Failure of Company to Procure Certificate; Effect; Penalty

1. Law
2. Georgia Code
3. Corporations, Partnerships, and Associations
4. Limited Liability Companies
5. Foreign Limited Liability Companies
6. Failure of Company to Procure Certificate; Effect; Penalty

1. A foreign limited liability company transacting business in this state may not maintain an action, suit, or proceeding in a court of this state until it is authorized to transact business in this state.
2. The failure of a foreign limited liability company to procure a certificate of authority does not impair the validity of any contract or act of the foreign limited liability company or prevent the foreign limited liability company from defending any action, suit, or proceeding in any court of this state.
3. A foreign limited liability company that transacts business in this state without registering as required by this chapter shall be liable to the state:
   1. For all fees which would have been imposed by this chapter upon such foreign limited liability company had it registered as required by this article; and
   2. If it has not been authorized to transact business in this state within 30 days after the first day on which it transacts business in this state, for a penalty of $500.00.

(Code 1981, §14-11-711, enacted by Ga. L. 1993, p. 123, § 1; Ga. L. 2002, p. 989, § 16.)

Law reviews.

- For article, "2014 Georgia Corporation and Business Organization Case Law Developments," see 20 Ga. St. B. J. 26 (April 2015).

JUDICIAL DECISIONS

Not transacting business.

- Trial court did not err by denying a mortgagor's motion to dismiss the foreclosure confirmation proceeding based on the mortgagee being a foreign limited liability company impermissibly transacting business in Georgia because a limited liability company was not considered to be transacting business in Georgia merely because it engaged in acquiring loan documents, conducting a foreclosure sale, purchasing the property at the sale, reporting the sale, and filing the confirmation petition. Powder Springs Holdings, LLC v. RL BB ACQ II-GA PSH, LLC, 325 Ga. App. 694, 754 S.E.2d 655 (2014).

Even though the claimant was not qualified to do business in Georgia, the claimant could undertake all the actions the claimant was pursuing in the bankruptcy court - acquiring evidences of debt, securing and collecting debts, enforcing the claimant's rights in the property, and maintaining or defending any action. In re Brooks, Bankr. (Bankr. S.D. Ga. Jan. 12, 2016).

Claimant's action in bankruptcy case.

- This bankruptcy case was initiated by the debtor, and the claimant was defending the claimant's rights to pursue and collect the claimant's debt pursuant to the terms of the loan documents and guaranty, and such conduct was permitted by O.C.G.A. § 14-11-711 without qualifying to do business in Georgia. The claimant's failure to procure a certificate of authority did not invalidate the claimant's contractual rights, or prevent the claimant from defending the claimant's proofs of claim, or seeking relief from the stay in the bankruptcy court to pursue the claimant's rights to collect the claimant's purported debt under the loan documents. In re Mohr, 538 Bankr. 882 (Bankr. S.D. Ga. 2015).

Cited in Brock v. RES-GA SCL, LLC, 340 Ga. App. 194, 796 S.E.2d 914 (2017).

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