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How To Reinstate or Revive a Forfeited Corporation in California?

 
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How To Reinstate or Revive a Forfeited Corporation in California?

Prepared By: Melissa C. Marsh, Los Angeles Business And Corporate Attorney
Written: June 2017
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Has your “foreign” Corporation been Suspended or “Forfeited” in California?

A corporation formed in California is called a domestic corporation. A corporation originally formed in another state (Texas, Nevada, Arizona, or England) but qualified to do business in the state of California, is called a foreign corporation. A foreign corporation, like all other California corporations, can be suspended, or forfeited, by the California Secretary of State and/or the California Franchise Tax Board (FTB). If a foreign corporation is suspended by the California Secretary of State, or the California Franchise Tax Board, the suspended status of the corporation is called “forfeited.”

Why is my foreign corporation “Forfeited” in California?

A corporation qualified to do business in California can be forfeited if: (1) the corporation fails to file its annual statement; (2) the corporation fails to maintain a registered agent (or the agent resigns) in the State of California; (3) the corporation fails to pay its annual California franchise tax; (4) the corporation fails to file its annual California state tax return (required even if the corporation did not engage in any business); or (5) the corporation stops doing business in California but fails to file a Certificate of Surrender of Right To Transact Intrastate Business.

California Does Not Allow Forfeited Corporations to Transact Business.

If a foreign corporation is “forfeited” that means the Secretary of State and/or the California FTB has revoked the powers and privileges of the foreign corporation for failing to file a required document or paying a tax. A forfeited corporation cannot: (1) transact any business in California, (2) transfer or sell property in California, (3) bring or defend a lawsuit in California, (4) file an appeal in California, (5) request a state tax refund; (6) amend a state tax return; (7) challenge an assessment, or (8) stop a customer or vendor in California from voiding a contract. To revive a foreign corporation in the state of California, the corporation must first determine when it was suspended (forfeited) and which California agency(ies) issued the request for forfeiture.

What to do if your Corporation is Suspended or Forfeited in California.

When a corporation is forfeited in California, it can become Active (in good standing) again. How a forfeited corporation is revived, however, depends on why and how the foreign corporation was forfeited. If the corporation was forfeited by the California Secretary of State, the reviver is actually less onerous than if the suspension (forfeited status) was initiated by the California Franchise Tax Board.

If the foreign corporation was forfeited by the California Secretary of State, the foreign corporation will need to file a new Statement of Information along with proof that the foreign corporation is in good standing in its original state of formation (e.g. Nevada, Delaware, etc..). In some cases, the foreign corporation will also need to amend its Articles of Incorporation to effectuate a change of status from forfeited to active.

If the corporation was forfeited by the California Franchise Tax Board, then someone will need to contact the Franchise Tax Board on behalf of the forfeited corporation to determine everything that is necessary to revive the entity back to active (good standing) status. If attempting to perform this task from another state, you should be aware that it often takes the California Franchise Tax Board 3-6 months to lift a forfeiture when documents are processed by the mail or online. If time is of the essence, my office can typically lift a suspension (forfeiture) within a week, and sometimes in as little as three business days.

Good Standing.

When the Franchise Tax Board issue a Certificate of Revivor, the foreign corporation is “reinstated,” is back in “good standing” (Active status), and the corporation may request a Certificate of Status from the California Secretary of State (which will typically take 2-3 business days). The reinstatement, however, when performed on a normal basis is “without prejudice to any action, defense, or right which has accrued” while the corporation was suspended.

Beware…Your Forfeited Corporation May NEED Contract Voidability

When a corporation is revived, without contract voidability, the reviver (also called revivor) is “without prejudice to any action, defense, or right which has accrued” while the corporation was suspended. What does this mean? This means that if the corporation entered into any contracts while suspended, those contracts were voidable and remain voidable. However, to prevent this, California allows a forfeited corporation ONE CHANCE to elect (and of course pay for) contract voidability. If the corporation elects to have, and pays the California Franchise Tax Board for, Contract voidability, then any contract executed while the corporation was in a forfeited status is no longer void, or voidable.

If you would like Attorney Melissa C. Marsh to assist you in reviving your forfeited corporation in California, please Email Ms. Marsh your request, or call 323-655-1002. Ms. Marsh will typically respond to an email within 2-4 hours and she attempts to return all calls by the end of the business day.

All revivors in my office are conducted in a two phase process. Under Phase 1 of the revivor process, which is conducted within 1 business day and performed for a flat fee of $499, Ms. Marsh or her associate will prepare a schedule setting forth: (a) when your corporation was formally placed in forfeited status, (b) all of the documents that must be filed with both the California Secretary of State and FTB to revive the corporation back to Active Good Standing status, (c) the estimated back owed taxes, penalties and interest that have been assessed or levied against the corporation based on the minimum tax, (d) if appropriate a referral to an accountant to prepare any needed California State Tax Returns in a manner appropriate for a revivor; (e) instructions on how to lift the suspension (forfeiture) yourself, should you decide to do so; and (f) a flat fee proposal for Ms. Marsh to continue on to Phase 2 of the revivor process (lifting the forfeiture).

At the conclusion of Phase 1 of the revivor process, Ms. marsh will provide you with a flat fee quote to have her lift the forfeiture and get the corporation back into Good Standing on an expedited basis (typically within 5 days). The fees for Phase 2 of the revivor process vary depending on the amount of work involved (which is determined during Phase 1 of the revivor process) and typically range anywhere from a low of $800 to $4,500+.

If you would like Attorney Melissa C. Marsh to assist you in reviving your forfeited corporation in California, please Email Ms. Marsh your request, or call 323-655-1002. Ms. Marsh will typically respond to an email within 2-4 hours and she attempts to return all calls by the end of the business day.


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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.


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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.