Secretary of State: To Register or Not to Register? That is the question that plagues many individuals responsible for state authorization at their institution.
A number of states require out-of-state universities to register with the Secretary of State’s office prior to enrolling students in a distance education program or offering learning placements. Some states do not require registration while others do.
Being a member of the National Council for State Authorization Reciprocity Agreements (NC-SARA), does not eliminate the need to file with the Secretary of State offices. Institutions must register with the Secretary of State’s Office in required states as well as obtain a registered agent.
Citing the inability to provide legal advice, many of the Secretary of State offices are unable to answer when asked if it is required that out-of-state institutions register with the office of the Secretary of State prior to engaging in any distance learning activities. So where do you start?
Cheryl Dowd, State Authorization Network (SAN) Director, suggested that individuals in charge of state authorization check within their own institution before making inquiries to the states. Dowd stated the institution’s Business Services Office (or similar title) and Legal Counsel may already have knowledge in other states for other activities of the institution (e.g. alumni, etc.) that requires registration to transact business in that state. These offices may also be aware of a registered agent the institution has already acquired.
Secondly, identify where your students are located, if you have not already done so. Contact the Data Warehouse/Institutional Research office at your institution to obtain a report on student location. After identifying where your students reside, you can research the Secretary of State web sites, paying close attention to statutes and definitions. According to a recent article by the State Authorization Network, institutions should pay close attention to the term “foreign corporation”. The article states, “If a state requires foreign corporations to register, and if higher education institutions meet that definition, then it is likely that they would need to register.”
“Obtainment of a registered agent is for the purpose of service of process in the state where the ‘foreign’ business is required to register with the Secretary of State,” Dowd said. “The Registered Agent provides a legal address within the state to receive official government documents.”
If an institution fails to register but is an entity that must be registered, the consequences could vary per state, Dowd said. The consequences could include an inability to bring a lawsuit, an injunction from continuing business in the state, civil penalties, late filing fees, etc.