NYS Department of State Counsel s Office Legal Memorandum CO01 DOING BUSINESS IN NEW YORK AN INTRODUCTION TO QUALIFICATION General Guidelines Certain organizations formed outside New York may not do business in New York until authorized to do so Called foreign whether formed in another state of the United States or in another country such organizations include for profit and not for profit corporations limited liability companies and limited partnerships See generally Business Corporation Law 1301 1320 for profit corporations Limited Liability Company Law 801 809 limited liability companies Not for Profit Corporation Law 1301 1321 not for profit corporations and Partnership Law 121 901 121 908 limited partnerships For simplicity and for reasons of history much of this discussion will refer to corporations In context such a reference should be taken as including other forms The requirement to obtain authority to do business exists to protect domestic organizations from unfair competition and to place domestic and foreign organizations on an equal footing Fairness and justice require that when a foreign corporation comes into our State to conduct business under similar methods and to the same degree it does in its own state or as do our domestic corporations that such a corporation should be subject to New York laws and regulations as a recompense for the advantages enjoyed by it William L Bonnell Co v Katz 23 Misc 2d 1028 1031 196 N Y S 2d 763 768 Sup Ct 1960 Organizations obtain authority to do business in New York by making a filing an application for authority in the Department of State The effect of an application for authority is twofold the organization acknowledges that it considers itself to be doing business in the state and it facilitates legal and administrative proceedings by specifying in the application for authority where and in what manner the organization may be served with process The application for authority does not subject the foreign organization to any substantive regulation that does not also apply to a foreign organization doing business without authority The consequence of doing business without authority is that the organization may not affirmatively use New York courts until it obtains authority and pays all arrears in fees penalties and taxes The ability of a state to require a foreign corporation to apply for authority or to take out a license or to qualify traces to Paul v Virginia 75 U S 8 Wall 168 1868 It holds that only natural persons are citizens within the meaning of the Privileges and Immunities Clause U S Constitution art IV 2 From this it follows that a state has the power to exclude a foreign corporation from doing intrastate business within its borders However no state may exclude or condition admission of a foreign corporation that engages solely in interstate or foreign commerce The Commerce Clause U S Constitution art I 8 cl 3 commits to Congress and impliedly withholds from states the power to regulate interstate and foreign commerce Holding that a corporation engaged in interstate commerce need not comply with a foreign corporation statute the U S Supreme Court said A corporation of one state may go into another without obtaining the leave or license of the latter for all the legitimate purposes of interstate commerce and any statute of the latter state which obstructs or lays a burden on the exercise of this privilege is void under the commerce clause Dahnke Warner Milling Co v Bondurant 257 U S 282 290 1921 See also International Textbook Company v Tone 220 N Y 313 115 N E 914 1917 We have steadily upheld the right of foreign corporations without aid of any license to engage in activities incidental to commerce between the states 220 N Y at 318 Whether an organization is doing business sufficient to require it to qualify is often the source of confusion In part this is because we tend no longer to think about organizations especially corporations in the same way as do the historical cases Another source of confusion is the fact that Business Corporation Law 1301 b and its analogs do not define doing business they contain only a nonexclusive list of what does not constitute doing business See the discussion below Yet more confusion stems from use of the same term doing business in two other separate but related contexts whether a corporation s activities in a state are sufficient to subject it to personal jurisdiction and whether a corporation s presence within a state requires it to pay taxes Before any further discussion of qualification some discussion of these other uses of the term is worthwhile The power of New York courts to subject a foreign corporation to personal jurisdiction because it is doing business in the state derives from case law Courts continue to exercise the power by virtue of Civil Practice Law and Rules 301 In this sense of the term a foreign corporation is amenable to suit in New York courts if it is engaged in a continuous and systematic course of doing business here as to warrant a finding of its presence in this jurisdiction Frummer v Hilton Hotels International Inc 19 N Y 2d 533 227 N E 2d 851 281 N Y S 2d 21 1967 quoting Simonson v International Bank 14 N Y 2d 281 285 200 N E 2d 427 429 251 N Y S 2d 433 436 1964 See also Landoil Resources Corp v Alexander Alexander Services Inc 77 N Y 2d 28 565 N E 2d 488 563 N Y S 2d 21 1990 This test of doing business is a simple and pragmatic one which varies in its application depending on the particular facts of each case Bryant v Finnish National Airline 15 N Y 2d 426 432 208 N E 2d 439 441 2 260 N Y S 2d 625 629 1965 See D Siegel New York Practice 82 83 A court must be able to say from the facts that the corporation is present not occasionally or casually but with a fair measure of permanence and continuity Tauza v Susquehanna Coal Co 220 N Y 259 267 115 N E 915 1917 The traditional test of doing business for purposes of CPLR 301 is more demanding than that for longarm jurisdiction under CPLR 302 a 1 CPLR 302 discards the traditional concept of doing business for a broader standard that of transacting any business It also abandons the requirement of the defendant s presence However even CPLR 302 fails to exhaust the full jurisdictional potential permissible under the due process clause of the federal constitution See Simonson v International Bank supra and Longines Wittnauer Watch Co v Barnes Reinecke Inc 15 N Y 2d 443 209 N E 2d 68 261 N Y S 2d 8 1965 The
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