20 Del. Admin. Code — Corporations

100 Division of Corporations

101 Registered Agent Customer Entity Verification Requirements

20 Del. Admin. Code § 101-1.0 Enabling Legislation

House Bill 404 of the 149th Delaware General Assembly, as amended by House Amendment No. 1 and Senate Amendment No. 2, 81 Del. Laws, Ch. 334, modifies 8 Del.C. §132; 6 Del.C. §§15-111, 17-104 and 18-104 to enable the Secretary to establish regulations for Registered Agents to verify the identification of their customer business entities.

History

• 22 DE Reg. 519 (12/01/18)

20 Del. Admin. Code § 101-2.0 Purpose

The purpose of this regulation is to clarify the obligation of Registered Agents in Delaware to comply with regulations issued by the Secretary pertaining to Business Entity Formation in matters involving filings submitted to the Secretary on behalf of corporations, partnerships, trusts, limited partnerships, and limited liability companies. This regulation outlines the standards for Registered Agents regarding verification of customer entities in accordance with House Bill 404 of the 149th Delaware General Assembly, as amended by House Amendment No. 1 and Senate Amendment No. 2, 81 Del. Laws, Ch. 334.

History

• 22 DE Reg. 519 (12/01/18)

20 Del. Admin. Code § 101-3.0 Definitions

The following words and terms, when used in this regulation, shall have the following meaning unless the context clearly indicates otherwise:

"Business Entity Formation" means the act of any person, partnership, association, corporation, company, singly or jointly with others, in organizing under the Delaware Code and filing the required documents with the Division of Corporations in the Department of State.

"Business Entity Representation" means any person, partnership (whether general (including a limited liability partnership) or limited (including a limited liability limited partnership)), association, corporation, company, singly or jointly with others, that acts on behalf of any person or entity as a registered agent.

"Corporation" means an entity that is organized or incorporated in accordance with the Delaware Code and as expressly set forth at Title 8 of the Delaware Code.

"Customer" means the person or persons intending to form, and/or otherwise conduct activities through, a business entity formed, registered or qualified in Delaware.

"Customer Information" means any and all information or documents relating to the true and correct identity of a potential customer of a Registered Agent that includes, but is not limited to, full name, complete address (to include background information related to a P.O. Box address), photographs, background information, or any other information as needed to verify identification.

"Department" means the Delaware Department of State.

"Limited Liability Company" means an entity that is organized or created in accordance with the requirements of a "limited liability company" or a “series” as set forth in the Delaware Code and as expressly defined at 6 Del.C. §18-101, as amended.

"Limited Partnership" means an entity that is organized or created in accordance with the requirements of a "limited liability partnership" as set forth in the Delaware Code and as expressly defined at 6 Del.C. §17-101 as amended.

"Office of Foreign Assets Control" means the office or its equivalent office(s) as created by federal laws and administered by order of the United States Department of the Treasury or its successor(s) or equivalent department(s).

"Partnership" means an entity that is organized or created in accordance with the requirements of a "partnership" as set forth in the Delaware Code at 6 Del.C. §15-202 as amended.

"Registered Agents" means an agent or agents as defined or described in accordance with the Delaware Code and as expressly set forth at 8 Del.C. §132 and 6 Del.C. §§15-111, 17-104 and 18-104.

"Secretary" means the Secretary of the Delaware Department of State.

"Specially Designated Nationals and Blocked Persons (SDN)" means individuals, groups and entities as defined or described as "Specially Designated Nationals" by the Office of Foreign Assets Control.

"Trust" means a statutory trust as set forth in the Delaware Code and as expressly defined in 12 Del.C. Ch. 38 as amended.

History

• 22 DE Reg. 519 (12/01/18)

20 Del. Admin. Code § 101-4.0 Procedures

4.1 Registered Agents are required to complete the following steps to verify filings submitted to the Secretary on behalf of corporations, partnerships, limited partnerships, trusts, and limited liability companies in the course of Business Entity Representation:

4.1.1 Prior to engaging in business:

4.1.1.1 Registered Agents will take reasonable steps to verify the identity of potential customers. Such steps may include, but are not limited to, manual verification, the use of software or third party services to perform background or identification verification or obtaining such documents sufficient for identity.

4.1.2 New Customer Information:

4.1.2.1 Registered Agents shall compare new customer information against the register and lists of the Office of Foreign Assets Control (“OFAC”), before performing services on behalf of any new customer. Customer information shall include the full name and complete address of the submitting customer (whether business or individual).

4.1.2.2 For Business Entity Formation or Business Entity Representation, Registered Agents shall collect and retain the full name, business address and business telephone number of the current communications contact(s) and any other such information that shall hereafter be required by statute. In addition, Registered Agents may collect additional information, including, but not limited to officers, directors, members, managing members, partners, or owners. All such information collected shall be compared against OFAC.

4.1.3 Updating names and addresses of related parties:

4.1.3.1 Registered Agents shall request (at minimum annually) updates to the communications contact(s) and any other information required by statute. To the extent additional information has been collected, Registered Agents may, at their discretion, request updates to such information. All updated information shall be compared against OFAC.

4.1.4 Entity and Customer Information transferred from another Registered Agent:

4.1.4.1 Registered Agents shall compare all entity and customer information transferred from another registered agent against the register and lists of OFAC, or its successor, before accepting the customer.

4.1.4.2 Entity information shall include the full name, business address and business telephone number of communications contact(s), any other information required by statute along with any additional information collected by the previous registered agent.

4.1.5 Quarterly Review:

4.1.5.1 Registered Agents shall review complete customer registry against the OFAC register or lists at a minimum on a quarterly basis.

4.1.6 Notifications:

4.1.6.1 Registered Agents shall sign up for notifications and updates from OFAC, to include but not limited to updates on specific sanctions.

4.1.7 OFAC Search Lists:

4.1.7.1 Registered Agents shall search for either individuals or corporate entities on all OFAC lists, to include but not limited to “Specially Designated Nationals” and “Blocked Persons” lists. Registered Agents may use software or third party services to perform a search of OFAC lists.

History

• 22 DE Reg. 519 (12/01/18)

102 Business Entity Name Standards and Process

20 Del. Admin. Code § 102-1.0 Enabling Legislation

1.1 29 Del.C. §8703 enables the Secretary of State to establish regulations governing the administration and operation of the Department of State as may be deemed necessary by the Secretary of State and which are not inconsistent with the laws of this State.

1.2 The Division has the power to perform and shall be responsible for the performance of all the powers, duties and functions vested in the Secretary of State pursuant to Subtitle I of Title 6 and Title 8. 29 Del.C. §8704. Such vested powers, duties, and functions include regulating the administration and operation of the Division as well as the performance of the Secretary of State's duties and functions with respect to filings submitted to and accepted by the Division relating to business entities incorporated or formed in Delaware pursuant to 8 Del.C. Ch. 1; 6 Del.C. Chs. 15, 17 and 18.

History

• 23 DE Reg. 323 (10/01/19)

20 Del. Admin. Code § 102-2.0 Purpose

2.1 The purpose of this regulation is to clarify the standards in Delaware regarding the names of Delaware business entities, while, in a narrowly-tailored fashion, preventing the naming of a business entity in a manner that is likely to violate the law, mislead the public or lead to a pattern and practice of abuse that would cause harm to the interests of the public or the State of Delaware.

2.2 The Division expressly determines that its Delaware Corporate Information System (“DCIS”), which is the State’s computerized, online system for business organization filings, to be a non-public forum and not a platform for the exercise of legal rights. This regulation outlines the standards for entity names and the process of review, which carefully and narrowly balances any alleged infringement on statutory requirements, public policies, and the rights of others, against the interests of the public and the State of Delaware, including Delaware’s interest in its standing in the global business-community.

History

• 23 DE Reg. 323 (10/01/19)

20 Del. Admin. Code § 102-3.0 Definitions

The following words and terms, when used in this regulation, shall have the following meaning unless the context clearly indicates otherwise:

“Business Entity” means any partnership (whether general (including a limited liability partnership) or limited (including a limited liability limited partnership), corporation or limited liability company, organized or to be organized under the Delaware Code and filing or seeking to file the required documents with the Division of Corporations in the Department of State.

“Corporation” means an entity that is organized or incorporated in accordance with the Delaware Code and as expressly set forth at Title 8 of the Delaware Code.

“Department” means the Delaware Department of State.

“Division” means the Division of Corporations, Delaware Department of State.

“Limited Liability Company” means an entity that is formed in accordance with the requirements of a “limited liability company” or a “series” of a limited liability company, as defined at 6 Del.C. §18-101, as amended.

“Limited Partnership” means an entity that is formed in accordance with the requirements of a “limited partnership” as defined at 6 Del.C. §17-101, as amended.

“Partnership” means an entity that is formed in accordance with the requirements of a “partnership” as set forth in the Delaware Code at 6 Del.C. §15-202, as amended.

“Secretary” means the Secretary of State of the State of Delaware.

“Trust” means a statutory trust as set forth in the Delaware Code and as expressly defined in 12 Del.C. Ch. 38, as amended.

History

• 23 DE Reg. 323 (10/01/19)

20 Del. Admin. Code § 102-4.0 Standards

4.1 After receipt of a request to reserve a name for a business entity or to accept a filing submitted on behalf of, a business entity, the Division will review the proposed name of the business entity, subject to a right of refusal by the Division, if the proposed name fails to meet the following standards:

4.1.1 Does not contain words that discriminate against, disparage, or denigrate any of the protected classes, as provided under Federal Law (including the U.S. Civil Rights Act of 1964, as amended), to include but not limited to race, color, religion, sex including pregnancy, sexual orientation, national origin, disability, age (40 years or older), marital status or genetic information;

4.1.2 Does not contain words likely to facilitate, incite or foster any criminal act or offense as prohibited under Delaware law, as amended, to include but not be limited to those set forth in Title 11 of the Delaware Code:

4.1.2.1 Acts of terrorism, terroristic threatening or offensive touching (11 Del.C. Ch. 5);

4.1.2.2 Endanger the life or physical safety of an individual or threatening public safety (11 Del.C. Ch. 5);

4.1.2.3 Hate Crimes, Stalking, Cyberstalking, Bullying or Cyberbullying (11 Del.C. Ch. 5);

4.1.2.4 Narcotic drug, opioid or controlled substances (16 Del.C. Ch. 47) (Example: “Opioids-R-Us”);

4.1.2.5 Fraud (6 Del.C. Subtitle II, 11 Del.C. Ch. 5);

4.1.2.6 Deadly weapon or dangerous instrument (11 Del.C. Ch. 5); or

4.1.2.7 Obscene or libelous language (11 Del.C. Ch. 5).

4.1.3 Does not contain words likely to cause public deception or confusion or result in difficulty in administration by the Division (Example: five-hundred-letter entity name);

4.1.4 Does not contain words likely to mislead the public about the business purpose of the business entity (8 Del.C. §102; 6 Del.C. §18-102); or

4.1.5 Does not contain words likely to lead to a pattern and practice of abuse that would cause harm to the interests of the public or Delaware (8 Del.C. §102; 6 Del.C. §18-102).

History

• 23 DE Reg. 323 (10/01/19)

20 Del. Admin. Code § 102-5.0 Application

This regulation shall not be interpreted or applied by the Division in any manner that conflicts with public policy or statutory provisions in the Delaware Code, including those regulating the inclusion of the term “bank” or “trust” in a business entity name. 8 Del.C. §102(a); 8 Del.C. §395; 6 Del.C. §18-102; 6 Del.C. §17-102; 6 Del.C. §15-108.

History

• 23 DE Reg. 323 (10/01/19)