Legal Question in Business Law in Maryland

I registered a business in 2014 in Maryland through a registered agent but soon changed my mind before any business was conducted. I never paid annual fees and Maryland has finally forfeited the entity. Now Maryland fees are piling up annually and Maryland tells me that in order to dissolve the entity I must first pay them back fees. Additionally, the registered agent continues to withdraw an annual membership fee from my credit card because they tell me I can't cancel because Maryland requires me to have a registered agent. How do I get out from this scam because as I mentioned, I've NEVER conducted any business with this entity? It just exists on paper.

Asked on 1/23/18, 2:33 pm

1 Answer from Attorneys

Cedulie Laumann Arden Law Firm, LLC

When a Maryland entity is not engaged in any business and the owners wish to discontinue, they essentially have two options: either formally dissolve the entity (and if this is done in the first year before annual personal property returns, there should be only a single filing fee to file Articles of Dissolution) or let the natural course take over and wait for the state to forfeit the charter. The longer a business waits, the more costly it will become to formally dissolve an entity because every Maryland entity must file annual personal property returns for every year it exists. The "just wait and let the state shut it down" option should not be used by any entity actively engaged in business since Maryland law makes it a crime to conduct business in the name of a forfeited entity, but where no business took place some entities opt just to let the charter lapse and walk away.

Any contract with a resident agent is not set by law and instead would be based on whatever terms the business owner chose. Generally speaking a business owner should always keep the right to terminate and change its resident agent (it would be surprising to imagine a contract that didn't retain this right). By law, every existing business needs a resident agent located in Maryland but this can be one of the owners, the company's attorney, a "resident agent" business or really any responsible adult over 18 selected by the company that lives in Maryland. Once a company's charter is forfeited, there would be little reason to pay a third party resident agent.

You're encouraged to seek legal advice on the particulars of any business situation but I hope this very general information sheds some light on the process in Maryland.

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Answered on 1/23/18, 2:58 pm

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