Delaware is Enforcing Its Principal Place of Business Requirement: An Inaccurate Address Can Block Good Standing Certificates

The Delaware Division of Corporations is actively enforcing the requirement under Section 502 of the Delaware General Corporation Law (8 Del. C. § 502) that a corporation’s annual franchise tax report list the corporation’s actual principal place of business. In practice, that address should be the company’s actual physical business location, not its registered agent’s address, a virtual office, a PO Box, or another third-party, administrative, or legacy address. Corporations identified as non-compliant may be unable to obtain a certificate of good standing until the issue is corrected.

Because good standing is routinely required in financings, M&A transactions, and other corporate transactions, an inaccurate or non-compliant principal place of business address can surface at the worst possible time — in the run-up to a closing — and may require expedited correction before a transaction can proceed. Companies should review the address listed on their most recent Delaware annual report now and, if it is inaccurate or not compliant, file an amended annual report proactively rather than waiting for notice from the state.

The Delaware Requirement

Under 8 Del. C. § 502, a Delaware corporation’s annual franchise tax report must list the corporation’s principal place of business. A report is non-compliant if it lists any of the following as that address:

• the address of a registered agent or Delaware registered office, except in the limited case where the corporation maintains its principal place of business in Delaware and serves as its own registered agent;
• a virtual office, mail-forwarding service, or similar address;
• a PO Box; or
• any other third-party, mailing, administrative, or legacy address, such as the address of the corporation’s law firm or accounting firm, that is not the physical street address from which the corporation’s business is directed.

The Division of Corporations is actively identifying non-compliant filings. A corporation flagged as non-compliant may be unable to obtain a certificate of good standing until it corrects the filing.

How to Correct an Inaccurate or Non-Compliant Address

A corporation whose annual report lists an inaccurate or non-compliant principal place of business address should file an amended annual report with the Delaware Division of Corporations listing the corporation’s actual principal place of business: the physical street address from which the corporation’s business is directed. This should be addressed proactively; corporations should not wait until they receive notice from the state or until a pending transaction surfaces the issue.

Where and How to File

An amended annual report is filed through the same Delaware Division of Corporations online annual report and franchise tax system:

• Start at the Division’s Annual Report and Tax Instructions page and click “File Your Annual Report Online.”
• Enter the corporation’s seven-digit Business Entity File Number. If you do not have it on hand, look it up using Delaware’s business entity search.
• Select the option to file an amended annual report for the applicable tax year, update the principal place of business to the corporation’s actual physical street address, and submit. The filing fee for an amended annual report is $50 for non-exempt domestic corporations ($25 for exempt corporations).

Companies may also have their registered agent submit the amended report on their behalf; either approach is acceptable, but the company, not the agent, is responsible for the accuracy of the principal place of business address.

Questions about a specific filing can be directed to the Division’s Franchise Tax Section at 302-739-3073, select option 3, then option 1, or by email at dosdoc_ftax@delaware.gov.

What Address to Use

• Corporation with a physical office. List the office address.
• Remote-only corporation with no office or a virtual office. Identify the physical street address where the corporation’s management actually directs the business. Depending on the facts, this may be the home address of a CEO, founder, or other principal officer, but companies should consider privacy and security implications before listing a residential address in a public filing. If another physical street address is available where management genuinely works from and directs the business, such as a coworking space where the corporation has an actual right to use the space and management is regularly present, the address may be appropriate. A mailbox-only, mail-forwarding, or virtual-office arrangement is not sufficient.
• Delaware corporation with foreign-based management. List the overseas office or other foreign physical street address where management is actually located. The statute expressly permits a foreign principal place of business address; there is no requirement to list a US address.

Beyond Delaware: Requirements in Other Jurisdictions

Companies should also consider whether similar address issues exist in other jurisdictions where they are organized or qualified to do business. Please reach out to your Goodwin team to discuss whether a previously used virtual office, mailing address, or other non-qualifying address may need to be updated.

Key Takeaways

Companies, particularly Delaware corporations preparing for a financing, sale, or other transaction in which good standing will be confirmed, should take three steps now:

• Review the principal place of business address listed on the most recent Delaware annual franchise tax report and confirm that it is the physical street address from which the corporation’s business is directed.
• If the address is inaccurate or not compliant with the requirements, file an amended annual report with the Delaware Division of Corporations promptly, rather than waiting for notice from the state or for a transaction to surface the issue.
• Review principal office and principal place of business address requirements in the other states where the company is organized or qualified to do business, and correct any filings that rely on a registered agent, virtual office, PO Box, or other non-qualifying address where a street address is required.

Please reach out to your Goodwin contact or any of the authors of this alert with questions about how these requirements apply to your company.