Foreign Entity

A "foreign entity" under Texas law is any entity (corporation, LLC, limited partnership, business trust, or similar entity) formed under the laws of a jurisdiction other than Texas. A foreign entity described in § 9.001(a) must register with the Texas Secretary of State to transact business in Texas.

Registration requirement

Under § 9.001, a foreign filing entity must register if it transacts business in Texas. The registration fee is $750 for most for-profit entities and $25 for nonprofit corporations. §§ 4.152(3), 4.153(6), 4.154, 4.155(1).

"Transacting business"

Texas does not define the term. Under § 9.251, sixteen activities are excluded, among them, maintaining bank accounts, holding internal-affairs meetings, owning passive real estate, an isolated transaction completed within 30 days that is not one of a number of repeated, similar transactions, and selling through an independent contractor. The list is not exhaustive, and activity outside it is judged on its facts.

Penalties for failure to register

Under §§ 9.051–9.054, a foreign entity that fails to register: (1) cannot maintain an action, suit, or proceeding in a Texas court on a cause of action arising out of its transaction of business in Texas until registered, though it may defend a suit; (2) is subject to a civil penalty equal to all fees and taxes that would have been imposed; (3) may be enjoined by a court, on the Attorney General's application, from transacting business; and (4) if it transacted business for more than 90 days before registering, may be charged a late-filing fee equal to the registration fee times the number of calendar years (a partial year counts as a full year) of unregistered business. Failure to register does not affect the validity of its contracts or other acts, and it does not make its owners, members or managerial officials liable for its debts, except a general partner of a foreign limited partnership.

Internal affairs

A foreign entity's internal affairs (governance, fiduciary duties, owner rights) are governed by the law of its jurisdiction of formation, not Texas law. §§ 1.102, 1.104, 1.105.