![]() 1 4 Because the company’s action arose out of intrastate business, the court held that the company could not maintain the action in California until the company qualified to do business in California. Plainly, the company did not enter California over a nearly 10-year period to contribute to or conclude a “unitary interstate transaction.” 1 3 As a result, even though no one of the company’s activities would necessarily have constituted intrastate business, the court concluded that, taken together, they did, “despite the fact that Neogard strategically maintained no payrolled office” in California. In addition, the company, which guaranteed its product for 10 years, sometimes sent one of its agents to sign the guarantee at the completion of the project and always appeared at the site to assist a contractor in remedying the problem if called on to make good on the guarantee. But the company flew its employees from Texas to California to inspect every project that its local waterproofing contractors carried out in California. The company did not maintain inventory, an office, a bank account, a telephone number, or payrolled employees in California during the time in question. Malott & Peterson-Grundy, 1 2 the foreign corporation went even further in attempting to avoid “transacting intrastate business” in California while nevertheless developing a market there for its system for waterproofing construction projects. On those facts, the court concluded that the company was transacting intrastate business in California. Copies of the music, though printed in New York, were kept in, and distributed from, the California office. However, the company did maintain a “professional office” in California, from which an agent solicited singers and bands to play and purchase the company’s copyrighted songs. The company did not maintain a bank account and did not publish any music in California. Lampton, 1 1 a music publishing company was formed in New York and had its principal place of business there. If a company engages in any activities in California beyond those, it becomes necessary to take a close look at the activities to try to determine if the company must be qualified to transact intrastate business in the state. conducting an isolated transaction that is completed within a period of 180 days and is not in the course of a number of similar and repeated transactions.creating evidence of debt or mortgages, liens, or security interests on real or personal property and.soliciting or procuring orders that require acceptance outside of California to become binding contracts.making sales through independent contractors.maintaining offices or agencies for the transfer, exchange, and registration of its securities.holding meetings of the company’s shareholders or board of directors.maintaining or defending a legal, administrative, or arbitration proceeding.So when does a foreign corporation need to be qualified to do business in California? A foreign corporation must be qualified in order to “transact intrastate business,” which means “entering into repeated and successive transactions of its business in, other than interstate or foreign commerce.” 8 The Corporations Code provides a laundry list of activities that do not constitute transacting intrastate business in California solely because the company engages in the state in one or more of those activities, which include 6 In addition, the foreign corporation cannot maintain an action in a California court upon any intrastate business so transacted until it has paid a $250 penalty and been qualified to do such business in California. ![]() 5 A foreign corporation that transacts intrastate business in California without obtaining a certificate of qualification is subject to various civil and criminal penalties. 4 In fact, one of the main purposes of requiring qualification is to facilitate service of process on a foreign corporation. 3 The foreign corporation must also pay a fee and consent to service of process upon the corporation’s agent in California. 2 To obtain a certificate of qualification, the foreign corporation must file, on a form prescribed by the Secretary of State, a statement and designation containing certain information, along with a certificate of good standing from the state where the corporation was formed. A foreign corporation-that is, a corporation not formed under California law 1-may not transact intrastate business in California without first obtaining from the California Secretary of State a certificate of qualification. ![]()
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