If you are working on a commercial transaction (for example, merger and acquisition, project finance, restructuring etc.) that involves companies registered in different countries, you may need to obtain their corporate documents as part of your due diligence process. The ultimate timeline of your deal transaction might depend on how quickly you are able to obtain these documents to verify the legal existence of the entities that are involved.
This article focuses on obtaining such documents from companies established in the United States.
What is Document Retrieval and How Does it Work?
In the US, there is no one central database/ registry for all companies. Company information is organized state-wise in the respective Secretary of State’s office. As a first step in the document retrieval process, you will need to know the name of the company and the US state in which they are incorporated (this is called the “domestic state). In addition to the domestic state, the said company may have registered themselves to do business in a few other states. As part of the due diligence process, it is important to check their status in all the jurisdictions that they are registered in, not just the domestic state.
If it is a large transaction involving multiple companies in various jurisdictions, the process of retrieving corporate documents from various US states alone could run into several weeks. As an attorney working on the more important aspects of the transaction, this could be a real burden, especially if your closing date is approaching soon. As a result, oftentimes, law firms will often hire the services of a third-party service provider with document retrieval expertise for the much-needed additional support.
When to Use a Document Retrieval Partner
Here are some of the advantages you gain by outsourcing document retrieval needs to a reliable service provider:
- Vast experience in liaising with the different state offices.
- Thorough knowledge on the retrieval process and expedite options where available.
- Extensive database of the current fee information and the turnaround time applicable for various states.
- Comprehensive knowledge of the various types of documents available in each state, the correct terminologies applicable in each state.
- Direct online access to the portals, saving time and effort in retrieving the documents.
- Thorough knowledge of the various filings that are made by entities and the extent of information available in public record for each entity type.
- Support on how to bring an entity back in good standing and assistance.
Which Documents Can You Retrieve?
In this section, we’ll discuss the types of documents you can legally obtain from the Secretary of State. It’s worth noting that each state may have different names for the same document, which we’ll explain below.
Good Standing Certificate
Sometimes known as a certificate of facts or certificate of status, a good standing certificate is issued by the Secretary of State. It certifies that a company is in existence and hasn’t been dissolved or merged.
In certain states, a good standing certificate verifies whether a company has any outstanding franchise taxes, penalties or fees to the Secretary of State. It also determines whether a company has been validly formed in a particular state and is in ‘good standing’ status.
From an attorney’s perspective, good standing certificates are normally required when you need to prove the existence of a company before making a transaction. They are also needed if a particular business wants to register and operate in another jurisdiction.
Short Form Good Standing Certificate
As the name suggests, short form good standing certificates provide a brief summary of the entity’s profile for that jurisdiction. It verifies basic information such as the company’s name and entity status.
Long Form Good Standing Certificate
A long-form good standing certificate contains everything that a short form contains, but also verifies specific details about a company history, such as the location of its first branch and the date of its first filed document.
Long forms aren’t available in every state, but they are worth retrieving thanks to their greater level of detail.
In some states, good standing certificates will not verify the status of the company, but instead verify only that the company exists on the state’s official records. In those states, this document is known as a certificate of existence, status certificate, subsistence certificate or a certificate of fact.
Certified copies are official documents featuring the Secretary of State’s sealant stamp. Filed by companies themselves, these documents can include information such as the company’s list of directors or officers.
Certified copies are useful if you want to compare the information you have with what’s on the official record. For example, by retrieving certified copies, you can identify whether an individual has the authority to sign off a deal on behalf of the company.
While certified copies feature an official sealant, their plain counterparts are simple copies of what’s on record. They don’t have endorsements, stamps or seals. Plain copies are quicker and easier to obtain, making them a suitable option if you’re nearing your deal’s closing date.
Also known as form 6166 by the IRS, a certification of u.s. tax residency certifies that an entity is a resident of the United States. This document is used for income tax law purposes. They also feature an official stamp from the U.S. treasury department.
You may want to obtain a tax certificate to claim income tax treaty benefits, or tax benefits for a company that trades in foreign countries.
Bring Down Services
‘Bring Down’ is a term used to confirm a company’s status without retrieving a good standing certificate. Bring down is used to obtain confirmation from the Secretary of State about an entity’s existence. It’s a quicker – but less ‘official’ – alternative to retrieving good standing certificates.
When would you use bring down services? Let’s say you’ve already retrieved a good standing certificate, but your closing date is pushed by two days. You can ask your service company to confirm whether a company is still in good standing since those two days have passed. The third party will then write you a bring down letter to confirm whether the company's status has changed or not.
U.S. Document Retrieval for International Companies
If you’re an international lawyer dealing with U.S. specific deals, you’ll likely find it more difficult to get documents than you would in Europe. This is due to internal bylaws and operational agreements that aren’t on public record in the U.S., unlike in Europe.
Unless it’s a trading company, shareholding information isn’t available publicly in the U.S., either. That particular information is only available to people who are dealing directly with the company i.e. the assigned attorney, not a third party like Cogency.
How Long Does Document Retrieval Take?
It depends on the jurisdiction and type of document you need. Each state responds differently to document retrieval requests and has varying procedures.
Some documents are available via online databases, which allow you to retrieve Good Standing Certificates more quickly. However, in some states, you’ll have to apply through the Secretary of State. This process can take a few days.
Generally speaking, it’s quicker to retrieve plain copies than certified copies. That’s because certified copies require a sealant stamp from the Secretary of State.
If your deal’s closing date is nearing, and you need to confirm a company’s status, we recommend enquiring about a bring-down letter. This option is quicker than getting a good standing certificate, helping you to verify an entity’s status more quickly.
It’s always worth checking with your document retrieval service partner to see if you can obtain the necessary documents before your closing date.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.