BUSINESSES MUST BE REGISTERED TO DO BUSINESS IN PENNSYLVANIA IN ORDER TO BRING LAWSUIT TO VERDICT

Foreign corporations may not transact business in Pennsylvania without first obtaining a Certificate of Authority from the Secretary of the Commonwealth. All that is required is a simple application, docketing statement and a small fee. The specific requirements are clearly set forth on the Pennsylvania Department of State’s website. What happens if you decide to ignore this requirement and are “not authorized” to transact business in Pennsylvania?

Aside from fines and penalties that can be assessed by the Commonwealth, you would not have the capacity to bring a lawsuit if the need were to arise. This means that even if you are owed a substantial sum of money for equipment that you delivered and the defendant is using without any complaints; you would not be able to collect. If your business is not authorized to do business within the Commonwealth of Pennsylvania you simply do not have the capacity to bring your lawsuit. Think of this as a foreign corporation’s ticket to gain entrance to the Pennsylvania Court System.

All is not lost however if you find yourself in litigation and you do not have a Certificate of Authority. In fact, the Pennsylvania Appellate Court just this past January spoke on this issue. All that is required is that the Certificate of Authority be entered into evidence prior to a court entering its verdict. If this is accomplished, the lawsuit will be valid and the judgment entered will be enforceable. If however this is not accomplished prior to verdict, the lawsuit will be dismissed, you’ve potentially lost money regarding the subject of the suit, and left your company vulnerable to fines and penalties from the Commonwealth.
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The take away here is that even if you are focusing on litigation, it is important to pay attention to the entire process and make sure your corporate books and records are in order. To lose sight of the forest amongst the trees can prove fatal to an otherwise straight forward claim and prove costly as well. Douglas Leavitt at Danziger Shapiro regularly represents his clients in complex commercial litigation cases throughout Pennsylvania (and new Jersey) and can provide valuable guidance and insight into the process affecting your business.

This entry is presented for informational purposes only and is not intended to constitute legal advice.