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7-90-801. Authority to transact business or conduct activities required.

Statute text

(1) A foreign entity shall not transact business or conduct activities in this state except in compliance with this part 8 and not until its statement of foreign entity authority is filed in the records of the secretary of state. Notwithstanding the foregoing, this part 8 shall not apply to foreign general partnerships that are not foreign limited liability partnerships and shall not apply to foreign unincorporated nonprofit associations. To the extent that a provision of this part 8 is inconsistent with another statute of this state in its application to a foreign entity, such other statute, and not such provision of this part 8, shall apply.

(2) A foreign entity shall not be considered to be transacting business or conducting activities in this state within the meaning of subsection (1) of this section by reason of carrying on in this state any one or more of the following activities:

(a) Maintaining, defending, or settling in its own behalf any proceeding or dispute;

(b) Holding meetings of its owners or managers or carrying on other activities concerning its internal affairs;

(c) Maintaining bank accounts;

(d) Maintaining offices or agencies for the transfer, exchange, and registration of its own securities or owner's interests, or maintaining trustees or depositories with respect to those securities or owner's interests;

(e) Selling through independent contractors;

(f) Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;

(g) Creating, as borrower or lender, or acquiring, indebtedness;

(h) Creating, as borrower or lender, or acquiring, mortgages or other security interests in real or personal property;

(i) Securing or collecting debts in its own behalf or enforcing mortgages or security interests in property securing such debts;

(j) Owning, without more, real or personal property;

(k) Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature;

(l) Transacting business or conducting activities in interstate commerce; and

(m) In the case of a foreign nonprofit corporation:

(I) Granting funds; or

(II) Distributing information to its members.

(3) The list of activities in subsection (2) of this section is not exhaustive.

(4) Nothing in this section shall limit or affect the right to subject a foreign entity that does not, or is not required to, have authority to transact business or conduct activities in this state to the jurisdiction of the courts of this state or to serve upon any foreign entity any process, notice, or demand required or permitted by law to be served upon an entity pursuant to part 7 of this article or sections 13-1-124 and 13-1-125, C.R.S., or any other provision of law or pursuant to the applicable rules of civil procedure.

(5) A foreign nonprofit entity shall be considered to be transacting business or conducting activities in this state if it is required to file a registration statement with the secretary of state pursuant to section 6-16-104, C.R.S.

History

Source: L. 2003: Entire part added, p. 2305, 217, effective July 1, 2004. L. 2004: (1) amended, p. 1492, 236, effective July 1. L. 2007: (5) added, p. 244, 39, effective May 29.

Annotations

 

ANNOTATION

Annotations

Law reviews. For article, "The New Colorado Corporation Act", see 35 Dicta 317 (1958). For article, "1959 Amendments to the Colorado Corporation Code", see 36 Dicta 489 (1959). For note, "Service of Process on Foreign Corporations Outside the Forum", see 34 Rocky Mt. L. Rev. 359 (1962). For article, "The 1985 Proposed Revisions to the Colorado Corporation Code", see 14 Colo. Law. 34 (1985). For article, "Piercing the Corporate Veil: Limited Liability", see 15 Colo. Law. 795 (1986). For article, "Significant Improvements to Colorado's Limited Partnership Act Adopted", see 15 Colo. Law. 1635 (1986). For article, "Trade Name Registration Requirements and Customs in Colorado -- Parts I and II", see 16 Colo. Law. 238 and 454 (1987).

Annotator's note. Since 7-90-801 is similar to 7-115-101 as it existed prior to the 2003 repeal and reenactment of article 115 of title 7 and former 7-115-101 is similar to 7-9-101 as it existed prior to the 1993 recodification of the "Colorado Business Corporation Act", articles 101 to 117 of title 7, cases construing that provision and its predecessors have been included in the annotations to this section.

Restrictions on interstate commerce may not be imposed. The legislature in prescribing conditions on which a foreign corporation may do business within the state may not impose any restrictions or burdens on interstate commerce. Int'l. Trust Co. v. A. Leschen & Sons Rope Co., 41 Colo. 299, 92 P. 727 (1907).

Thus this section cannot be construed to impose upon foreign corporations limitations on making contracts for carrying on commerce between the states, for that would make the act an invasion of the exclusive right of Congress to regulate commerce among the several states. Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 5 S. Ct. 739, 28 L. Ed. 1137 (1885).

And so foreign corporations engaged solely in interstate commerce are impliedly excepted from this section imposing duties and obligations upon foreign corporations generally; otherwise the section must necessarily be held unconstitutional as invading the exclusive power of Congress. Herman Bros. Co. v. Nasiacos, 46 Colo. 208, 103 P. 301 (1909).

This section and 10 of art. XV, Colo. Const., do not forbid, the doing of a single act of business in the state, but the carrying on of business by a foreign corporation without the filing of the certificate and the appointment of an agent as required by the statute. Cooper Mfg. Co. v. Ferguson, 113 U.S. 727, 5 S. Ct. 739, 28 L. Ed. 1137 (1885).

For to "transact business" within the meaning of this section is to maintain an office, have capital invested, and carry on a regular business in the state. Cockburn v. Kinsley, 25 Colo. App. 89, 135 P. 1112 (1913); Colo. Iron-Works v. Sierra Grande Mining Co., 15 Colo. 499, 25 P. 325 (1890).

And so a single transaction is not "transacting business". Cockburn v. Kinsley, 25 Colo. App. 89, 135 P. 1112 (1913).

Nor does "transacting business" include the mere sale of shares, measures taken for promoting the affairs of the corporation, or meetings of the directors for such purposes only. Cockburn v. Kinsley, 25 Colo. App. 89, 135 P. 1112 (1913).

Corporation without certificate must defend lawsuits. Although a foreign corporation which does not obtain a certificate of authority has no right to transact business in Colorado, such corporation maintains its corporate identity with respect to its contracts and other acts, and it cannot refuse to defend lawsuits in Colorado courts. Nat'l Ass'n of Credit Mgt. v. Burke, 645 P.2d 1323 (Colo. App. 1982).

Civil suits. A foreign corporation not properly qualified to transact business in Colorado can remove the statutory prohibition against maintaining a civil action by taking steps necessary for qualification at any time. Noldan Corp. v. District Court, 716 P.2d 120 (Colo. 1986).

Applied in Tabor v. Gross Mfg. Co., 11 Colo. 419, 18 P. 537 (1888); Miller v. Williams, 27 Colo. 34, 59 P. 740 (1899); Butler Bros. Shoe Co. v. United States Rubber Co., 156 F. 1 (8th Cir. 1907); Great W. Producers Coop. v. Great W. United Corp., 200 Colo. 180, 613 P.2d 873 (1980).