How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Loren Your Own Question
Loren, Attorney
Category: Business Law
Satisfied Customers: 34423
Experience:  30 years experience representing clients .
Type Your Business Law Question Here...
Loren is online now
A new question is answered every 9 seconds

Hi, Im not sure if this is an arbitrary question, but I am

This answer was rated:

Hi, I'm not sure if this is an arbitrary question, but I am Petitioner in a matter in which one of the Respondent's owned entities may not have legal jurisdiction in California, the state it does business. It is registered as a foreign company in California, with the domestic company in Nevada.
What would be some of the requirements of the California Secretary of State or the Division of Corporations to allow a company to do business here?
It seemed strange to me that the Nevada company
Thank you for using JustAnswer. I am JudgeLaw and I will do whatever I can to answer your question and provide you excellent service.

The only requirement is that the company file as a foreign entity registered to do business in California and pay the annual fees and taxes.

Otherwise, having filed, there is no requirement that they do anything else, other than, of course not having a lawful business purpose (loan sharking, for example).

It has been my privilege to assist you. Let me know if you need further assistance.  I hope I have helped you beyond your expectations in the service I have provided to you.  I am here for you.

Please remember to rate my answer when our communication is completed so I will be compensated for my time in providing you with the information you requested.

If you feel the need to provide a low rating, please stop and reply to me via the REPLY button with whatever issue or clarification you may need. I will happily answer your follow-up questions and assist you until I am able to explain the answer to your satisfaction. Please also remember that I cannot control whether the law is favorable to your situation, so please do not penalize me for having to deliver bad news.

Thank you.

Hello Michelle,

I'm just following up with you to see how everything is going.
Did I answer your question?

Customer: replied 4 years ago.



I didn't ask my question properly. The business is registered in Nevada. All executives live and work in California. The business is registered as a foreign business in California. The indemnification agreements in the buy sell agreement for the business state that the business may not be qualified to operate as a legal business in California.

So, my question is:

1) what would allow the business to operate legally in nevada but not california? This could be something as benign as the rules re. Boards of Directors. For example, the company has a Sole Director who is also Sole Shareholder and CEO, but the company is a subsidiary of a Delaware company.

2) The company recently ventured into gambling.

3) The company makes loans to its director

4) The company did not pay taxes for two years in California.


I am trying to determine what freaky moves this company is pulling so we know which rock to uncover. Need to finish up this case. Thanks.

Thank you for the additional information.

If the company has a provision in its shareholder agreements that it may not operate or qualify in California then the director, who is also a shareholder, may be liable for violating that provision. Though, the provision would be more appropriate in the corporate bylaws or charter. The shareholders really do not, legally, as a general rule, have a say in the day to day operations of the business.

The director may have personal liability for the unpaid taxes for operating in California in direct violation of the shareholder agreements.

A corporation can operate in any state it wants, regardless of the residence of the shareholders, officers and directors, so long as it is engaged in a legal enterprise under that state's laws and complies with the registration laws regarding foreign entities..

Loans to a director are a tricky thing and need to be reviewed by outside counsel and fully disclosed to the shareholders.

This seems like something that you will want to sit down with local counsel to review you options after a thorough review of all the relevant documents.



Loren and 2 other Business Law Specialists are ready to help you