Ant Hill Incorporation: When will it work?

[nibot]

Documents submitted to the Department of State on behalf of Ant Hill Co-op. May 8, 2006.

Incorporation with the State is supposed to be a relatively simple matter. Mail a form to the state with a moderate filing fee, and, presto! you've created a corporation. Instead it turns out to be a huge pain in the ass.

We have just submitted our documents for a fifth time. Two of the previous submissions were simply silently lost. The other two were rejected for fairly simple reasons. The first: they didn't like our declared purpose, which included in part , "any other legal activity approved by the members." Fair enough. We removed a bunch of semi-extraneous items from our statement of purpose and resubmitted. Next time: they rejected our documents because we allegedly paid the wrong fee (which I had previously discussed and clarified via a telephone conversion with someone at the Department of State), and because I had stapled the documents incorrectly. Fair enough. Resubmit. The documents go into the void. So, now a fifth submission. Hopefully this one will take, and after a year of trying, we will be a corporation. But I am not holding my breath.

You can pay a $25 "rush" fee and they'll look at your documents within 24 hours of receiving them. You can pay more, I think it's $100, and they'll look at them the same day they receive them. You can pay even more and have your documents processed in two hours. My first mistake was to extrapolate from these numbers and assume that if you just paid the statutory filing fee without any rush service, it would take, oh, maybe a week. But it turns out that if you don't pay a rush fee, the processing time is unbounded. There is no way to check on the status of a submission, either. Hence the emphasis on "24 hour Rush."

Sending documents to the New York State Government is probably a more secure way of destroying them than any kind of shredding yet invented.

Comments

[janviere.livejournal.com]

I bet they cash both checks.

[nibot.livejournal.com]

Oddly enough they've never cashed one of our checks. When they reject a filing, they enclose the checks. And when they lose a document... presumably they lose the checks too.

But yeah, if they accept this filing, I wouldn't be totally surprised if they did cash both checks. But if that's what it takes, fine.

[janviere.livejournal.com]

Why do you want to be incorporated?

[nibot.livejournal.com]

It's necessary for a co-op to be incorporated for several reasons, for instance in order to have bank accounts, make contracts, or own anything. At a minimum the co-op needs to be able to sign a "master lease" with our landlord, sign residency and membership contracts with our members, and maintain contracts with the telephone company, our bank, and the energy supplier. Currently the landlord has a lease that lists each individual co-op member, which is non-optimal for a number of reasons, the most practical of which is that it's a pain for both us and for the landlord to get a new lease signed whenever we have a member come or go. We also need to have the lease in the name of the co-op for the co-op, as a distinct entity, to build credit. Eventually the co-op (as a corporation) will take on a loan from a bank in order to buy a house. Both borrowing money and buying a house will require that we be incorporated. Incorporation is also necessary for liability purposes; if someone goes wrong, and someone sues the co-op for some civil matter, it'll be the co-op as a corporation that gets sued, not an individual member or collection of members.

Our co-op currently has an annual budget of $50,208. We are a business and need to operate as one.

This is discussed here: http://www.nasco.coop/ccdc/OrgHand/forward.html#Heading12

[nibot.livejournal.com]

That is true. The telephone company wanted to double or quadruple our rates, so we just left the phone line / DSL in the name of an individual (farmckon!). However, the energy supplier (Rochester Gas and Electric) didn't give us any trouble at all, and our rates are the same. In their case, the buildings for which we have electricity and gas accounts are still zoned as residential, so they don't care whether the bill is handled by an individual or a corporation (as probably happens quite frequently with property management companies that cover utilities for their tenants).

[nibot.livejournal.com]

It is also necessary that we be incorporated and have federal 501(c)3 "charitable purpose" status if we ever want anyone to donate anything substantial to us. However, a more likely scenario is that we will ask NASCO, which does have 501(c)3 status, to accept any substantial donation (e.g. a mansion) on our behalf as a "fiscal sponsor."

[farmckon.livejournal.com]

Nice scans. As I mentioned on the mailing list, while at the D.C. conference, the guy from Amalgamated Housing in NYC (http://www.amalgamated-bronx.coop/) were telling me that New York State forwards all of the incorprations for Cooperatives into the Agbusiness section of the apporvers, who don't know how to handle non agriculture businesses. He was telling me that they don't know how to handle them, so they reject them for minor errors, or 'lose' them. Rumor has it all non-ag cooperative have been rejected or 'lost' for the last 8 to 10 years!

[nibot.livejournal.com]

How passive-aggressive of them.

Already with the "rush" fees, I see a subjugation of the law. The law says it costs X to start a corporation. But that doesn't cover their costs, so they need to charge more. Hence they create a supposedly-optional "rush" fee that you're forced to pay.

Et cetera.

[nibot.livejournal.com]

Glad you like the scans. We have a nice flatbed scanner here. The thumbnails on the left and right are bitmap scans from the scanner, hosted on Flickr. The center image, of the certificate of incorporation, was generated using ImageMagick's "convert" command (which does no anti-aliasing, so the results are really ugly). The linked document (PDF file) of my response, the one bearing the Ant Hill logo, was generated by doing "print to a file" and then using the ps2pdf utility to generate a PDF file. The Certificate of Incorporation itself is typeset using LaTeX and a PDF file is generated directly.

[cassiusdio.livejournal.com]

Interesting, NY doesn't require you to have a registered agent? Who, then, is going to be served with legal pleadings in the case of lawsuit?

[nibot.livejournal.com]

Oddly enough it seems that the Secretary of State is designated as the receipient of Process, and presumably, the secretary of state will track us down or something.

[codetoad.livejournal.com]

You should have sent them $5 to establish the existence of an upper bound.

[nibot.livejournal.com]

Hmm. Is the existence of an (unknown) upper bound different than the non-existence of an upper bound?

[codetoad.livejournal.com]

Yes! But really, only in theory. In your case, you're fucked either way.