As Twisdale Law, PC expands its presence across the Southeast, businesses operating across multiple states often face the question: Should we register as a foreign entity in South Carolina? The answer depends on various legal and strategic factors, particularly how South Carolina law treats foreign corporations and LLCs.

Under S.C. Code § 33-15-101, a foreign corporation may not transact business in South Carolina until it obtains a certificate of authority from the Secretary of State. However, not all activities constitute “transacting business.” Certain activities, such as maintaining a bank account or conducting internal corporate affairs, do not require registration.

Failure to obtain a certificate of authority can have significant legal and financial consequences:

• Inability to Maintain a Lawsuit: Under S.C. Code § 33-15-150, an unregistered foreign corporation may not bring a lawsuit in South Carolina courts.
• Civil Penalties: A business operating without registration is subject to fines and back fees.
• Personal Liability Risks: Officers and agents of an unregistered business may face additional risks when dealing with contracts or disputes in the state.

A key concern for foreign entities is whether filing a certificate of authority subjects them to personal jurisdiction in South Carolina. Courts have recently clarified this issue:

• In Fidrych v. Marriott Int’l, Inc., 952 F.3d 124 (4th Cir. 2020), the Fourth Circuit held that merely registering as a foreign corporation does not constitute consent to general jurisdiction in South Carolina. The court ruled that South Carolina law does not explicitly state that foreign entities consent to lawsuits unrelated to their in-state activities.
• Similarly, in Maseng v. Lenox Corp., 483 F. Supp. 3d 360 (D.S.C. 2020), the court reaffirmed that minimum contacts are required for personal jurisdiction, and registration alone is insufficient.

Certain business activities do not require foreign qualification. S.C. Code § 33-15-101(b) provides a list of exempt activities, such as:

• Holding director or shareholder meetings.
• Defending or settling a lawsuit.
• Selling through independent contractors.
• Creating or acquiring debt.

Given Twisdale Law, PC’s operations in multiple states, the decision to register in South Carolina should weigh the following factors:

• Contract Enforcement: If your firm plans to enter into long-term agreements in South Carolina, registration may provide stronger legal footing.
• Litigation Strategy: If litigation is a foreseeable concern, registration ensures access to South Carolina courts.
• Tax & Compliance Costs: Foreign registration entails additional fees and compliance obligations, such as annual reports and registered agent requirements.

While registration as a foreign entity in South Carolina is legally required for companies transacting business in the state, it does not automatically subject the entity to general jurisdiction for all lawsuits. Instead, courts will evaluate jurisdiction based on specific business activities within the state. Twisdale Law, PC can assist businesses in assessing their registration requirements, mitigating risks, and ensuring compliance with South Carolina corporate law.

If you have questions about your business’s status in South Carolina, contact Twisdale Law, PC today for legal guidance tailored to your needs.