In 2013 there were 261 out-of-state firms who failed to register with Secretary of the State Denise Merrill’s office and were forced to pay $1.3 million in penalties.
Under state law, business corporations, nonstock corporations, limited partnerships, limited liability companies, limited liability partnerships, and statutory trusts formed outside of Connecticut must obtain a certificate of authority from Merrill’s office and pay the necessary fees when they register their company in the state. About 50,000 of these foreign entities have properly filed with the state, according to the Secretary of the State’s office.
“Here in Connecticut, we strive for fair competition in the market place so that all businesses in the state have a chance to make a profit in this economic climate,” Merrill said in a press release. “Out-of state companies who fail to register and do not obtain a certificate of authority to do business here undercut Connecticut companies and make it difficult to provide accountability for Connecticut consumers. All out-of-state companies should be aware that if they wish to conduct business in the state of Connecticut, they must be registered to do so or they may face penalties.”
The joint, multi-year enforcement effort between the offices of the Attorney General George Jepsen and Merrill, who is responsible for registering businesses, has led to fines against thousands of delinquent out-of-state businesses. The $1.3 million in fines collected in 2013 is slightly less than the total fines collected during the previous fiscal year.
The requirement to obtain authority to do business exists to protect domestic organizations from unfair competition and it places domestic and foreign organizations on an equal footing, according to a press release from Merrill’s office. The law also protects consumers with a grievance against an out-of state firm by requiring businesses to appoint an agent for service of process in Connecticut to accept legal papers if court action is taken. Companies that violate the law face a fine of $300 for every month the company is transacting business in Connecticut without legal authority.
The top five companies paying the fines include: MTS Systems Corporation of Minnesota which paid more than $54,000; Ventura Foods of California which paid more than $35,000; Katherine Cowdin Inc. of New York which paid more than $23,000; Amdocs IT Services LLC of Missouri which paid more than $22,000; and Tecan U.S. Inc. of North Carolina which paid more than $20,000.