Delaware Business Lawyer Blog

All Delaware corporations are required to have a registered agent located in the State of Delaware. But what happens if the registered agent resigns?

There are 2 kinds of resignations. The first one is referred to as “resignation of registered agent coupled with appointment of successor.” Here, the registered agent resigns and files with the Secretary of State’s office a certificate appointing a successor registered agent. The resigning registered agent has to attach to the certificate a statement signed by the corporation approving the appointment of the new registered agent.

The second kind of resignation is where the registered agent resigns and does not appoint a successor registered agent. Here’s what happens. The registered agent files a certificate of resignation with the Secretary of State. This certificate must contain a statement by the registered agent that he sent a notice of the resignation to the corporation at its last known address. The resignation becomes effective 30 days after the certificate of resignation is filed.

If the corporation fails to appoint a new registered agent within 30 days after the resignation was filed, the Secretary of State will declare the corporation’s charter forfeited. Although there's a procedure for breathing new life into a corporation after its charter is declared forfeited, losing your corporate charter should be something you want to avoid.

As a Delaware attorney who helps clients form corporations, one of my first questions when someone says they want to incorporate is “why?” And the answer that’s most frequently given is “I want to protect myself from personal liability.” That’s a legitimate reason, but we’ll come back to this in just a moment.

Creating a Delaware corporation is easy, but without proper advice and a push in the right direction, you’re taking a big risk if you try doing this without a Delaware attorney’s help.

Most clients who walk into a lawyer’s office to start a business assume that if they become incorporated or form a limited liability company, they’ll be protected from personal liability. That’s not entirely correct. Let’s look at the following example.

You’ve decided to start a small limousine service. You’ll be one of the drivers, and you plan to hire two other drivers who will be employed by your corporation. If one of your drivers is negligent and crashes into another car, he will be personally liable for the harm he causes. In addition, your corporation will also be held legally responsible for the injuries because an employer is responsible for the negligence of an employee if he was acting within the scope of his employment at the time of the accident. That’s because of a well recognized doctrine called “respondeat superior,” or “vicarious liability.” The good news is that as the owner of the company, you yourself will have no personal liability for the injuries caused by the employee.

Now let’s take the same example, but now you’re the driver of the limo that gets into an accident and causes injuries. In this situation, you will be held personally liable. Why? It’s because a person is always legally responsible for any injuries that are caused by his negligence. Just like the employee who was driving in the first scenario, this time you were the driver, you were negligent, and your negligence resulted in someone getting hurt. In the first scenario, you escaped liability because (1) you weren’t negligent, and (2) you weren’t the driver’s employer (the corporation was the employer).