When foreign corporations ‘transact interstate business’

by Jeff Pomerance and Jason Balitzer

Published in the Los Angeles Daily Journal, October 30, 2014

Under California law, a corporation incorporated in another jurisdiction (a “foreign corporation”) is prohibited from “transacting intrastate business” in the state of California until it has obtained from the California secretary of state a certificate of qualification. This requirement also applies to a limited liability company organized in a jurisdiction other than California.

Given the global economy and the Internet, among other things, it is possible that a Wisconsin corporate farmer will sell produce in California without ever leaving the farm. So too, a corporate merchant in Beijing may well sell products in California without ever visiting the United States. Neither corporation will have an office in California, or a sales staff or other indicia of operations in California. A question often asked by non-California clients, and a question relevant to both the Wisconsin farmer and the Chinese merchant, is whether they are doing business in California such that they need to qualify to transact intrastate business in California as required by law.



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