An Out-of-State LLP's Statement of Foreign Qualification in Kentucky

Kentucky's partnership statute, KRS 362.1-951, says that before transacting business in the Commonwealth a foreign limited liability partnership shall file a statement of foreign qualification. The statement must set out the partnership's name, where its chief executive office is located (plus a Kentucky office, if there is one), its registered office and agent, and the jurisdiction under which it was organized.

After the filing, the partnership's status continues through any change in the partnership, ending only on cancellation or revocation. A foreign LLP with a statement holds the rights and privileges of a Kentucky LLP, no more, and carries the same duties. In Frankfort, the Secretary of State's business filing division processes it.

KRS 14A.9-010(4) sends the question to the test used for every foreign entity, and no definition exists. The statute supplies examples of activity that does not count, and says the examples are not exhaustive. They include:

• Litigation steps: starting a case, defending it or settling it
• Partners' meetings and other internal affairs
• Having bank accounts
• Transfer and registration offices for the partnership's own securities, plus trustees or depositaries holding them
• Selling through independent contractors
• Soliciting orders, however they arrive, that cannot become contracts until accepted outside Kentucky
• Taking on debt, mortgages and security interests in real, personal or intangible property
• Collecting debts or enforcing the security that backs them
• Owning real or personal property without more
• One-off transactions that are completed within thirty days and are not repeated in a like manner
• Interstate commerce

Property, staff and clients

Because bare ownership of property is among the examples, a partnership that only holds an investment in Kentucky is not forced to qualify by that alone. Having a local office, putting employees to work here, or serving Kentucky clients regularly is different, and the statute draws no line there. Kentucky leaves open which contacts support service of process or taxation, and it requires a certificate or statement for eligibility on state contracts. A Kentucky attorney can help if your facts sit near the edge.

Form FNL can be mailed or delivered to the Division of Business Filings. On paper, send a single exact or conformed copy along with payment. Cash, checks payable to the Kentucky State Treasurer, prepaid accounts and approved debit or credit cards are accepted. The fee schedule lists the statement of foreign qualification at $90, and no expedite option appears on it. As a rule, the Secretary of State processes documents other than annual reports the day they arrive, or within three business days. The statement is effective upon filing.

Contents of the form

• The partnership's name, as it stands in its home jurisdiction
• A different Kentucky name only if the real name is unavailable here
• The principal office's mailing address, and one for a Kentucky partnership office if there is such an office
• The street address of the initial registered office in Kentucky
• The name of the initial registered agent
• The state or country of organization
• Signatures of at least two partners, with a declaration under penalty of perjury
• The agent's signed consent to serve

Kentucky wants the name to close with one of the LLP designations the form lists. If another name of record is too similar, KRS 362.1-951(3) allows a fictitious name, with the real home-state name recited in the statement.

Neither the statute nor the form asks for any paper from the partnership's home jurisdiction. The state does not require a certificate of existence or a certified copy of the home filing, so there is no age limit involved. The reassurance Kentucky takes is the signers' declaration, under penalty of perjury, that the statement is true.

Two partners will stand behind that declaration, so each should be confident the partnership's LLP status is current at home before signing.

KRS 362.1-117 requires a foreign LLP to maintain a registered office and agent that comply with KRS 14A.4-010. Who qualifies: an individual living in Kentucky, or an entity qualified to transact business here, with the agent's business address being the registered office. The form instructions also rule out the applicant serving itself, and add that the office needs a street address because a PO Box is insufficient.

The agent consents in writing, on the form or in a separate document delivered with it. The partnership should also give its agent a communications contact, meaning a natural person who is authorized to receive messages, along with that person's address and phone number. Otherwise the agent is free to resign. There is no business-hours rule. The Secretary of State's own mail goes to the principal office, so that address needs to stay current.

The form's instructions explain how to print a copy of the filing from the Secretary of State's organization search for delivery to the county clerk's office. The statute that requires county filings lists applications for a certificate of authority, amendments and withdrawals, and does not name the statement of foreign qualification, so it is worth asking the Division whether a clerk copy is expected for an LLP. If a clerk's office records one, KRS 64.012 sets the fee at $33 for a filing of five pages or fewer.

The partnership statute, KRS 362.1-121, says each foreign LLP authorized to transact business shall deliver an annual report as provided in KRS 14A.6-010, which means a window of January 1 through June 30 and a $15 fee. The Secretary of State's fee schedule also lists a $15 annual report for partnerships. However, an exemption clause in KRS 14A.6-010(7)(b) is worded in a way that can be read to exclude foreign LLPs. Because the two provisions pull in different directions, ask the Division of Business Filings whether the partnership should file one.

• Changing the agent or office. File a statement of change, which is $10.
• Revocation. Revocation follows the procedure used for other foreign entities: a mailed notice to the partnership's principal business address and 60 days to cure.
• Cancellation. KRS 362.1-105(4) lets a partnership cancel a statement by filing a cancellation that names the partnership. The cancellation form for a statement of qualification is $40. The certificate of withdrawal used by other foreign entities is also $40, and no form is labeled specifically for a foreign LLP, so confirm which one to use.

Kentucky's Department of Revenue handles tax accounts, which are not part of these Secretary of State filings.

KRS 362.1-951(5) points to KRS 14A.9-020 for the consequences. Without the statement, a foreign LLP that transacts business is blocked from maintaining a proceeding in any Kentucky court until it obtains authority, and a judge may stay a case while deciding whether the statement was needed. A successor, and whoever is assigned a claim from that business, is subject to the limit too.

Under the same statute the partnership is liable for a $2 civil penalty on every day of unauthorized business, which the Secretary of State may collect. Nothing caps it, and a year's worth is $730. Kentucky's Attorney General is allowed to sue to restrain a foreign LLP from transacting business in violation of the subchapter (KRS 362.1-952). The partnership's acts remain valid, and it may defend suits brought against it.

Mainstay Filing's qualification checkout does not include LLPs (it registers LLCs and for-profit corporations), so the partners prepare Form FNL themselves or through counsel. For an LLP, Mainstay Filing offers a Kentucky registered agent at a flat $149 per year, the price staying the same on renewal. Use Mainstay Filing's Kentucky street address on the form; the state keeps it in the public record.

If a court paper is delivered to Mainstay Filing as your agent, the scan appears in your account within that business day, with no fee. Three government mailings a year receive the same no-fee scan. If the partnership has a different agent on file right now, Mainstay Filing files the change and bills just the state fee. See the Kentucky registered agent page for details. Mainstay Filing is not a law firm.