Checking whether a corporation is active in California is an important first step for any person or attorney litigating or doing business with a corporation.

1) If you’re doing business with a corporation, it must be active. 2) If you’re litigating with a corporation, it must be active or it cannot represent itself in court. 3) If you’re an attorney representing a corporation, it must be active or you could get in trouble. I’ll expand on each of these.

Corporations can be suspended by either the Franchise Tax Board (FTB) or the California Secretary of State. The FTB will suspend corporations for nonpayment of taxes. The California Secretary of State will suspend a corporation for failure to file a Statement of Information and pay the required fee.

Doing Business With A Suspended Corporation

Technically, a suspended corporation is not allowed to do business and must shut their doors until they take the necessary steps to revive the corporation. A suspended corporation cannot collect payment for services or goods. Also, any contract made by the business during its suspension is voidable by the other party. In other words, the contract is enforceable on the suspended corporation if the other party wants it to be. If they don’t want to enforce the contract, they can void it.

Suing or Being Sued By A Suspended Corporation

Very simply, a suspended corporation cannot prosecute or defend itself in court. If you’re involved in a lawsuit with a suspended corporation, inform the court either orally or through written pleading. The suspended corporation can take no action in the suit, and the suit can move forward without the suspended corporation, even to a default judgment. A suspended corporation must be revived before it can prosecute or defend a suit. There is one exception: the suspended corporation’s insurance company may defend its interests on behalf of the corporation it insures.

An Attorney Cannot Represent A Suspended Corporation

Attorneys: read California Revenue and Taxation Code Section 19719 immediately (link). It says, “Any person who attempts or purports to exercise the powers, rights, and privileges of a corporation that has been suspended pursuant to Section 23301 or who transacts or attempts to transact intrastate business in this state on behalf of a foreign corporation, the rights and privileges of which have been forfeited pursuant to the section, is punishable by a fine of not less than two hundred fifty dollars ($250) and not exceeding one thousand dollars ($1,000), or by imprisonment not exceeding one year, or both fine and imprisonment.”

Do I need to say more? There are exceptions, such as attorneys hired by an active corporation that later becomes suspended are ok. However, once the attorney finds out about the suspension, he or she must withdraw or take steps to help revive the corporation. Also, an attorney may work for a suspended corporation for the purpose of helping to revive the corporation. This is serious and all attorneys should check their corporate clients before representing them.

Reviving a Suspended Corporation

To revive a suspended corporation, you must first resolve the problems that caused the suspension. If taxes are owed to the FTB, then the corporation must file all delinquent tax returns and statements pay all taxes owed with penalties, interest, and fees and file an application for a Certificate of Revivor with the FTB. The Secretary of State will then need to approve the certificate and issue the Certificate of Revivor.

If the corporation is suspended by the Secretary of State, the corporation must send a letter to the Secretary of State with the delinquent Statement of Information and payment of overdue fees and penalties. If the Secretary of State approves the application, it will issue a Notice of Revivor.

Bear in mind that the corporation’s name can be taken during the suspension. If that is the case, then the corporation cannot use that name. The Secretary of State will check before issuing any certificate or notice of revivor.

Stories of Past Experiences

Suspended corporations have been an issue that has appeared a lot for me lately. I participated in a large real estate lawsuit in which a co-defendant was a suspended corporation. Neither their lawyers nor opposing counsel knew of the suspension for two years. The suspended corporation’s attorneys were extremely embarrassed, and it may have prejudiced their case.

In the past, I filed an eviction (Unlawful Detainer) against a corporation. A quick search of the tenant corporation revealed that they were suspended. Thus they could not defend against my client’s suit and were, quite frankly, SOL.

How To Check

You can see how important it is check whether a corporation is active or suspended, and it’s easy to do. Go to the California Secretary State Business Search [here] and input the name of the corporation. Make sure to check off the correct box for either a corporation name or for a “Limited Liability Company/Limited Partnership.” If one doesn’t work, try the other.

If you have any questions, please call or e-mail me for a free consultation. (213) 223-2350 or

The above is for informational purposes only and does not constitute legal advice. Please seek advice from counsel.