Still, paper submissions are common. Depending on the type of change made, the Secretary of State’s Office may also require supporting documents. These may include a certified copy of your amended Articles of Incorporation/Formation or a Certificate of Name Change or Certificate of Good Standing from the domicile state.
Fees for amendments vary by state. Most are around $50 per amendment, but they can be as high as $300. And keep in mind that you want to begin the amendment process as soon as possible after a change occurs!