Someday, I’m going to run for public office in Tennessee, and the legislation that I will work on will be the most boring, non-headline-generating, administrative laws you’ve ever seen. But I’ll win 100% of the lawyer vote.
We need to fix Tenn. Code Ann. § 48-15-101, the statute that defines who can serve as a registered agent for a corporate entity in Tennessee and requires every corporation to maintain one at all times.
The stakes are high because of Tenn. Code Ann. § 48-15-104(a), which governs service of process. In layman’s terms, a corporate entity does not have “hands” into which a plaintiff can serve a lawsuit, so this statute requires that the company designate a specific “individual who resides in this state” (§ 48-15-101(a)(1)) to serve as those hands.
But, the statute also allows a registered agent to just be another corporate entity, which, itself, may or may not have an individual listed as its registered agent. See Tenn. Code Ann. § 48-15-101(a)(2).
That creates a gap. What if that second entity has no individual serving as its own registered agent and, instead, just lists another LLC (and so on)? Worse, what if an LLC simply lists itself as its own registered agent? If no individual is ever named in the chain — or the registered agent is the LLC itself — who is there to serve? (Spoiler-alert: Nobody. Service becomes impossible.)
The same gap opens if a registered agent resigns and, despite Tenn. Code Ann. § 48-15-101(b), the corporation never names a replacement.
Tenn. Code Ann. § 48-15-101 should require that, when another entity serves as registered agent, some minimal standard ensures an actual individual — or at least a legitimate, service-able corporate entity — stands behind it. Without that, the Secretary of State is effectively handing sloppy (or clever) entities a permanent way to dodge service of process.
The only fallback is Tenn. Code Ann. § 48-15-104(b), which provides that when a corporation “fails to appoint or maintain a registered agent in this state,” or when “its registered agent cannot be found with reasonable diligence,” the Secretary of State becomes the corporation’s agent for service. Tenn. Code Ann. § 48-15-105(a) then governs the mechanics: the plaintiff identifies which § 104(b) ground applies, and the Secretary of State sends process “by registered or certified mail” to the corporation’s registered office.
But that’s a workaround, not a fix — and plaintiffs shouldn’t have to invoke it just because Tennessee’s registered-agent statute lets entities hide behind entities with no individual, anywhere, ultimately accountable.
Plus, with all due respect to our very smart Tennessee Secretary of State Office, the law isn’t clear, and, at best, this introduces a great deal of uncertainty and delay when this fairly common problem presents itself.
The General Assembly should amend § 48-15-101 to require that whenever a corporate entity names another entity as its registered agent, the filing must, somewhere, identify a natural person and a physical Tennessee address where that person can actually be found — either directly, or by reference to the designated entity’s own registered-agent filing.
The amendment should also bar an entity from naming itself as its own registered agent, closing off the most obvious version of this loophole, and direct the Secretary of State to reject filings that don’t ultimately identify an individual or a legitimate third party corporate entity.
This shouldn’t be controversial; it just extends the “individual who resides in this state” requirement through any layers of entity-agents the statute already allows.
Until then, plaintiffs are stuck relying on the Secretary of State as substitute agent under §§ 48-15-104(b) and 105(a) — a real remedy, but one that only kicks in after the time and expense of proving the primary agent can’t be found.
(Side note: I was going to upload an image of a snake eating its own tail, but everything I found was disgusting.)
Creditors Rights 101 