Many companies conduct business in California without having incorporated under the laws of this state. While this is entirely lawful, it does expose such businesses to civil liability. This risk can be mitigated by filing a Certificate of Qualification. This process enables a foreign corporation to operate in California with the protection of California corporate laws. An experienced California corporate attorney can help your business determine whether filing a Certificate of Qualification is appropriate for your business. An experienced California Corporate attorney can also help entrepreneurs determine which state they should incorporate their business in.
What is the Difference Between a Foreign and Domestic Corporation?
In California, a domestic corporation is one that has incorporated under the laws of California. A foreign corporation is one which has incorporated under the laws of another state. As is common in business, many foreign corporations do business in California. This can expose the business to liability under California law. Any business which “reaches into” California for the purpose of doing business is subject to the jurisdiction of California courts over that transaction. Thus, a foreign company which does business in California may find itself subject to the jurisdiction of the California courts, but without the protection of California corporate laws.