Doing business in the State of New York? You may need to obtain consent from the Department of Financial Services, Board of Regents or Department of Tax and Finance first.
In New York State Consent Process for Professional Corporations and LLCs, I discussed the process for obtaining consent from the NYS Department of Education, Office of the Professions to form a professional corporation or LLC. In New York, the need to obtain consent can be triggered by a number of words or business activities.
Picking back up where we left off on New York’s consent processes for professional corporations and limited liability companies (LLCs), let’s look at a few other situations where consent is frequently required:
- Forming or registering an insurance agency or brokerage.
- Forming or registering a company with a name that implies education service.
- Various corporate filings that require consent from the Department of Taxation and Finance.
Consent for Insurance Agencies and Brokerages
A corporation, LLC or limited partnership (LP) that wants to act as an insurance agency or brokerage must obtain a license from the New York State Department of Financial Services (DFS). When forming or registering one of these entities with the New York Secretary of State (SOS), the state will require consent from this agency if the name of the company includes the term ‘insurance’ or if the purpose indicates the company will be acting as an insurance agency.
However, if a company is planning to be an insurance producer in New York but there are no indicators of this from the entity name or purposes listed in the formation/qualification document, the SOS will file the document. This can create problems for the company later on when obtaining their license to operate.
The NYS DFS has particular rules for entity names and advises companies to verify that any desired names are acceptable according to those rules prior to filing with the SOS. If a company’s name does not meet DFS criteria and the entity has already filed formation/registration documents, an amendment will need to be filed with the SOS to change the name to comply with DFS rules.
Insurance provider names must meet the following NYS DFS criteria:
- The name is not deceptively similar to another agency or brokerage operating in NY State. Keep in mind, DFS will compare against all licensed entity names but the New York SOS does not review existing assumed names or trade names filed at the county clerk’s office when determining availability. It is, therefore, possible for a name to be considered available by the SOS but deceptively similar by DFS.
- Specificity when using the term ‘insurance’. If the name of the company includes the term ‘insurance’, the company may be advised by the Insurance Department that they need to include an additional descriptor such as ‘agency’ or ‘brokerage’.
Foreign insurance-providing entities with true legal names that do not meet these criteria must register to do business in New York under another name that does comply with DFS requirements. This is done, as follows, in Paragraph 1 of an Application for Authority:
“The name the company will use in New York is <NYS DFS COMPLIANT NAME>.”
Consent for Entities That May Be ‘Education Providers’
In New York, educational institutions are incorporated by the Board of Regents, rather than the SOS. Incorporation by the Board of Regents is an involved procedure that we will not be venturing into at this time.
Rather, let’s instead look at those cases where the SOS asks a company to obtain Consent or Waiver of Consent. This may happen when an entity’s name implies provision of education in some way.
Review by the Office of Counsel may be required if a desired entity name uses any of the words listed below:
To obtain consent from the Office of Counsel, an entity must submit two copies of its organizational document, accompanied by a completed consent form and the appropriate fee. (As of March 2019, the fee is $10 for nonprofit organizations and $20 for all other entity types). If the need for consent is due to an amendment to the name or purposes, you will also need to submit all the charter documents for the company, including any amendments.
The organizational documents should include the following criteria:
- A purpose clause, specifically outlining what the entity will be doing.*
- Specific disclaimer language, set out below:
Nothing herein shall authorize the corporation to operate, maintain or manage a charter school, a nursery school, a kindergarten, an elementary school, a secondary school, a college, university or to advertise or offer credit-bearing courses or degrees in New York State.
Nothing herein shall authorize the corporation to operate or maintain a library, museum, archive or historical society or to own or hold collections.
Except as authorized by Title VIII of the Education Law or other applicable statute, nothing herein shall authorize the corporation to engage in the practice of any profession in New York, engage in the training of any profession in New York or to use a professional title or term of any profession in New York in violation of Title VIII.
*If the specific purpose indicates that the entity will be providing counseling or operating a television or radio station, additional disclaimers will be needed. Sample language regarding this situation is available on the Office of Counsel’s website.
Corporation-Specific Consent from NYS Department of Tax and Finance
Business corporations may be required to obtain consent from the New York State Department of Tax and Finance (DTF) for a number of filings, like dissolution, surrender of authority, application for authority and reinstatement. In these situations, the DTF will only deal directly with the corporation or its attorney or accountant. The DTF will not work with third parties (like service companies) for these filings.
Note: The following requirements apply only to business corporations, not other entity types like LLCs or LPs.
Obtaining Consent for Dissolution
File (or e-file) the final corporation tax return as usual but place an X in the box at the top marked ‘Final’. If the DTF determines the corporation has fulfilled all of its tax obligations, they will issue consent. After the DTF issues consent, file a Certificate of Dissolution (consent attached) with the SOS.
Note: Use the current year’s corporate tax form. If it is not yet available, the previous year’s form may be used but computations must account for any changes in tax law made since that time.
Tax Consent for Surrender of Authority
First, call the Corporate Dissolution Unit at 518.485.2639 to verify the corporation is paid up. File any tax returns required. If your company was not liable to pay taxes for any period after January 1, 2015, submit an Affidavit for Surrender of Authority for Foreign Corporations (Form TR193.1). If the DTF determines the corporation has fulfilled all its obligations, they will issue consent, which gets attached to a Certificate of Surrender of Authority and filed with the SOS.
Tax Consent for Application for Authority
Foreign companies who have done business in New York prior to filing an Application for Authority are required to obtain consent.
Call the DTF Call Center at 518.485.2639 to verify all taxes have been paid and request the consent. Once received, attach the consent to the Application for Authority and file with the SOS.
Tax Consent for Reinstatement
When corporations are delinquent on taxes for at least 2 years, the DTF shares this information with the SOS, which proclaims domestic companies on that list dissolved and their charters forfeited. Authority to do business in NY will be annulled for foreign corporations in the same situation. These dissolved and annulled corporations must then apply for reinstatement if they wish to restore good standing.
Contact the Corporate Dissolution Unit at 518.485.2639 to identify what filings are delinquent. File all outstanding returns, paying taxes, penalty and interest, attaching a separate check for each return.
Once the DTF determines the corporation is up to date, they will send a Certificate of Payment of Taxes to the corporation. File this Certificate and the written consent from DTF with the New York SOS.
Consent Can Get Complicated
There are many situations when forming, qualifying or amending the name or purposes of a company in New York requires consent from specific state agencies. The situations covered here, along with the Office of the Professions requirements previously discussed, occur fairly frequently in the business world. It helps to understand these consent processes – and how long and involved they can be – to anticipate how the requirements (and likely delays) fit into your filing schedule.
The best way to minimize delays? Arm yourself upfront with the requirements or, when possible, rely on assistance from a knowledgeable service company.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.