Recently, I received a call from the owners of one of my clients
who explained the shocking news that they had apparently lost the
right to their limited liability company's (LLC's) name.
Why? They failed to timely file their required periodic statement
of information with the California Secretary of State. They
wondered whether I could help bring their LLC back into good
standing. Quickly thereafter, I was able to confirm that in fact my
client's LLC was "SOS suspended" and that their
company's name had been taken by another party during the
suspension. I called my client to confirm that they would have to
revive their LLC by (1) filing a statement of information, and (2)
paying the outstanding fees and penalties imposed by the Secretary
of State. But first, they would need to change their LLC's
name. Because this name had deep family roots and a great deal of
sentimental value, the news was understandably not well received,
and they were left wondering, how could this have happened?
So, what did happen? Every California and California registered
foreign LLC must file a statement of information with the
California Secretary of State within 90 days after the filing of
its original articles of organization and, based on the original
file date, every two years thereafter during a specific six-month
filing period. The statement of information includes such things as
the LLC's business address, the names and addresses of its
managers, the agent for service of process, and the LLC's line
of business. The California Secretary of State will suspend an LLC
if it fails to timely file its required periodic statement of
If an LLC is suspended for failing to
file its required periodic statement of information, the California
Secretary of State will provide a suspension notice.
If the statement of information is
not filed within 60 days after the date of such notice, the
California Franchise Tax Board will assess a $250.00 late fee.
A suspended California LLC may not
conduct business, prosecute or defend an action in a California
Any contract executed by a suspended
LLC may be voidable at the option of the other party.
While the California Secretary of
State lacks the authority to prohibit foreign LLCs from transacting
business outside the state of California, foreign LLCs that are
suspended by the California Secretary of State are subject to the
same restrictions as California LLCs during such suspension for
activities conducted within the State of California.
Finally and more importantly for my
client, while an LLC is suspended another party may assume its
Returning Your LLC to Good
If your LLC has been suspended by the California Secretary of
State for failing to timely file its required periodic statement of
information, it can be placed back into good standing by being
revived or reinstated, which usually means filing the delinquent
statement of information with the California Secretary of
State's office and paying any outstanding fees and penalties.
However, if an LLC's name was taken while the LLC was
suspended, the LLC may not file its statement of information until
the LLC changes its name by filing an amendment to its articles of
It is important to file your statements of information on time
and to take timely action on all notices received from the
California Secretary of State. Failing to do so is a trap for the
unwary. California and California registered foreign LLC's that
fail to file their required periodic statements of information with
the California Secretary of State may incur significant penalties,
including the possibility of losing the right to register their
company name with the California Secretary of State. In the event
you have a California LLC and your LLC is suspended by the
California Secretary of State, your LLC may not conduct any
business until it is brought back into good standing. In the event
you own a foreign LLC registered to conduct business in California
and your LLC is suspended by the California Secretary of State,
your LLC may not conduct any business in California until it is
brought back into good standing. In the event another party adopts
your company name or a name that is confusingly similar to your
company name while your LLC is suspended you will not be permitted
to file a statement of information or pay your outstanding fees and
penalties until you amend your articles of organization to change
the name of your company.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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