Has your registered agent ever requested that you provide a “communications contact” when obtaining forwarding instructions for an entity you’ve asked them to represent? Do you understand why you are being asked for this information and how it might be used?
Business Ownership: The Need for Transparency
Legislators, law enforcement and special interest groups have been actively pursuing federal legislation requiring business entities to disclose the names of their beneficial owners to state officials during the entity formation process and to update the information as required. One of the arguments presented to substantiate the need for this information is law enforcement’s claim that the entities’ registered agents, when compelled to respond, may have no information on the entity beyond the public filings already available on the public record.
States Requiring a “Communications Contact”
In news articles and other presentations by government officials, a handful of states, including Delaware, are often cited when discussing the need for transparency. Delaware passed legislation effective January 1, 2007 requiring Delaware domestic and foreign corporations, limited liability companies and limited partnerships to appoint a communications contact and further requiring the registered agent to maintain the contact’s name and address information. The agents may resign if they are not given the information. With the implementation of the communications contact requirement, agents that are unable to provide the communications contact information face possible enforcement actions. Wyoming, Kentucky and Indiana adopted legislation with similar communications contact requirements effective January 1, 2009, July 1, 2011 and July 1, 2014, respectively.
The Delaware statutes require each Delaware domestic and foreign corporation, limited liability company and limited partnership to “provide to its registered agent and update from time to time as necessary the name, business address and business telephone number of a natural person . . . who is then authorized to receive communications from the registered agent. Such person shall be deemed the [entities’] communications contact.” The agent is required to maintain this contact information for the entities it represents.
Effective August 1, 2014, Delaware strengthened its legislation by adding provisions requiring limited liability companies and limited partnerships to maintain a current record that identifies the name and last known business, residence or mailing address of each member or manager/partner. The designated communications contact is required to know, or know how to contact, the appropriate business person with the entity should there be a request by the government for the information.
Communications Contact May Be Contacted by Law Enforcement
The legislation in Delaware, Wyoming, Kentucky and Indiana raises the potential that the listed party will be contacted by law enforcement if there are questions about the entity or its beneficial owners. As a result, entities registered to do business in these states need to carefully consider who will act as their communications contact.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.