googleace03ff07b704d6e 9E610E327B22C4D0DE77FCAF1F4E508A yandex_c1ed43cb6a742649

Common terms used in a Corporate Environment

This topic will address the following questions:

  • What is a domestic entity?
  • What is a foreign entity?
  • When is my annual report due?
  •  What is a Purpose clause?
  • What does BCA mean?

Background:

The definitions provided are just a small sample of terms that relate to the formation and corporate compliance associated with your entity and are commonly referred to in State statutes and on Illinois Secretary of State forms.  

If there are any items you are not familiar with and are not listed here, please reach out to us and we can provide further guidance.

Common Corporate Definitions:

Administrative Dissolution:
When a company does not comply with the State’s annual filing requirements, the State will administratively dissolve or revoke an entity’s ability to transact business in the State of Illinois.

Annual Report Due Dates:  Reports are due prior to the first day of the anniversary month of the acceptance of your filing with the State of Illinois

Application For Admission:
The LLC 45.5 form (or 45.5(S) form is the application filed in the state of Illinois to obtain the legal rights of a limited liability company (or Series LLC) to transact business in Illinois.

Application For Authority:
The BCA 13.15 form for corporations is the application required to be filed with the State of Illinois to obtain the legal rights to transact business in Illinois.

Authorized Shares:
The amount of shares the corporation is allowed to issue. This amount is listed on the Articles of Incorporation.

BCA:
BCA is the acronym for Business Corporation Act of Illinois.  When you see BCA Corporation, it means a corporation registered with Illinois pursuant to the Business Corporation Act of 1983, as amended.

By-Laws:
By-Laws spell out how your company will operate. A corporation’s By-laws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of incorporation.  These are required to maintain your limited liability.

Dissolution:
When a company files a document to dissolve the entity in the State of Incorporation or formation.  This officially closes the company in the State it was formed. Dissolution terminates the partners’ authority to act for the partnership, except for winding up.  Qualifications in other States must file the withdrawals and terminations in each State once the company dissolves.

Domestic BCA:
Any company that files Articles of Incorporation in the State of Illinois under the Business Corporation Act of 1983, as amended is considered a domestic corporation in the State of Illinois.

Duration of the entity:
The duration of the entity is Perpetual unless the by-laws, operating agreement or limited partnership agreement specifies a date certain on which the company is to dissolve.

Foreign BCA:
A corporation organized in another state who is requesting the authority to transact business in Illinois by filing the BCA 13.15 form is considered a foreign corporation in the State of Illinois.  This does not refer to a company from another country.

Foreign Qualification:
An entity organized in a state other than Illinois that desires a business presence in Illinois and who files the appropriate documentation with the State of Illinois to receive the authority to transact business is considered a foreign qualification.

Formation Documents (Supporting Documents or Charter):
The initial documents that were submitted to your domestic state that established a legal business presence (i.e., Articles of incorporation, Articles of Organization, Certificate of Limited Partnership, etc.)

General-Purpose Clause:
The statutory language required by the state to identify the purpose of the entity.  Each entity type’s purpose clause is listed below:

Domestic Corporation:
This field is pre-populated on the BCA 2.10 form and contains the General- Purpose clause.

Foreign Corporation:
The Statutory General-Purpose language for the BCA 13.15 form is:  “To engage in any lawful act or activity for which corporations may be organized under the Corporation Laws of ______ (insert the state of incorporation here), and permitted under the Illinois Business Corporation Act of 1983”.

Domestic LLC:
This field is pre-populated on the LLC 5.5 form and contains the General-Purpose clause.

Foreign LLC:
The Statutory General-Purpose language for the BCA 45.5 form is:  “the transaction of any or all lawful business activity for which limited liability companies may be organized under the limited liability company law of the ________ (enter the state of formation here) and permitted under the Illinois Limited Liability Company Act”.

Domestic Series LLC:
This field is pre-populated on the LLC 5.5(S) form and contains the general purpose clause.

Foreign Series LLC:
The Statutory General Purpose language for the BCA 45.(S) form is:  “the transaction of any or all lawful business activity for which limited liability companies may be organized under the limited liability company law of the___________ (enter the State of Formation here) and permitted under the Illinois Limited Liability Company Act”.

NFP:
The State of Illinois requires the purpose clause to be specific on the NFP 102.10 form and the NFP 113.15 form, unlike the for-profit corporation requirements that allows for a general purpose, the purpose of a NFP must be focused and to the point.

Issued Shares:
The number of shares the corporation has issued to Stockholders.

LLC:
This is the acronym for Illinois’s Limited Liability Company Act.

Operating Agreement:
Operating agreement identifies your company’s structure, regulates the affairs of the company and the conduct of its business. An operating agreement also governs relations among the members or managers and the company.

Paid In Capital:
Paid-in capital is the amount of money the corporation received from stockholders when the corporation first issued its stock. Paid-in capital represents the funds raised by the business from equity, and not from ongoing operations.  The most current Paid in Capital can be verified by the most recent signed Federal 1120 form on Schedule L.

Par Value:
The value given to a single share of stock.

Principal Office:
The location of the office where the company’s books and records are maintained and the company receives day-to-day business mail.

Registered Office:
The location of your registered agent where Service of Process and State correspondence are delivered on behalf of the company.  The registered office does not accept or deliver day-to-day operational mail.

Registered Agent:
A statutory requirement of the State of Illinois that requires all entities to maintain a resident Corporation or individual from the State of incorporation, formation or qualification, whose sole purpose is to accept service of process and state correspondence on behalf of the entity, estate or sole proprietor. 

Series LLC:
A limited liability company that has the ability to established subsidiary series that maintain their own books and records and has limited liability other than the limited liability of the Parent LLC.

Service of Process:
Litigation documents or correspondence delivered by process server or a government official such as a County/State Sheriff.  Documents typically need to be signed for and once delivered are normally time sensitive and have a specific time frame for response. 

Termination:
Filing of a document that closes your domestic entity with the State of Illinois which prevents accrual of franchise tax, penalties and late fees and also prevents corporate identity theft.

Withdrawal:
When a company is qualified to do business in a state other than their incorporation or formation state, terminating the existence in the qualified state is considered a withdrawal and does not affect the ability of that company to transact business in any other state that it may already be qualified to do business.