Business growth and expansion offer new opportunities. However, it may also come with challenges. Because of that, it may be necessary for a company to make certain changes.
The Importance Of Filing An Amendment
One of the things a company needs to understand once it decides to make changes related to the business entity structure is an amendment. Generally, changing certain information included in the company’s formation documents requires the completion of a state process. It usually involves the submission of formal paperwork and payment of the corresponding fees. Depending on the state and the changes, it can be an amendment or a restatement of the formation documents.
The things a company reported in its Articles of Organization or Incorporation (or whatever the formation documents are called in the company’s home state) are included in the official database and records of the state. So when there are certain changes, the company has to report them to the state.
- Filing an amendment tells state authorities or the appropriate agency that the company’s representatives agree to the changes. For instance, the consent of the shareholders of a corporation is necessary for some states.
- Approval of the filed amendments means the state certifies that the business entity has met legal requirements.
- It ensures that the state’s records are updated.
When To File An Amendment
As stated earlier, changes to some pieces of information that a company reported in its initial formation documents often require an amendment. But if the changes are only to provisions in internal documents, such as an LLC’s operating agreement or a corporation’s bylaws, then filing an amendment may not be needed.
Here are the common changes that can trigger the completion of the state amendment process:
- Business Entity Name
- The Purpose Of The Business
- The Number Of Authorized Shares Of A Corporation
- The Type, Class, Or Series Of A Corporation’s Authorized Shares
- The Number Of Directors Of A Corporation (If It Is Stated In The Incorporation Documents)
- The Management Structure Of An LLC
In some states, changing the names and addresses of members, managers, or directors of an entity also requires the filing of amendments. However, it may not be necessary for other states. In such cases, the company will have to report the updates on its annual report.
Most states also do not require companies to file amendments if there is a change in the registered agent because there is a separate Change of Registered Agent form and fee.
Additionally, many states allow business entities to write a general purpose in the company’s formation documents. It can be as simple as the phrase “all lawful business.” Some states may not even require the inclusion of a business purpose. In such cases, there is no need to inform the state about any changes in the company’s business purpose information. However, if the state requires a specific business purpose that properly explains the company’s activities, then altering such information calls for an amendment filing.
There are states that allow companies to make changes in ownership, membership, or management internally without involving the state. Meanwhile, some states may require businesses to report those changes. Possible changes in ownership include those related to the amount of ownership.
Understanding when it is necessary to file an amendment will help companies avoid fines and legal issues. It also ensures compliance with state obligations.
How To File
Once a company realizes that it has to file an amendment, it has to do so as soon as possible. The first step in the process is to determine what form to use. There may be instances when a restatement of the formation documents may be enough. It may also be a cheaper alternative.
In most cases, states offer readily available forms that companies can fill out. They are often called Articles of Amendment. Common information that a company will have to provide to complete the form includes the following:
- Company Name
- Date Of The Amendment
- Article Number That Is Being Amended
- A Statement Indicating That The Article Specified Is Being Amended
- The Specific Amendment
- A Statement That Other Sections Remain In Full Force And Effect
- Signatures Of Authorized Representatives
After completing the form, the company will have to submit it to the appropriate state agency. It usually comes with a corresponding filing fee. To find out more about the requirements and the cost of an amendment in each state, check this out.
What To Do
Undertaking business-related changes require a company to ensure compliance with two sets of responsibilities.
First, the company has to follow the formalities and processes stated in its formation documents to authorize and adopt the changes. For example, some states may also require detailed information or records regarding the votes of shareholders or members when it comes to the changes.
Second, after all of the business formalities, the company has to file the appropriate paperwork with the state agency. Some states may have additional requirements as well. For example, there are those that require the publication of a notice for some changes.
Adopting certain changes to the formation documents of a company requires the preparation, completion, and filing of formal paperwork. There may also be additional documents depending on the changes.
For some companies, the whole ordeal can seem intimidating and overwhelming. It may also be a bit hard for business owners to set aside time to take care of the filing process. In such cases, it may be best to look for a reliable document filing company like DoMyLLC. Our team of experts has knowledge and experience in handling the filing of amendments in all 50 states. We also know the appropriate documents for various business entity structures. Leave the amendment process to us to have a hassle-free experience.
Additionally, companies will continue to have obligations with the state. DoMyLLC can also help ensure compliance to prevent any issues in the future. We offer personalized solutions to address various business needs too. Talk to us today and find out how your business entity can benefit from our services.
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