Central Illinois Business Magazine
LEGAL ISSUES          December 2012

Annual business filing scams

Randall Green

By Randall Green
CIB Contributor

We've all received some iteration of the email from a north African prince who has inherited hundreds of millions of dollars and will gladly split it with you 50/50. All you need to do is simply send him $1,000 via Western Union so he can buy a plane ticket to the United States, unlock his riches and lavishly celebrate with you. In this situation, most of us know to implore the rule: If it sounds too good to be true, it probably is.

Likewise, as an attorney, I receive at least two or three emails per week "from" the ex-wife of the international real estate mogul who resides in my jurisdiction and wishes to retain my services to collect the multimillion divorce judgment that she was awarded in the divorce proceeding. I've learned to spot and delete most of these emails on my phone before I even get out of bed in the morning, and I'm sure my profession isn't unique.

However, as our ability to identify these frauds improves with experience, the fraudsters' methods evolve as well.

Recently, many Illinois businesses received letters in the mail from a firm calling itself Corporate Records Service. The letters ask the recipient to fill out the enclosed Annual Minutes Records Form and submit a $125 fee to keep the corporation in good standing. Since the names and addresses of every registered agent and select company officers are available on the secretary of state's website, it is easy for fraudsters to target these businesses. If you receive one of these letters or have fallen victim to this scam, the secretary of state encourages you to call its Business Services Office at 217-782-6961.

Of course, Illinois law does require corporations (and other business entities) to follow certain basic formalities to remain in good standing and to avail themselves of the corporate protections provided by Illinois law.

There are two basic formalities required of all Illinois corporations:

First, corporations must file an annual report with the Illinois secretary of state each year. The annual report is due on the first day of the anniversary month of the company's incorporation. So if a company was incorporated on Aug. 18, the annual report would be due on Aug. 1 of each succeeding year. Among other things, the annual report lists the officers, the authorized and issued shares, and the current paid-in capital. A fee of $75 is required as well as an associated franchise tax of no less than $25. Although the secretary of state currently sends the report to the company's registered agent annually, the annual report can also be completed and filed online at www.cyberdriveillinois.com.

Second, the corporation is required to hold annual shareholder meetings to, at a minimum, elect the directors of the corporation. Illinois permits the shareholders to adopt a written action in lieu of a meeting, which is the preferred method for many small businesses. These meeting minutes or written actions are not required to be filed with any state agency, nor is there an associated fee. A record of the minutes should be placed in the company's corporate record book as evidence that the corporation has observed the corporate formalities required by statute.

There are independent companies that will serve as a company's registered agent in any of the 50 states for a fee; however, as part of their services to businesses, many attorneys will serve as registered agent, prepare annual resolutions and maintain the official corporate record book.

If you have questions about whether your business has been observing all of its required formalities, your attorney should be able to review your corporate record book and tell you what, if anything, you should be doing differently to make sure that your company is complying with Illinois law.

Randy Green is an attorney at Meyer Capel, a Professional Corp. He can be reached at 217-552-1800 or rgreen@meyercapel.com. This article does not constitute legal advice, nor does it create an attorney-client relationship.

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Editor's Note

Made in Central Illinois

It was a couple of decades ago when Champaign-Urbana first was referred to as the “Silicon Prairie.” A tech consulting company — Pixo, previously known as OJC Technologies — formed around that time and is one of the success stories of the Silicon Prairie. Pixo President Lori Patterson said Champaign-Urbana has been a fertile ground for companies such as hers, and the community has now developed a “tech ecosystem” where activities at the University of Illinois and the Research Park provide resources for local tech companies.

You can read in this issue about what makes Pixo unique and how it has grown.

Champaign County is home to many manufacturers as well, and our February/March issue featured several businesses that made products here for customers worldwide.

That story has spawned a new feature for Central Illinois Business — Made in Champaign County. We’ve partnered with the Champaign County Economic Development Corp. to feature an area business in each issue and tell you a little about who they are and what they do. And we’ll venture outside Champaign County so you’ll learn about businesses in neighboring counties too.

Jodi Heckel is editor of Central Illinois Business magazine. She can be reached at 217-351-5695 or jheckel@news-gazette.com.