A corporation is created under state law by formal incorporation and state requisite filing (Articles of Formation or Incorporation), It is owned by shareholders (public or private). Corporations have double taxation—the corporation itself pays corporate taxes and shareholders pay taxes on distributions. Shareholders have no personal liability of shareholders/owners for debts of corporation. Corporation can be involuntarily dissolved for failure to comply with state formalities. Name changes must be effectuated by filed amendment to formation document.
The loan file should include a copy of the Certificate of Formation or Articles or Certificate of Incorporation and any Amendments. All corporations formed in Texas on or after January 1, 2006 have Certificates of Formation rather than Articles of Incorporation. This may be obtained from the Secretary of State of the state of incorporation. For a Texas corporation this may be obtained from the Texas Secretary of State online at www.sos.state.tx.us or by telephoning (512) 463-5555.
The loan file should include a copy of the Bylaws and all amendments certified by the corporation’s secretary. These should be reviewed to verify that they do not restrict the corporation’s ability to borrow, pledge collateral or guaranty debt. They should also be reviewed to determine which Officer’s signature(s) are required on the loan documents. Bylaws are not filed with the Secretary of State.
The loan file should include a Certificate of Fact: Status. For a Texas corporation this may be obtained from the Texas Secretary of State online or by telephoning (512) 463-5578.
The loan file should include a Certificate of Franchise Tax Account Status. A Certificate of Franchise Tax Account Status, commonly referred to as a “good standing certificate,” is available for corporations doing business in Texas. The CoAS certifies whether or not the corporation is in good standing with its franchise tax reports and payments, or that the entity is exempt from the state franchise tax. This certificate provides the account status on franchise tax only. This may be obtained from the state office responsible for the collection of franchise taxes. In Texas this is obtained from the Comptroller of Public Accounts by telephoning (800) 252-5555, or online at www.window.state.tx.us (click franchise tax account status). To determine the status of a corporation or LLC, select the CoAS Corporation Search page. Answers to your questions are available via e-mail at [email protected] or by telephoning (800) 252-1381.
The loan file should include a copy of the Resolutions of the Board of Directors authorizing the corporation to borrow money, pledge collateral and/or guaranty indebtedness. A sample form Corporate Authorization Resolution is located at the end of this chapter.
The loan file should include a Certificate of Authority to Transact Business if the corporation conducts business in any state other than its state of formation. This may be obtained from the Secretary of State’s office or other appropriate official’s office in each of these other states.
If a corporation is doing business in Texas under an assumed name, a Certificate of Fact: Assumed Name which lists all an entities assumed names (or specifies that none exist) may be ordered from the Texas Secretary of State. A copy of the Assumed Name Certificate should be obtained from the Texas Secretary of State online or by telephoning (512) 463-5578 and from the applicable county clerk(s). A sample Assumed Name Certificate form, with instructions, is located at the end of this chapter.
NOTE: The provisions of the Texas Assumed Business or Professional Name Act (located in the back of this Guide) require a corporation to file its Assumed Name Certificate with the Secretary of State and, if the corporation is required to maintain a registered office address in Texas, in the county clerk’s office of the county in which the registered office is located and in the county of its principal office. In the case of a corporation that is not required to maintain a registered office address or that does not maintain a registered office address, the Assumed Name Certificate would be filed with the Secretary of State and in the county clerk’s office of the county in which its office is located in Texas.
EXAMPLE: The Bank makes a loan to a corporation. Its Articles of Incorporation or Certificate of Formation lists the name of the corporation as Autoworld, Inc. The exact legal name of the corporation is Autoworld, Inc. and that is the name which should be listed as the debtor’s name on the UCC-1. If Autoworld, Inc. does business under the assumed name “John’s Auto Shop” the Bank should obtain an Assumed Name Certificate. John’s Auto Shop should not be listed as a debtor in the UCC-1.
NOTE: The name of a Texas corporation (profit or non-profit) is sufficient for purposes of a UCC-1 financing statement only if that name matches the name shown on its Articles of Incorporation or Certificate of Formation.