Starting a business as a corporation, LLC or Limited Partnership requires having a registered agent in Delaware. Learn what the registered agent is, their job duties and the requirements to be one.
What is a Registered Agent?
A registered agent is an individual or company who is the central point of contact to receive important legal documents on behalf of a business.
Why is a Registered Agent Required in Delaware?
A registered agent is required by the Delaware Secretary of State when filing a business entity such as a corporation, Limited Liability Company and Limited Partnership. This appointment is first made in the entity formation documents (Certificate of Formation or Articles of Incorporation), but can be changed at any time.
Sole proprietorships and general partnerships do not need a registered agent.
The requirements for an entity to have a registered agent are formed under Delaware Statutes Title 6 § 18-104 (LLC) and Title 8 § 131 (corporation) which mandate registered entities will have and continuously maintain a registered agent and office within the state. The agent must be generally present at sufficiently frequent times to accept service of process and otherwise perform the functions of a registered agent.
The reason for having one makes sense. If a business is owned by a single-person, it’s easy to determine who should be notified in the event of a lawsuit or tax notice. However, if a business has several owners, members or partners, it would be difficult to determine who the correct contact is. By requiring a central point of contact in the state there is no question that time-sensitive documents are going to the right person in a timely manner.
What Happens If You Don’t Have A Registered Agent?
For starters, the Secretary of State won’t approve the formation of the entity without one.
Even after starting the business, a registered agent and registered office must be continuously maintained. Not having one can result in issues such as:
- Not Receiving Legal Notices – If the listed registered agent isn’t able to receive legal notices, this doesn’t mean a lawsuit can’t proceed. If a process server is unsuccessful in reaching the company’s registered agent, the court can proceed with the case. This could result in a judgement being placed against the business without the owners knowing.
- Administrative Dissolution – In Delaware, if the business doesn’t have a registered agent, the Secretary of State can dissolve the entity.
- Penalties and Fees – By not maintaining a current registered agent, penalties and fees can be levied against the entity and in some cases the owners too. Once an entity is no longer in good standing with the state, the owners have lost their liability protection and are at risk personally.
Who can be a Registered Agent in Delaware?
A registered agent in Delaware can be any resident of the state who is 18 years or older, a registered Delaware domestic business entity or a foreign business entity authorized to do business in the state. An entity may not be its own agent.
The registered agent needs to have a physical address (often referred to as a registered office or principal office) in the state of Delaware. This can be your home address, the address of an accountant or attorney, the address of the business, or a registered agent service. Any physical address in the state may be used, but PO Boxes and mail drop services are not acceptable, since someone has to be available to sign for documents.
The agent will also need to be available to receive Service of Process on behalf of the business during normal business hours. Service of process refers to the delivery of legal documents, often a summons, subpoena or lawsuit filed against a business entity.
Can I be my own Registered Agent in Delaware?
Yes! Any individual, owner, member, officer, director, etc of a business entity that meets the state requirements can be a registered agent.
Why use a Commercial Registered Agent Service?
Provided one of the members or officers live in Delaware, it is often more convenient and less expensive to act as your own agent rather than hiring a service. While this is the route many businesses take, there are a few reasons to consider hiring a service.
- Privacy – The address of the registered agent becomes public record and is available for anybody to see. This can be especially concerning if someone is doing business on the side and they don’t want their employer knowing about the business. Also, if the business is sued, the notice will be delivered to the address on file. This could mean employees, customers or even neighbors witnessing the event. There is always the remote possibility a vindictive litigant or upset customer showing up at your house.
- Availability – Delaware requires the registered agent be available at the principal address during normal business hours. The biggest issue with availability, especially if a home address is used, is if the agent goes on vacation or is otherwise away for some period of time and can’t be reached.
- If the Business Expands to Additional Locations – If the business will have a physical presence in multiple states (offices, warehouses, employees, etc.), a foreign entity registration will often need to be filed with those states. A registered agent will need to be appointed with a physical address in each state.
- Annual Notices – Registered agent services provide reminders on the state requirements such as annual report filings.