OFFICIAL COMMENT TO FORMER G.S. 55-1-23

Editor's Note. - The Official Comments below were formerly located under G.S. 55-1-23 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Section 1.23(a) provides that documents accepted for filing become effective at the time and date of filing, or at another specified time on that date, unless a delayed effective date is selected under section 1.23(b). This section gives express statutory authority to the common practice of most secretaries of state of ignoring processing time and treating a document as effective as of the date it is submitted for filing even though it may not be reviewed and accepted for filing until several days later.

Section 1.23(a) requires secretaries of state to maintain a date and time stamp for recording the receipt of documents and provides that documents become effective at the stamped time on the date of filing. This provision should eliminate any doubt about situations involving same-day transactions in which documents, for example articles of merger, are filed on the morning of the date the merger is to become effective. Section 1.23(a) contemplates that the time of filing, as well as the date, will be routinely recorded.

Section 1.23(b) provides an alternative method of establishing the effective date of a document. The document itself may fix as its effective date any date within 90 days after the date it is filed; it may also fix the time it becomes effective on that date. If no time is specified, the document becomes effective as of the close of business on the specified date. The Model Act also allows the effective date fixed in a document to be corrected to a limited extent. See the Official Comment to section 1.24.

Section 1.23(b) does not authorize or contemplate the retroactive establishment of an effective date before the date of filing.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-1-23

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-1-23 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

This section differs from prior law in three respects. First, it increases from 20 to 90 days the maximum time by which the effective date of a filed document may be delayed. Second, it specifies a time of day (11:59:59 P.M.) for the effectiveness of documents that specify a delayed effective date but no time. Third, it deletes reference to a penalty for a failure to deliver documents to the register of deeds, since that requirement no longer exists.

This section differs in two respects from the Model Act. First, it specifies 11:59:59 P.M. (rather than the close of business) as the time of effectiveness of documents that specify a delayed effective date but no time. Second, it makes explicit in subsection (c) the limited effect of the Secretary of State's acceptance of documents for filing. This is probably implicit under the Model Act. See North Carolina Comment to G.S. 55-1-25(d), infra.

Editor's Note. - Session Laws 2008-194, s. 2, provides: "(a) The following definitions apply in this section:

"(1) Department. - The Department of the Secretary of State.

"(2) Filer. - An individual, entity, or corporation that files a single notice pursuant to this section for more than 20,000 entities on file with the Department.

"(3) Notice. - A bulk filing which includes the information required in G.S. 55D-31(a)(2) through (6) and a certification that the filer has complied with the entity notification requirements of G.S. 55D-31(b). For a notice intended to update information for unincorporated nonprofit associations, 'notice' shall also mean a filing which includes the information required by G.S. 59B-11(b)(4). Any notice filed must be in an electronic form acceptable to the Department and include a written statement that the notice is filed pursuant to this section.

"(b) Upon receipt and filing by the Department, a notice pursuant to this section shall be sufficient as a matter of law under G.S. 55D-31 and G.S. 59B-11 to update registered office and registered agent information for each entity on file with the Department for which the filer is listed on the records of the Department as the registered office, the registered agent, or both.

"(c) The requirements of G.S. 55D-13(a) and (b), 55D-10(b)(8), 55-1-22(a), 55A-1-22(a), 57C-1-22(a) (repealed by Session Laws 2013-157, s.1), 59-35.2(a), 59-1106(a), and 59B-11(f) shall not apply to notices filed pursuant to this section.

"(d) This section shall only apply to one notice for each filer.

"(e) Unless otherwise specified, the change of address shall become effective on the 45th day following the Department's receipt of a notice filed pursuant to this section. A filer may specify in the notice a later effective date for the change of address, but not an earlier effective date.

"(f) A notice filed pursuant to this section shall be delivered to the Department no later than one year after the effective date of this section."

Section 57C-2-20, referred to in subsection (c), was repealed by Session Laws 2013-157, s. 1, effective January 1, 2014. For present comparable provisions, see G.S. 57D-1 et seq.

Effect of Amendments. - Session Laws 2001-358, ss. 3(b) and 4, s. 173, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-1-23 as this section; substituted "of this section and in G.S. 55D-14" for "and G.S. 55-1-24(c)" in the introductory language of subsection (a); substituted "filed document" for "original document" in subdivision (a)(1); and inserted "55A-2-03(b), and 57C-2-20(b)" in subsection (c).

Session Laws 2013-157, s. 8, effective January 1, 2014, substituted "57D-2-20(b)" for "57C-2-20(b)" in subsection (c).

OFFICIAL COMMENT TO FORMER G.S. 55-1-24

Editor's Note. - The Official Comments below were formerly located under G.S. 55-1-24 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Section 1.24 permits making corrections in filed documents without refiling the entire document or submitting formal articles of amendment. This correction procedure has two advantages: (1) filing articles of correction may be less expensive than refiling the document or filing articles of amendment, and (2) articles of correction do not alter the effective date of the underlying document being corrected. Indeed, under section 1.24(c), even the correction relates back to the original effective date of the document except as to persons relying on the original document and adversely affected by the correction. As to these persons, the effective date of articles of correction is the date the articles are filed.

A document may be corrected either because it contains an "incorrect statement" or because it was defectively executed (including defects in optional forms of execution that do not affect the eligibility of the original document for filing).

A provision in a document setting an effective date (section 1.23) may be corrected under this section, but the corrected effective date must comply with section 1.23 measured from the date of the original filing of the document being corrected, i.e. it cannot be before the date of filing of the document or more than 90 days thereafter.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-1-24

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-1-24 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

This section has no counterpart in prior law.

Effect of Amendments. - Session Laws 2001-358, ss. 3(b) and (4), effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-1-24 as this section; rewrote subsections (a) and (b); and substituted "as of the effective time and date" for "on the effective date" in subsection (c).

OFFICIAL COMMENT TO FORMER G.S. 55-1-25

Editor's Note. - The Official Comments below were formerly located under G.S. 55-1-25 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

1. Filing duty in general
2. Mechanics of filing
3. Elimination of certificates of incorporation and similar documents
4. Rejection of document by secretary of state

Under section 1.25 the secretary of state is required to file a document if it "satisfies the requirements of section 1.20." This language should be contrasted with earlier versions of the Model Act (and many state statutes) that required the secretary of state to ascertain whether the document "conformed with law" before filing it. The purpose of this change is to limit the discretion of the secretary of state to a ministerial role in reviewing the contents of documents. If the document submitted is in the form prescribed and contains the information required by section 1.20 and the applicable provision of the Model Act, the secretary of state under section 1.25 must file it even though it contains additional provisions the secretary of state may feel are irrelevant or not authorized by the Model Act or by general legal principles. Consistently with this approach, section 1.25(d) states that the filing duty of the secretary of state is ministerial and provides that filing a document with the secretary of state does not affect the validity or invalidity of any provision contained in the document and does not create any presumption with respect to any provision. Persons adversely affected by provisions in a document may test their validity in a proceeding appropriate for that purpose. Similarly, the attorney general of the state may also question the validity of provisions of documents filed with the secretary of state in an independent suit brought for that purpose; in neither case should any presumption or inference be drawn about the validity of the provision from the fact that the secretary of state accepted the document for filing.

Section 1.25(b) provides that when the secretary of state files a document, he stamps or endorses it as filed, retains the signed original document for his records, and returns the exact or conformed copy (which must accompany the document under section 1.20(i)) to the corporation or its representative with the secretary of state's fee receipt or acknowledgement of receipt if no fee is required. This will establish that a document has been filed in the form of the copy. Consideration was given to dispensing with the document copy entirely and providing only for the return of a fee receipt or equivalent document. Several states currently follow this practice with respect to articles of incorporation and other documents. It was felt to be important, however, to continue a practice by which each corporation receives back from the secretary of state for its records a document that on its face shows that it is an exact conformed copy of the document that was filed with the secretary of state. This copy is usually placed in the minute book and is available for informal inspection without requiring a person to examine the records of the secretary of state. Of course, a person desiring a certified copy of any filed document may obtain it from the office of the secretary of state by paying the fee prescribed in section 1.22(c).

Section 1.25(b) provides that acceptance of articles of incorporation or other documents is evidenced merely by the issuance of a fee receipt or acknowledgement of receipt if no fee is required. Earlier versions of the Model Act and the statutes of many states provided that acceptance by the secretary of state is evidenced by a "certificate" (e.g., of incorporation, of merger, or of amendment). This older practice was not retained in the revised Model Act because it was felt desirable to reduce the number of pieces of paper issued by the secretary of state. Under the older practice most state offices routinely issued both fee receipts and certificates. A single document - the fee receipt or acknowledgment - should sufficiently indicate that the document has been accepted for filing, and in fact many states in recent years have dispensed with the formal certificate.

Because of the simplification of formal filing requirements and the limited discretion granted to the secretary of state by the Model Act, it is probable that rejection of documents for filing will occur only rarely. Section 1.25(c) provides that if the secretary of state does reject a document for filing he must return it to the corporation or its representative within five days together with a brief written explanation of his reason for rejection. This rejection may be the basis of judicial review under section 1.26.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-1-25

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-1-25 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Former G.S. 55-4(a) (5) required the Secretary of State to file a document unless it did not "conform to law." Although this section omits the filing standard of former G.S. 55-4(a) (5) - that a document shall be filed only if it "conforms to law" - the drafters rejected the Official Comment's suggestion that there is a conflict between the Secretary of State's ministerial filing duty under section 1.25 of the Model Act and his review of a document to determine whether it conforms to law. The drafters intend that the Secretary of State's office continue the practice under former G.S. 55-4(a) (5) of calling attention to mistakes apparent on the face of a document presented for filing and to inconsistencies between a document presented for filing and other documents previously filed by the same corporation. For example, if a document presented for filing contains a reference (e.g., par value of authorized shares; number of outstanding shares) that, on its face, is inconsistent with the corporation's articles of incorporation, then the Secretary of State may refuse to file it. Similarly, a document may be refused if, on its face, it shows that the action referred to therein has not been authorized in the manner prescribed by the statute (e.g. no shareholders' vote on a matter requiring shareholder action). The drafters concluded that continuation of the practice under former G.S. 55-4(a) (5) was necessary to preserve the integrity and reliability of documents on file in the office of the Secretary of State. Accordingly, to clarify their intention, the drafters modified the Model Act in subsection (a) to provide that in order to be filed, a document must satisfy the requirements of "this Chapter."

The Model Act was modified in subsection (b) to omit the requirement that the Secretary of State provide a filing fee receipt in all cases. However, it is intended that a filing fee receipt will be provided upon request.

The Model Act was also modified in subsection (c) by substituting "received" for "delivered." "Deliver" is defined in G.S. 55-1-40(5) as including "mail," which creates an ambiguity as to when the five-day period for returning a document presented for filing begins to run. The modification was made to clarify this point.

Former G.S. 55-169 provided that a certificate issued by the Secretary of State with respect to a document on file in his office constituted prima facie evidence of the facts therein stated. Subsection (d) eliminates that presumption with respect to extrinsic facts in a document on file (e.g. the number of shares issued and outstanding; the number of shares voted on a particular matter). In that respect G.S. 55-1-23(c) was added to make a clear distinction between the word "validity," as used in subsection (d), and the word "effective" as used elsewhere in the statute. "Validity" refers to the substance and legal sufficiency of a filed document, and "effective" refers only to whether the document has been accepted and become operative under the formal filing procedures of the Act. Subsection (d) was also modified from the Model Act to describe the Secretary of State's duty under this section instead of merely characterizing it as ministerial.

Effect of Amendments. - Session Laws 2001-358, ss. 3(b), (4), and (46), effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-1-25 as this section, and rewrote the section.

Session Laws 2013-157, s. 9, effective January 1, 2014, substituted "57D" for "57C" in the first sentence of subsections (a) and (d); and substituted "57D-2-20(b)" for "57C-2-20(b)" in subdivision (d)(1).

CASE NOTES

Cited in Builders Mut. Ins. Co. v. Doug Besaw Enters., 242 N.C. App. 254, 775 S.E.2d 681 (2015).

OFFICIAL COMMENT TO FORMER G.S. 55-1-26

Editor's Note. - The Official Comments below were formerly located under G.S. 55-1-26 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

1. The court with jurisdiction to hear appeals from the secretary of state
2. "Summary" orders
3. Burden of proof and review standard

The identity of the specific court with jurisdiction to hear appeals from the secretary of state under section 1.26 must be supplied by each state when enacting this section. It is intended that this should be a court of general civil jurisdiction. It may either be the court located in the capital of the state or the court in the county where the corporation's principal business office is located in the state or, if the corporation does not have a principal office in the state, the court located in the county in which its registered office is located. The annual report of the corporation must state where the principal office of the corporation (which need not be within the state) is located. See section 16.22. Other sections of the Model Act also contemplate that the court with jurisdiction over substantive corporate matters will be designated in the statute. See, for example, section 7.03, relating to the ordering of a shareholders' meeting after the corporation fails to hold such a meeting. It is expected that jurisdiction over litigation with respect to substantive matters will normally be vested in the court in the county of the corporation's principal or registered office. See the Official Comment to section 7.03.

In view of the limited discretion of the secretary of state under the Act, a "summary" order appears to be appropriate in section 1.26. Throughout the Model Act the term "summarily order" or similar language is used where courts are authorized to order action taken and the person charged with taking the original action has little or no discretion. The word "summary" is not used in a technical sense but to refer to a class of cases where the court might appropriately order that action be taken on the face of the pleadings or after an oral hearing but without any need to resolve disputed factual issues.

The revised Model Act, unlike earlier versions, does not address either the burden of proof or the standard for review in judicial proceedings challenging action of the secretary of state. It is contemplated that these matters will be governed by general principles of judicial review of agency action in each adopting state.

AMENDED NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-1-26

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-1-26 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

The prior law contained no explicit procedure for appeal from the Secretary of State's refusal to file a document.

This section varies from the Model Act in that it avoids use of the word "summarily" and instead sets out a specific procedure, in the nature of a petition for a writ of mandamus, which (1) requires the appellant to file a copy of its petition with the Secretary of State, (2) makes it clear that the Administrative Procedure Act does not govern such appeal, and (3) provides that the court may give the Secretary of State further notice and an opportunity to be heard if it chooses to do so. In addition, to clarify that a refusal to file initial articles of incorporation or reservations of corporate names may be appealed pursuant to this section, this section uses the words "person tendering the document for filing" to describe the appellant where the Model Act uses the words "domestic or foreign corporation."

Editor's Note. - The Administrative Procedure Act, referred to in this section, is codified at Chapter 150B, G.S. 150B-1 et seq.

Effect of Amendments. - Session Laws 2001-358, ss. 3(b) and 4, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-1-26 as this section; and in subsection (a), in the first sentence, substituted "the Secretary of State's office" for "his office," substituted "on whose behalf the document was submitted" for "tendering the document," and substituted "the date of the refusal" for "such refusal," in the third sentence, substituted "must" for "shall" and substituted "the refusal" for "his refusal," inserted the present fourth sentence, and in the final sentence, inserted "Chapter 150B of the General Statutes" and inserted "by a judge of the superior court."

OFFICIAL COMMENT TO FORMER G.S. 55-1-27

Editor's Note. - The Official Comments below were formerly located under G.S. 55-1-27 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

The secretary of state may be requested to certify that a specific document has been filed with him upon payment of the fees specified in section 1.22(c). Section 1.27 provides that the certificate is conclusive evidence only that the original document is on file. The limited effect of the certificate is consistent with the ministerial filing obligation imposed on the secretary of state under the Model Act.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-1-27

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-1-27 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

This section makes the Secretary of State's certificate of a document conclusive that the original is on file in his office. It differs from former G.S. 55-169, which made such certificate "prima facie" evidence of the facts stated in the certificate and in the certified document.

The section differs from the Model Act by inserting the requirement that the Secretary of State certify that the attached copy of the document is a true copy and by providing for the use of the Secretary of State's seal rather than the State seal.

Effect of Amendments. - Session Laws 2001-358, ss. 3(b) and 4, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-1-27 as this section; substituted "and the seal of office (both of which may be in facsimile or in any electronic form approved by the Secretary of State)" for "(which may be in facsimile) and the seal of office" in the first sentence, and substituted "under this Chapter, Chapter 55, 55A, 55B, 57C, or 59 of the General Statutes, or any predecessor law" for "pursuant to this Chapter or any predecessor act" in the final sentence.

Session Laws 2013-157, s. 10, effective January 1, 2014, substituted "57D" for "57C" in the last sentence.

OFFICIAL COMMENT TO FORMER G.S. 55-1-29

Editor's Note. - The Official Comments below were formerly located under G.S. 55-1-29 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Section 1.29 makes it a criminal offense for any person to sign a document that he knows is false in any material respect with intent that the document be submitted for filing to the secretary of state.

Section 1.29(b) is keyed to the classification of offenses provided by the Model Penal Code. If a state has not adopted this classification, the dollar amount of the fine should be substituted for the misdemeanor classification.

Effect of Amendments. - Session Laws 2001-358, ss. 3(b) and 4, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-1-29 as this section; and substituted "the person" for "he" in two places in subsection (a).

§ 55D-19: Reserved for future codification purposes.

OFFICIAL COMMENT TO FORMER G.S. 55-4-01

Editor's Note. - The Official Comments below were formerly located under G.S. 55-4-01 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

All of chapter 4, relating to corporate names, has been reviewed and revised in light of the responsibilities that should reasonably be placed on secretaries of state considering their available resources.

Section 4.01 deals with two basic name requirements: (1) the name must indicate "corporateness," and (2) the name must be distinguishable upon the records of the secretary of state.

1. Indication of corporateness
2. Names that are "distinguishable upon the records of the secretary of state"
3. Classes of unavailable names
4. Consent to use

Section 4.01(a) permits the words indicating corporateness to include "corporation," "incorporated," "limited," or "company" or an abbreviation of them. While the words "company" and "limited" are commonly used by partnerships or limited partnerships, and therefore do not uniquely indicate corporateness, their use is widespread and is continued since it creates no discernible harm. The Act also permits the use of words or abbreviations in another language that import corporateness.

The revision of the Model Act is based on the fundamental premise that its name provisions should only ensure that each corporation has a sufficiently distinctive name so that it may be distinguished from other corporations upon the records of the secretary of state. The general business corporation statute should not be a partial substitute for a general assumed name, unfair competition, or antifraud statute. As a result, the Model Act does not restrict the power of a corporation to adopt or use an assumed or fictitious name with the same freedom as an individual or impose a requirement that an "official" name not be "deceptively similar" to another corporate name (a requirement of earlier versions of the Model Act). Principles of unfair competition, not the business corporation act, provide the limits on the competitive use of similar names.

The phrase "distinguishable upon the records of the secretary of state" is drawn from section 102(a)(1) of the Delaware General Corporation Law. The principal justifications for requiring a distinguishable official name are (1) to prevent confusion within the secretary of state's office and the tax office and (2) to permit accuracy in naming and serving corporate defendants in litigation. Thus, confusion in an absolute or linguistic sense is the appropriate test under the Model Act, not the competitive relationship between the corporations, which is the test for fraud or unfair competition. The precise scope of "distinguishable upon the records of the secretary of state" is an appropriate subject of regulation by the office of secretary of state in order to ensure uniformity of administration. Corporate names that differ only in the words used to indicate corporateness are generally not distinguishable. Thus, if ABC Corporation is in existence, the names "ABC Inc.," "ABC Co.," or "ABC Corp." should not be viewed as distinguishable. Similarly, minor variations between names that are unlikely to be noticed, such as the substitution of a "." for a "," or the substitution of an arabic numeral for a word, such as "2" for "Two", or the substitution of a lower case letter for a capital, such as "d" for "D," generally should not be viewed as being distinguishable.

The elimination of the "deceptively similar" requirement that appeared in earlier versions of the Model Act and the specific recognition appearing in section 4.01(e), that corporations may use artificial or fictitious names to the same extent an individual can, are based on the fact that the secretary of state does not generally police the unfair competitive use of names and, indeed, usually has no resources to do so. For example, assume that "ABC Corporation" operates a retail furniture store in Albany, New York, and another group wants to use the same name to engage in a business involving imports of textiles in New York City. An attempt to incorporate a second "ABC Corporation" (or a very close variant such as "ABC Corp." or "ABC Inc.") should be rejected because the names are not distinguishable upon the records of the secretary of state. If the second group uses a distinguishable official name, like "AB D Corporation," it probably may lawfully assume the fictitious name "ABC Corporation" to import goods in New York City if it files the assumed name certificate required by New York law. In these situations, the secretary of state will usually not know in what business or in what geographical area "ABC Corporation" is active or what name AB D Corporation is actually using in its business; he simply maintains an alphabetical list of "official" corporate names as they appear from corporate records and makes his decision about whether a proposed name is distinguishable from other "official names" by comparing the proposed name with those on the list. This assumes that there is either no assumed name statute or that if there is such a statute it requires only local filing in counties or, as in New York, a central filing which does not become part of the corporate records maintained by the secretary of state's office. These assumptions are generally if not universally correct.

Section 4.01(b)(3) lists classes of "official names" that are not available. Names in use and thus unavailable from the standpoint of the secretary of state's uniqueness test for "official names" come from the following sources: (1) official names of profit or not-for-profit domestic corporations, (2) official names of foreign profit or not-for-profit corporations qualified to transact business, (3) reserved names, and (4) registered names. The secretary of state becomes involved with fictitious or assumed names only in the situation where a foreign corporation, planning to transact business in a state, discovers that its name is not available in that state. To qualify it must adopt an assumed or fictitious name as its "official name" in the state, see section 15.06. Such a fictitious or assumed name is thereafter an "official" name and is unavailable to the same extent as any other "official name" in use is unavailable.

Section 4.01(c)(1) authorizes the secretary of state to accept a name that is indistinguishable from the name of another corporation if that corporation files an undertaking in a form satisfactory to the secretary of state that it will thereafter change its name to a name that is distinguishable upon the records of the secretary of state. This privilege may be important in acquisition transactions where a new corporation is to take over the business of an existing corporation without a change in corporate name. The secretary of state may require the undertaking to specify the new name which the corporation will adopt and the time period within which the change will be made. The requirements imposed on the undertaking should be consistent with the limited role of the secretary of state in the administration of section 4.01.

FORMER AMENDED NORTH CAROLINA COMMENTARY TO G.S. 55-4-01

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-1-23 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Unlike the Model Act, former G.S. 55-12(a) did not permit a corporate name to contain "words or abbreviations of like import in another language." The drafters concluded that a corporate name should not contain foreign words or abbreviations to indicate corporateness and that it would be confusing to the Secretary of State's office to determine what foreign words or abbreviations are "of like import." Therefore, consistent with the provisions of the prior law, they omitted the Model Act language "or words or abbreviations of like import in another language" from subdivision (a)(1).

The Model Act was modified in subsection (c) to clarify that any person (not just a corporation) may apply for authorization under this subsection.

Subsection 4.01(d) of the Model Act is a restatement of the trade name law and therefore was deemed unnecessary.

Subsection (e) was rewritten for clarification.

Subsection (f) was added to bring forward the provisions of former G.S. 55-12(k).

Subsection (g), which is not in the Model Act, is an entirely new section that addresses the use of a dissolved corporation's name.

Former G.S. 55-12(b), which provided that a corporate name could not contain "any word or phrase which is likely to mislead the public or which indicates or implies that it is organized for any purpose other than one or more of the purposes contained in its charter," was not brought forward. The provision was aimed at preventing fraudulent business practices, and the drafters decided that this should be policed by the Attorney General rather than by the Secretary of State through the corporation laws.

Editor's Note. - Session Laws 2001-358, s. 14(b), as amended by Session Laws 2001-387, s. 173, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-4-02, 55-4-03, 55-4-04, 55-4-05 as G.S. 55D-23, 55D-24, 55D-25, 55D-26, respectively, in Article 3 of Chapter 55D of the General Statutes.

Session Laws 2001-358, s. 53, provided that the act, which amended this section, was effective October 1, 2001, and applicable to documents submitted for filing on or after that date. Section 173 of Session Laws 2001-387 changed the effective date of Session Laws 2001-358 from October 1, 2001, to January 1, 2002. Section 6 of Session Laws 2001-413, effective September 14, 2001, added a sentence to s. 175(a) of Session Laws 2001-387, making s. 173 of that act effective when it became law (August 26, 2001). As a result of these changes, the amendment by Session Laws 2001-358 is effective January 1, 2002, and applicable to documents submitted for filing on or after that date.

Session Laws 2001-387, s. 154(b), provides that: "Nothing in this act shall supersede the provisions of Article 10 or 65 of Chapter 58 of the General Statutes, and this act does not create an alternate means for an entity governed by Article 65 of Chapter 58 of the General Statutes to convert to a different business form."

Session Laws 2016-100, s. 12 provides, in part: "Sections 1 through 9 of this act become effective July 1, 2017, and do not affect a civil action or proceeding commenced or a right accrued before July 1, 2017. Sections 1 through 9 of this act become effective only if funds are appropriated by the 2015 General Assembly, 2016 Regular Session, to implement the provisions of G.S. 66-71.9, as enacted by Section 2 of this act." Although the appropriation was made in the reserves for current legislation in the budget bill, the funds have not yet been released for implementation.

Effect of Amendments. - Session Laws 2001-358, ss. 14(a) and 15, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-4-01(a), (e), and (f) as subsections (a), (c), and (d) of this section; added the section catchline; and rewrote the section.

Session Laws 2010-187, s. 3, effective August 3, 2010, added subdivision (a)(6).

Session Laws 2013-157, s. 11, effective January 1, 2014, added the last sentence to subdivision (a)(2); deleted subdivision (a)(6); substituted "57D-2-01" for "57C-2-01" in subsection (c); and substituted "57D" for "57C" in subsections (d) and (e).

Session Laws 2016-100, s. 5, effective July 1, 2017, in subsection (d), inserted "business" near the beginning and added "of the General Statutes" at the end. For contingent effective date, see Editor's note.

Legal Periodicals. - For article, "The Creation of North Carolina's Limited Liability Corporation Act," see 32 Wake Forest L. Rev. 179 (1997).

CASE NOTES

Editor's Note. - The cases below were decided under the Business Corporation Act adopted in 1955.

Generally Descriptive Phrases Not Covered by Subsection (c). - The proscription in former G.S. 55-12(c) against deceptively similar corporate names remained circumscribed by the salutary common law principle that generally descriptive phrases may not be exclusively appropriated in a trade name. Two Way Radio Serv., Inc. v. Two Way Radio of Carolina, Inc., 322 N.C. 809, 370 S.E.2d 408 (1988).

Use of a Generally Descriptive Term Did Not Exclude Others. - Plaintiff did not, by its prior incorporation under a name that included the generally descriptive phrase "two way radio," acquire a right to the use of that phrase in its corporate name to the exclusion of that right in defendant and others subsequently incorporated. Two Way Radio Serv., Inc. v. Two Way Radio of Carolina, Inc., 322 N.C. 809, 370 S.E.2d 408 (1988).

"Homestead Builders" Insufficient. - Where a contract or sale entered into by a purported corporation used only the name "Homestead Builders," and, similarly, the bank account of the purported corporation was opened in the name of "Homestead Builders," the corporate name did not comply with former G.S. 55-12(a). Keels v. Turner, 45 N.C. App. 213, 262 S.E.2d 845, cert. denied, 300 N.C. 197, 269 S.E.2d 624, reh'g denied, 270 S.E.2d 109 (N.C. 1980).

Applied in State v. Woody, 132 N.C. App. 788, 513 S.E.2d 801 (1999).

OFFICIAL COMMENT TO FORMER G.S. 55-4-02

Editor's Note. - The Official Comments below were formerly located under G.S. 55-4-02 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

The "reservation" of a corporate name is basically a device to simplify the formation of a new corporation or the qualification of a foreign corporation. By reserving a name, the persons considering the formation or qualification of the corporation can order stationery, prepare documents, etc. on the assumption that the reserved name will be available. Reference to a specific intent to form a new corporation is not required by the statute, however, since a secretary of state is not equipped and should not be asked to determine whether the requisite intent actually exists. For the same reason, "any person" is permitted to reserve a corporate name without reference to specific classes of persons who might wish to reserve a corporate name for various purposes.

Under section 4.02 of the Model Act, an available corporate name may be reserved:

1. by persons considering the formation of a new domestic corporation;
2. by persons considering the formation of a corporation in another state and the immediate qualification of that new corporation in this state; and
3. by a foreign corporation planning or considering qualification in this state. The name reserved may be the foreign corporation's "official name" (if that name is available) or another name. The foreign corporation may thereafter use the reserved name as the name of a domestic subsidiary or, if its real name is unavailable, as a fictitious "official name" for its qualification under section 15.06.

These illustrations are designed to suggest the scope and flexibility of section 4.02, and not to exhaust the possible uses to which a reserved name may be put.

Consideration was also given to whether reservation of a corporate name should be made renewable. The modern requirements for incorporation of a domestic corporation or the qualification of a foreign corporation are so simple that it is unlikely that more than 120 days could ever be realistically required to form or qualify a corporation. Also, it was believed to be undesirable to allow the reservation procedure to be used for other purposes, such as permanently setting aside a name by successive renewals. Therefore, only a single, one-time reservation is provided for, although after the 120-day period expires the name becomes available again and anyone, including the original reserver, may reserve the name. And nothing prevents the formation of an inactive corporation specifically to hold the desired name if a longer period of reservation is desired than the 120-day period specified by section 4.02.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-4-02

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-4-02 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Subsection (c) was added to the Model Act's provisions to bring forward the provisions of former G.S. 55-12(e). Other minor changes to the Model Act in this section were made for clarification.

Effect of Amendments. - Session Laws 2001-358, ss. 14(b) and 15, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-4-02 as this section; in subsection (a), in the first sentence, substituted "exclusive use of a name for an entity" for "exclusive use of a corporate name" and inserted "foreign nonprofit corporation, foreign limited liability company, foreign limited partnership, or foreign limited liability partnership," and in the last sentence, deleted "corporate" preceding "name applied," and substituted "the Secretary of State" for "he"; deleted "corporate" preceding "name may" in subsection (b); and rewrote subsection (c).

OFFICIAL COMMENT TO FORMER G.S. 55-4-03

Editor's Note. - The Official Comments below were formerly located under G.S. 55-4-03 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

The "registration" of a corporate name is basically a device by which a foreign corporation, not qualified to transact business in the state, can preserve the right to use its unique "real" name if it decides later to qualify in the state. In effect, registration ensures "real" name availability in areas of potential future expansion.

It is believed desirable to limit section 4.03 to this purpose and not allow it to become an indirect device for the preservation of trademarks, trade names, or possible assumed names. For this reason, generally only "real" names of foreign corporations may be registered (with exceptions described below). A broader approach would create issues better resolved under a trademark or similar statute, or by litigation under unfair competition principles, and might impose duties on secretaries of state that they are generally not equipped to handle, or could handle only at increased cost.

Registration of a name other than the "real" name is permitted in only one situation: if the "real" name of a foreign corporation is not available solely because it does not comply with section 15.06, requiring the words "incorporated," "corporation," "company," or "limited," or an abbreviation of one of these words, the corporation may add one of these words or abbreviations and register its "real" name as so modified under section 4.03(a).

Confusion sometimes exists between "reservation" of names under section 4.02 and registration of names under section 4.03. A foreign corporation that is planning to qualify as a foreign corporation and finds that its name is available in the state may either register or reserve the name. Often a foreign corporation will have to decide whether to qualify or to create a domestic subsidiary; this well may be decided after the exclusive right to use the corporate name in the state is obtained either by reservation or by registration. If the corporation registers its name, it will be kept indefinitely; if it reserves, it will be kept for 120 days and then become available again. That is the foreign corporation's choice. If a foreign corporation registers its name and then elects to form a domestic or foreign subsidiary, the written consent procedure of section 4.03(e) allows the secretary of state to ascertain that the domestic subsidiary is related to the foreign corporation and that use of the registered name by that subsidiary is acceptable to the foreign parent.

If a foreign corporation's "real" name is unavailable, a foreign corporation may reserve any name - including one that is assumed or fictitious when compared with the corporation's "real" name - for 120 days. But it may not register this type of name in light of the policy against allowing the name provisions of the Model Act to be used for purposes broader than the "unique name" issue. Nevertheless, a foreign corporation that wishes to be certain that a particular fictitious or assumed name will be available in the future may create an inactive domestic subsidiary with the desired name to preserve its future availability. See also the Official Comment to section 15.06.

Section 4.03(e) provides that the protection of the name provided by this section terminates when the name is used pursuant to this section by the foreign corporation or its domestic or foreign subsidiary.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-4-03

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-4-03 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Subsection (c) differs from the Model Act in providing that registration of a corporate name remains effective "until the end of the calendar year in which it became effective."

The last sentence of subsection (d) was added from former G.S. 55-12(h). Former G.S. 55-12(h) permitted renewals on a year-to-year basis for ten years, whereas this Act does not contain this limitation.

Other minor changes to the Model Act in this section were made for clarification.

Editor's Note. - Session Laws 2001-387, s. 154(b), provides that "Nothing in the act shall supersede the provisions of Article 10 or 65 of Chapter 58 of the General Statutes, and this act does not create an alternate means for an entity governed by Article 65 of Chapter 58 of the General Statutes to convert to a different business form."

Effect of Amendments. - Session Laws 2001-358, ss. 14(b) and 15, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-4-03 as this section; rewrote subsections (a) and (e); in the introductory language of subsection (b), substituted "An entity registers its name, or its name with" for "A foreign corporation registers its corporate name, or its corporate name with" and substituted "G.S. 55D-22" for "G.S. 55-15-06"; in subdivision (b)(1), substituted "its name, or its name with any addition required by G.S. 55D-22" for "its corporate name, or its corporate name with any addition required by G.S. 55-15-06," and inserted "organization, or formation" and "or activities"; added "organization, or formation" to the end of subdivision (b)(2); and in the first sentence of subsection (d), substituted "An entity" for "A foreign corporation" and inserted "of this section."

CASE NOTES

The listing of an agent for corporate service of process is not a voluntary action, subject to the discretion of the corporation. This listing is legislatively mandated. South Carolina Ins. Co. v. Hallmark Enters., Inc., 88 N.C. App. 642, 364 S.E.2d 678, cert. denied, 322 N.C. 482, 370 S.E.2d 228 (1988), (decided under prior law).

Failure to Appoint New Registered Agent. - Trial court did not abuse its discretion in denying a limited liability company's request for relief under G.S. 1A-1, N.C. R. Civ. P. 60(b)(1) and (6) from a default judgment entered in an action on an account, in which service was procured on the company by service on the North Carolina Secretary of State after the company's registered agent left the State for an extended vacation and the company failed to appoint a new registered agent, because the company failed to properly maintain a registered agent in the State of North Carolina as required by G.S. 55D-30(a)(2), and the evidence and findings supported the trial court's finding that the company's neglect was inexcusable. Advanced Wall Sys. v. Highlande Builders. LLC, 167 N.C. App. 630, 605 S.E.2d 728 (2004).

Failure to Notify Insurer of Suit Where Corporation Without Agent Received No Notice Thereof. - Corporation could not rely on its violation of former G.S. 55-13 to justify its failure to receive notice of suit. Consequently, it did not give notice of suit to its insurer at the time it was reasonably expected to receive actual notice thereof, thus failing to notify insurer as soon as practicable. South Carolina Ins. Co. v. Hallmark Enters., Inc., 88 N.C. App. 642, 364 S.E.2d 678, cert. denied, 322 N.C. 482, 370 S.E.2d 228 (1988), (decided under prior law).

No Excusable Neglect Where LLC Failed to Maintain Registered Office to Receive Notice. - Denial of an LLC's motion to set aside a default judgment based on alleged improper substituted service on the Secretary of State was proper because the LLC's failure to receive actual notice of the lawsuit was due to the LLC's own failure to properly maintain a registered office; only after several attempts to serve the LLC by serving the registered agent and by mail failed, was process served on the Secretary of State. Smith v. Jones, 183 N.C. App. 643, 645 S.E.2d 198 (2007).

Cited in Builders Mut. Ins. Co. v. Doug Besaw Enters., 242 N.C. App. 254, 775 S.E.2d 681 (2015).

OFFICIAL COMMENT TO FORMER G.S. 55-5-02

Editor's Note. - The Official Comments below were formerly located under G.S. 55-5-02 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Changes of registered office or registered agent are usually routine matters which do not affect the rights of shareholders. The purpose of this section is to permit these changes without a formal amendment of the articles of incorporation, without approval of the shareholders, and, indeed, even without formal approval of the board of directors.

Changes of registered office or registered agent are often of particular concern to corporation service companies which routinely serve as registered agent and routinely provide a registered office for literally thousands of corporations within many states.

Experience with the change of registered agent and registered office provisions in earlier versions of the Model Act and the statutes of many states revealed several minor problems with these largely formal provisions that are addressed in the revised Model Act.

1. Changes of registered office or registered agent need not be authorized by the board of directors. Many changes (such as the name of a specific registered agent at a registered office) are so routine that they should not require action by the board of directors, particularly in publicly held corporations.
2. In the case of a change of registered agent, the written consent of the new registered agent is required. This is designed to prevent naming persons as registered agents without their knowledge.
3. The procedure by which a registered agent may change the street address of the registered office applies to any location within the state and the agent is expressly required to notify the corporation of the change. But a facsimile signature of the agent is acceptable since a corporation service company changing its street address may be required to file a form for each of the thousands of corporations for which it serves as registered agent and to notify each corporation of the change.

Resignation of the registered agent is separately treated in section 5.03.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-5-02

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-5-02 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

The provisions requiring a mailing address (if different from the street address) and the name of the county were added to the Model Act's provisions.

Editor's Note. - Session Laws 2001-387, s. 154(b), provides that nothing in this act shall supersede the provisions of Article 10 or 65 of Chapter 58 of the General Statutes, and this act does not create an alternate means for an entity governed by Article 65 of Chapter 58 of the General Statutes to convert to a different business form.

Session Laws 2008-194, s. 2, provides: "(a) The following definitions apply in this section:

"(1) Department. - The Department of the Secretary of State.

"(2) Filer. - An individual, entity, or corporation that files a single notice pursuant to this section for more than 20,000 entities on file with the Department.

"(3) Notice. - A bulk filing which includes the information required in G.S. 55D-31(a)(2) through (6) and a certification that the filer has complied with the entity notification requirements of G.S. 55D-31(b). For a notice intended to update information for unincorporated nonprofit associations, 'notice' shall also mean a filing which includes the information required by G.S. 59B-11(b)(4). Any notice filed must be in an electronic form acceptable to the Department and include a written statement that the notice is filed pursuant to this section.

"(b) Upon receipt and filing by the Department, a notice pursuant to this section shall be sufficient as a matter of law under G.S. 55D-31 and G.S. 59B-11 to update registered office and registered agent information for each entity on file with the Department for which the filer is listed on the records of the Department as the registered office, the registered agent, or both.

"(c) The requirements of G.S. 55D-13(a) and (b), 55D-10(b)(8), 55-1-22(a), 55A-1-22(a), 57C-1-22(a) (repealed by Session Laws 2013-157, s.1), 59-35.2(a), 59-1106(a), and 59B-11(f) shall not apply to notices filed pursuant to this section.

"(d) This section shall only apply to one notice for each filer.

"(e) Unless otherwise specified, the change of address shall become effective on the 45th day following the Department's receipt of a notice filed pursuant to this section. A filer may specify in the notice a later effective date for the change of address, but not an earlier effective date.

"(f) A notice filed pursuant to this section shall be delivered to the Department no later than one year after the effective date of this section."

Effect of Amendments. - Session Laws 2001-358, ss. 44 and 45, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-5-02 as this section; in the introductory language of subsection (a), substituted "An entity required to maintain a registered office and registered agent under G.S. 55D-30" for "A corporation" and added "all of the following" to the end; substituted "entity" for "corporation" in subdivision (a)(1); substituted "its" for "the corporation's" in subdivision (a)(2); substituted "entity's" for "corporation's" in subdivision (a)(3); deleted "and" at the end of subdivision (a)(5); in subsection (b), substituted "the agent's" for "his," substituted "the agent" for "he" in two places, substituted "entity" for "corporation" in three places, inserted "in this State," deleted "(either manually or in facsimile)" following "and signing," and inserted "of this section"; and rewrote subsection (c).

Session Laws 2013-157, s. 14, effective January 1, 2014, substituted "57D-2-24" for "57C-2-23" in subsection (c).

CASE NOTES

No Excusable Neglect Where LLC Failed to Maintain Registered Office to Receive Notice. - Denial of an LLC's motion to set aside a default judgment based on alleged improper substituted service on the Secretary of State was proper because the LLC's failure to receive actual notice of the lawsuit was due to the LLC's own failure to properly maintain a registered office; only after several attempts to serve the LLC by serving the registered agent and by mail failed, was process served on the Secretary of State. Smith v. Jones, 183 N.C. App. 643, 645 S.E.2d 198 (2007).

OFFICIAL COMMENT TO FORMER G.S. 55-5-03

Editor's Note. - The Official Comments below were formerly located under G.S. 55-5-03 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

The resignation of registered agents in states with statutes similar to earlier versions of the Model Act created special problems. Most of these problems arose in connection with corporation service companies who serve as registered agent for an annual fee. If the fee was not paid, the corporation service company obviously desired to terminate the representation promptly. Often the agent did not have a current business address for the corporation and was uncertain whether the corporation was still actively engaged in business. The earlier Model Act provision required the agent to submit his statement of resignation in duplicate and the secretary of state was directed to mail one copy "forthwith . . . to the corporation at its registered office." This resulted in a circularity in notice: the duplicate was mailed back to the resigned agent who originally filed the copy. The probability that the corporation would receive a copy of the resignation under these circumstances was obviously low.

Section 5.03 resolves the circularity problem by requiring the resigning agent to submit two copies of its statement of resignation, one to be sent to the corporation at its registered office and the other to the corporation "at its principal office." Mailing to this second address appears to be the only option regularly available to "break the circle" of the corporation "receiving" the notice through an agent whose resignation is being communicated.

This section also permits the discontinuance of the registered office as well as the resignation of the agent. Corporation service companies desiring to resign their agency for nonpayment of fees will normally wish to discontinue the registered office as well as the registered agent.

AMENDED NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-5-03

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-5-03 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

The Model Act was modified in subsection (a) to require that the statement of resignation include or be accompanied by a certification that written notice of the resignation was mailed or delivered to the corporation. The certification must include the name and title of the officer notified (if any) and the address to which the notice of resignation was mailed or delivered.

Editor's Note. - Session Laws 2001-387, s. 154(b), provides that "Nothing in the act shall supersede the provisions of Article 10 or 65 of Chapter 58 of the General Statutes, and this act does not create an alternate means for an entity governed by Article 65 of Chapter 58 of the General Statutes to convert to a different business form."

Effect of Amendments. - Session Laws 2001-358, ss. 44 and 45, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-5-03 as this section; in subsection (a), in the first sentence, substituted "The registered agent of an entity may resign" for "A registered agent may resign his agency appointment" and deleted "the signed original and two exact or conformed copies of" preceding "a statement of resignation," in the second sentence, substituted "the agent" for "he" and substituted "entity" for "corporation," and, in the last sentence, substituted "This" for "Such" and substituted "individual" for "officer"; rewrote subsection (b); and in subsection (c), inserted "if applicable" and deleted "if so provided" following "discontinued."

OFFICIAL COMMENT TO FORMER G.S. 55-5-04

Editor's Note. - The Official Comments below were formerly located under G.S. 55-5-04 prior to its transfer in 2001. At the request of the Revisor of Statutes, the Official Comments have been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Somewhat the same circularity problem that arose in connection with the resignation of registered agents (see the Official Comment to section 5.03) also sometimes arose in connection with service of process under statutes based on the former Model Act provision. Under that provision, if service could not be made on the registered agent at its registered office, a duplicate of the process was forwarded to the secretary of state who served it at the registered office (where the agent previously could not be found). It is unlikely that this arrangement resulted in the copy being forwarded routinely to the corporation. Instead of providing for service on the secretary of state if service cannot be perfected on the registered agent, therefore, section 5.04 provides for service by registered or certified mail addressed to the secretary of the corporation at its principal office shown in its most recent annual report.

If service is not perfected on the corporation at its registered office, section 5.04(b) provides that service is deemed perfected at the earliest of:

1. the date the corporation receives the mail;
2. the date shown on the return receipt if the receipt is signed on behalf of the corporation;
3. five days after the certified or registered mail is delivered to the post office or deposited in the mail by the person seeking to serve the corporation, if the return receipt was not returned or not signed on behalf of the corporation.

Section 5.04 also simplifies the recordkeeping requirements of the secretary of state, who is no longer required to keep records of service of process on domestic corporations.

Section 5.04(c) provides that this section does not prescribe the only, or necessarily the required, means of serving a corporation. Service may also be perfected under civil practice statutes, under rules of civil procedure, or under statutes that provide special service requirements applicable to certain types of corporations.

NORTH CAROLINA COMMENTARY TO FORMER G.S. 55-5-04

Editor's Note. - The North Carolina Commentary below was formerly located under G.S. 55-5-04 prior to its transfer in 2001. At the request of the Revisor of Statutes, the North Carolina Commentary has been transferred to this section as historical annotations pursuant to Session Laws 2001-358, s. 52.

Subsection (a) follows the Model Act except for specifying that the registered agent is "an" agent rather than "the" agent for service on the corporation. Subsections (b), (c) and (d) bring forward former G.S. 55-15(b), (c) and (d), with minor conforming changes in subsection (b). Service on the Secretary of State under the circumstances permitted by former G.S. 55-15(b) has been retained as an alternative.

Effect of Amendments. - Session Laws 2001-358, ss. 44 and 45, effective January 1, 2002, and applicable to documents submitted for filing on or after that date, recodified G.S. 55-5-04 as this section; and rewrote the section.

CASE NOTES

Editor's Note. - Most of the cases below were decided under the Business Corporation Act adopted in 1955 or under prior law.

Purpose of Service on Secretary of State. - The provision for service of process on the Secretary of State is not in the nature of a penalty upon the corporation for not having an agent upon whom service could be had, and not keeping the name of such agent on file with the Secretary of State, which might be condoned because of the alleged inability of the corporation to comply with the statute. It is a device for public convenience and is sustained upon the theory that it is reasonably adequate notice, either to be employed alternatively or where other forms of notice are unavailable. Sisk v. Old Hickory Motor Freight, 222 N.C. 631, 24 S.E.2d 488 (1943).

Service upon a corporation by substituted service upon the Secretary of State does not violate due process of law. Royal Bus. Funds Corp. v. South E. Dev. Corp., 32 N.C. App. 362, 232 S.E.2d 215, cert. denied, 292 N.C. 728, 235 S.E.2d 784 (1977).

Violation of Due Process Where Attorney Had Actual Knowledge of Defendant's Address. - Where plaintiff's attorney had actual knowledge of an address where defendant could be served and did not attempt to serve defendant at the known address, substitute service of process on the Secretary of State was ineffective and violated defendant's due process rights. Interior Distribs., Inc. v. Hartland Constr. Co., 116 N.C. App. 627, 449 S.E.2d 193 (1994).

To obtain proper service upon a domestic corporation, (i) service must first be made upon the Secretary of State, and (ii) the Secretary of State must forward a copy of the summons and complaint to the corporation. Huggins v. Hallmark Enters., Inc., 84 N.C. App. 15, 351 S.E.2d 779 (1987).

Test of Sufficiency of Notice. - The test is not whether defendants received actual notice, but whether the notice was of a nature reasonably calculated to give them actual notice and the opportunity to defend. Royal Bus. Funds Corp. v. South E. Dev. Corp., 32 N.C. App. 362, 232 S.E.2d 215, cert. denied, 292 N.C. 728, 235 S.E.2d 784 (1977).

Actual Receipt of Notice Not Required. - Former G.S. 55-15(b), which directed the Secretary of State to forward process by registered mail, did not require that the defendant corporation receive actual notice. Royal Bus. Funds Corp. v. South E. Dev. Corp., 32 N.C. App. 362, 232 S.E.2d 215, cert. denied, 292 N.C. 728, 235 S.E.2d 784 (1977).

Effect of Failure to Comply with Statutory Registration Requirements. - Where defendants were required by former G.S. 55-13 to maintain a registered office and registered agent, and their failure to do so caused process to be twice returned without personal service, while had they conformed to the statutory requirements, both methods of service would have resulted in their receiving actual notice of the lawsuit, the notice given (attempted personal service on the Secretary of State) was in fact reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Accordingly, the service upon the Secretary of State was constitutionally valid and the trial court acquired in personam jurisdiction over the North Carolina corporations. Royal Bus. Funds Corp. v. South E. Dev. Corp., 32 N.C. App. 362, 232 S.E.2d 215, cert. denied, 292 N.C. 728, 235 S.E.2d 784 (1977).

Failure of Secretary of State to Mail Copy of Process to Registered Office. - Where the Secretary of State's office, contrary to the mandate in former G.S. 55-15(b), failed to mail a copy of process to the registered office of defendant corporation, plaintiff did not obtain proper service upon defendant, and the fact that even if the Secretary of State had forwarded the summons and complaint to defendant's then recorded address, such would not have been received, would not change this result. Huggins v. Hallmark Enters., Inc., 84 N.C. App. 15, 351 S.E.2d 779 (1987).

Although the Secretary of State mailed the alias and pluries summons to defendant's registered address rather than defendant's principal address as set forth in G.S. 55D-33(b), defendant's argument that the trial court erred in failing to grant its motion to set aside the default judgment due to the Secretary of State mailing the alias and pluries summons to the wrong address was overruled. Builders Mut. Ins. Co. v. Doug Besaw Enters., 242 N.C. App. 254, 775 S.E.2d 681 (2015).

Service After Forfeiture of Charter. - The continuance of corporate existence by former G.S. 55-132 made service of process on a corporation after it had been adjudged a bankrupt and its charter forfeited reasonable notice and a valid service. Sisk v. Old Hickory Motor Freight, 222 N.C. 631, 24 S.E.2d 488 (1943).

Continuously Doing Business as Presence. - Where the seller has continuously done business in this State since plaintiff 's claims accrued, the seller has been sufficiently "present" in the State to warrant the protection of the statutes of limitations. Bobbitt v. Tannewitz, 538 F. Supp. 654 (M.D.N.C. 1982).

Presence Through Agents in State. - A corporation can actually be present in the State by continuously doing business in this State through its agents, even though its place of incorporation and principal place of business are in foreign states. Bobbitt v. Tannewitz, 538 F. Supp. 654 (M.D.N.C. 1982).

Corporation Bound upon Service of Agent. - Service of process upon a corporation's registered agent binds that corporation when the agent is served, not when the service actually comes to the attention of an officer or agent charged with defending actions against the corporation. Anderson Trucking Serv., Inc. v. Key Way Transp., Inc., 94 N.C. App. 36, 379 S.E.2d 665 (1989), decided under the former Business Corporation Act.

No Excusable Neglect Where LLC Failed to Maintain Registered Office to Receive Notice. - Denial of an LLC's motion to set aside a default judgment based on alleged improper substituted service on the Secretary of State was proper because the LLC's failure to receive actual notice of the lawsuit was due to the LLC's own failure to properly maintain a registered office; only after several attempts to serve the LLC by serving the registered agent and by mail failed, was process served on the Secretary of State. Smith v. Jones, 183 N.C. App. 643, 645 S.E.2d 198 (2007).

Cited in Patridge v. Associated Cleaning Consultants & Servs., Inc., 108 N.C. App. 625, 424 S.E.2d 664 (1993).