NOT FILING AN ANNUAL REPORT IN FLORIDA CAN HAVE CONSEQUENCES

July 26, 2017 

Many states require corporations to comply with annual reporting requirements.  In Florida, not filing a corporation's annual report can have consequences.  


The scope of the consequences for failing to file an annual report was the subject of a recent case before Florida's Third District Court of Appeal.  In that case, the trial court entered a judgment in favor of a corporation (the "Appellee"), even after it was administratively dissolved, because it asserted a counterclaim that setoff the Appellant's claims.  On appeal to the Third District Court of Appeal, the Appellant argued, inter alia, that the judgment in favor of the Appellee must be reversed because it was administratively dissolved by the State of Florida and therefore, pursuant to Section 607.1622(8), Florida Statutes (2012), it was prohibited from defending against the Appellant's claims or maintaining its own counterclaim.   Section 607.1622(8) states “Any corporation failing to file an annual report which complies with the requirements of this section shall not be permitted to maintain or defend any action in any court of this state until such a report is filed and all fees and taxes due under this act are paid and shall be subject to dissolution or cancellation of its certificate of authority to do business as provided in this act.”  In affirming the trial court's ruling, the Third District Court of Appeal found that the Appellee was an active corporation at the time that the “cause of action accrued and at the time it filed its answer, affirmative defenses and counterclaim.”  The Third District of Appeal therefore found that the Appellee could have defended against the Appellant’s claim and maintained a counterclaim.  The Third District Court of Appeal further found that the Appellant did not raise the issue of the Appellee’s corporate status until after final judgment and after notice of appeal – which was too late.  The Third District Court of Appeal stated that had the Appellant raised the corporate status to the trial court, the trial court could have abated the action to allow the Appellee to reinstate (which it subsequently did).  Finally, the Third District Court of Appeal stated that the sanctions authorized by a corporation failing to file its annual report are intended to benefit the State and not intended to allow third parties to take advantage of a party’s default to escape their own obligations to that party.

For more information about the topic of this blog post, please contact Weber Law, P.A.’s Steven D. Weber at 305-377-8788 or sweber@weberlawpa.com.


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