Legal Question in Business Law in California

Re: Definition of Transacting Business (Foreign Corporations)

Yes. A company that has employees working in Cal., for example, must qualify to do business in Cal. Let us know if you need help in this regard.

Re: Definition of Transacting Business (Foreign Corporations)

A "foreign" corporation is simply one organized under the laws of another jurisdiction.

In California, for example, a corporation formed under the laws of Nevada, or of Luxembourg, would be considered foreign, whether or not they do business here.

Now, to the next stap. As you seem to know, a foreign corporation cannot "do business" in a state where it is "foreign" without qualifying under that state's laws. Qualification usually entails filing a couple of forms, naming an agent for service of process within the state, and paying franchise taxes.

Here's the hard part, and I assume this is what you really wanted to know: What kind or amount of activity constitutes "doing business," and what kind or amount of activity would be lawful without registration?

There is unfortunately no hard-and-fast, 100% reliable formula or definition of "doing business" that covers all situations. Instead, California has a bunch of court decisions ruling one way or another on particular sets of facts, and in borderline situations one would have to read the case law and make an informed decision on whether the activity was permissible or registration was required.

Ordinarily, a corporation that maintains an office or similar facility in California, or has employees here, must register. Ordinarily, merely mailing catalogs to Californians would not require registration in and of itself. An isolated sale in California by a traveling salesperson would probably not require registration, but if the sale is necessarily followed up by rendering substantial services here, then the corporation should register.

As to "at will" employees: An employee is said to be "at will" if the employee is not under a contract that prescribes a term of employment, such that the employer can discharge the employee at any time without a reason, and the employee can resign at any time without breaching a contract. I cannot imagine that the status of an employee as "at will" versus subject to a collective-bargaining agreement or under an individually-negotiated employment contract would have any bearing upon the corporation's need to register. It's what the corporation does in the state, not the details of how it gets it done, that matters.