What Out-of-State Corporations Should Know About Doing Business in New Jersey

What Out-of-State Corporations Should Know About Doing Business in New Jersey

Due to its close proximity to business hubs in New York and Pennsylvania, many out-of-state corporations transact business in New Jersey. Because corporations formed outside the state are technically considered “foreign,” it is important to understand the legal formalities of doing business in New Jersey.

Transacting Business in New Jersey

To transact business in New Jersey, a foreign corporation must obtain a certificate of authority. The requirement exists to ensure that local and foreign businesses are on equal footing and must abide by the same laws.

Pursuant to N.J.S.A. 14A:13-3, a foreign corporation may be authorized to do any business which may be done lawfully in New Jersey by a domestic corporation, to the extent that the corporation is authorized to do such business in the jurisdiction of its incorporation. The statute further provides that a foreign corporation will not be considered to be transacting business in New Jersey by reason of carrying on any one or more of the following activities in the State:

• Maintaining, defending or otherwise participating in any action or proceeding, whether judicial, administrative, arbitrative or otherwise, or effecting the settlement thereof or the settlement of claims or disputes;
• Holding meetings of its directors or shareholders;
• Maintaining bank accounts or borrowing money, with or without security, even if such borrowings are repeated and continuous transactions and even if any such security has a situs in New Jersey; and
• Maintaining offices or agencies for the transfer, exchange and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.

While certainly not an exhaustive list, activities that would generally constitute “transacting business” include providing services, selling goods, hiring employees, and owning/renting property.

Obtaining a Certificate of Authority 

To procure a certificate of authority to transact business in New Jersey, a foreign corporation must file an application with the Secretary of State that sets forth the following:

• The name of the corporation and the jurisdiction of its incorporation;
• The date of incorporation and the period of duration of the corporation;
• The address of the main business or headquarters office of the corporation;
• The address of the registered office of the corporation in New Jersey, and the name of its registered agent in the State at such address, together with a statement that the registered agent is an agent of the corporation upon whom process against the corporation may be served; and
• The character of the business it is to transact in New Jersey, together with a statement that it is authorized to transact such business in the jurisdiction of its incorporation.

The foreign corporation must also submit with the application a certificate good standing from its home jurisdiction that was issued no earlier than 30 days prior to the filing of the application. The filing process can be completed online. All foreign corporations must pay a statutory filing fee of $125.

It is imperative to file the proper paperwork and obtain legal authority to operate your company in New Jersey before engaging in any business transactions. The failure to register can cause a number of legal headaches, ranging from the imposition of late fees to the inability to file legal actions.

Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Dennis Linken, at 201-806-3364.