2020 New Mexico Statutes
Chapter 53 - Corporations
Article 17 - Business Corporations; Foreign Corporations
Section 53-17-20 - Transacting business without certificate of authority.

Universal Citation: NM Stat § 53-17-20 (2020)

A. No foreign corporation transacting business in this state without a certificate of authority shall be permitted to maintain any action, suit or proceeding in any court of this state, until the corporation has obtained a certificate of authority. Nor shall any action, suit or proceeding be maintained in any court of this state by any successor or assignee of the corporation on any right, claim or demand arising out of the transaction of business by the corporation in this state, until a certificate of authority has been obtained by the corporation or by a corporation which has acquired all or substantially all of its assets.

B. The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of any contract or act of the corporation, and does not prevent the corporation from defending any action, suit or proceeding in any court of this state.

C. A foreign corporation which transacts business in this state without a certificate of authority is liable to this state, for the years or parts thereof during which it transacted business in this state without a certificate of authority, in an amount equal to all fees and franchise taxes which would have been imposed upon the corporation had it applied for and received a certificate of authority to transact business in this state as required by the Business Corporation Act, and thereafter filed all annual reports required by it, plus all penalties for failure to pay the fees and franchise taxes, plus a civil penalty of two hundred dollars ($200) for each offense.

History: 1953 Comp., § 51-30-19, enacted by Laws 1967, ch. 81, § 121; 1969, ch. 22, § 5.

ANNOTATIONS

Compiler's notes. — This section is derived from Section 124 of the ABA Model Business Corporation Act.

A foreign corporation is not required to allege that it has obtained a certificate of authority in order to state a valid claim for relief. Capco Acquisub, Inc. v. Greka Energy Corp., 2008-NMCA-153, 145 N.M. 328, 198 P.3d 354, cert. denied, 2008-NMCERT-010, 145 N.M. 524, 201 P.3d 855.

Section bars foreign corporation from maintaining any action in any New Mexico state court until it has obtained a certificate of authority. Riblet Tramway Co. v. Monte Verde Corp., 453 F.2d 313 (10th Cir. 1972).

Contracts of unauthorized foreign corporation not void. — Contracts made by unauthorized foreign corporation in the state are not void, rather the corporation is merely prevented from suing upon them until it complies. Riblet Tramway Co. v. Monte Verde Corp., 453 F.2d 313 (10th Cir. 1972).

Acts not constituting transacting business in state. — Where the initial contact between parties is through the mails, and, thereafter, the parties execute a contract signed by plaintiff in Spokane and then by defendants in New Mexico, plaintiff's foreign corporation is not transacting business in New Mexico and may sue under this section. Riblet Tramway Co. v. Monte Verde Corp., 453 F.2d 313 (10th Cir. 1972).

Texas company's representative in New Mexico who only solicits offers for contracts which are relayed back to Texas for acceptance is not transacting business in New Mexico and is not barred from suing in New Mexico on contract by this section. Don J. Cummings Co. v. Aluminum Mfg. Corp., 371 F.2d 118 (10th Cir. 1967).

Making of a sale which is primarily interstate in nature does not of itself subject the corporation to the state's certification provisions. Riblet Tramway Co. v. Monte Verde Corp., 453 F.2d 313 (10th Cir. 1972).

Acceptance of offer in state. — No cases actually consider the sole act of accepting an offer in New Mexico as enough to require certification. Riblet Tramway Co. v. Monte Verde Corp., 453 F.2d 313 (10th Cir. 1972).

Unauthorized business may not compel arbitration. — Texas corporations unauthorized to do business in New Mexico were unable to compel two dentists to arbitrate a dispute arising from an alleged breach of architectural and construction contracts for the construction of dental offices, because arbitration is in the nature of specific performance and the unauthorized corporations cannot specifically perform, as they are not licensed to do business in the state. Shaw v. Kuhnel & Assocs., Inc., 1985-NMSC-008, 102 N.M. 607, 698 P.2d 880.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 36 Am. Jur. 2d Foreign Corporations §§ 240 to 256.

Applicability to foreign corporations of statute precluding defense of want of legal organization, 73 A.L.R. 1202.

Right to assert mechanic's lien as affected by failure of foreign corporation to comply or delay in complying with condition of its right to do business, 95 A.L.R. 367.

Failure to procure occupational or business license or permit as affecting validity or enforceability of contract, 118 A.L.R. 646.

Foreign corporation's rights in respect of property sold under conditional sale as affected by failure to comply with conditions of doing business in state, 130 A.L.R. 999.

Federal court, right of foreign corporation or its assignee to maintain an action which it could not have maintained in state court because of noncompliance with conditions of doing business in state, 133 A.L.R. 1171.

Rule that in general inhibits foreign corporation which has failed to comply with conditions of doing or continuing business in state, or domestic corporation which has forfeited its charter, from maintaining action, as applicable to action at law to vindicate corporation's property rights against tort-feasor, 136 A.L.R. 1160.

Effect of execution of foreign corporation's contract which, while executory, was unenforceable because of noncompliance with conditions of doing business in state, 7 A.L.R.2d 256.

Rights of assignee or subsequent holder of negotiable paper executed to a foreign corporation doing business in state without compliance with local requirements, 80 A.L.R.2d 465.

Construction work by foreign corporation as doing business for purposes of statute requiring foreign corporation to qualify as condition of access to local courts, 90 A.L.R.3d 929.

What constitutes doing business within state for purposes of state "closed-door" statute barring unqualified or unregistered foreign corporation from local courts - modern cases, 88 A.L.R.4th 466.

Application of statute denying access to courts or invalidating contracts where corporation fails to comply with regulatory statute as affected by compliance after commencement of action, 23 A.L.R.5th 744.

18 C.J.S. Corporations § 897 et seq.

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