California Corporations Code Section 191(d) provides that a “foreign lending institution” will not be considered to be “doing, transacting or engaging in business” in California solely by reason of engaging in specified categories of activities. Those activities include, for example, the ownership of loans and the enforcement of loans. Based on this statute, some foreign lending institutions may conclude that they have no filing obligations with the California Secretary of State. That would be a mistake.
Corporations Code Section 2104 provides that any foreign lending institution that has not qualified to do business in this state and that engages in any of the activities listed in Section 191(d) must file a statement on or before June 30 with the Secretary of State. The statement (Form LL-25) can be mailed to the following address:
Secretary of State
Business Filings Section,
1500 11th Street
Sacramento, CA 95814
Alternatively, the statement may be delivered in person at the Sacramento office. The fee for filing this statement is $50.00. A non-refundable $15.00 special handling fee is applicable for processing documents delivered in person at the Sacramento office.
I suspect that many foreign lending institutions overlook this requirement precisely because they have concluded that Section 191(d) excuses them from registering to transact intrastate business. The risk of oversight is compounded by the fact that the Secretary of State does not send out reminder notices. As a practical matter, however, the Secretary of State has no way of ascertaining which institutions might become subject to the requirement.
Another problem is determining just what constitutes a “foreign lending institution” for purposes of the statute. The term appears only in Sections 191 and 2104. The former makes clear that the term includes, but is not limited to, any foreign banking corporation, any foreign corporation all of the capital stock of which is owned by one or more foreign banking corporations, any foreign savings and loan association, any foreign insurance company or any foreign corporation or association authorized by its charter to invest in loans secured by real and personal property, whether organized under the laws of the United States or of any other state, district or territory of the United States. However, the term “foreign banking corporation” is left undefined.