What was broken
A diamond trading company received adjudication proceedings from the corporate regulator relating to historical filing delays and procedural non-compliance. The promoters were concerned about financial penalties, reputational damage, and potential complications with banking relationships.
What we did
CapEasy reviewed the company's compliance history, prepared legal and factual representations, coordinated rectification of outstanding defaults, and represented the company throughout the adjudication process. We also introduced a structured compliance monitoring system to eliminate future regulatory risks.
Where it landed
The proceedings concluded with substantially reduced regulatory exposure, allowing the company to restore compliance while strengthening its internal governance processes.
A US company has its own version of this file — it opens at the state, not the IRS
The engagement was a company registrar acting on filing history. The closest US equivalent is not a tax audit — it is the state that chartered the company acting on the same thing: a corporation or LLC that stopped filing its annual report, stopped paying its franchise tax, or let its registered agent lapse. Every US state runs this process, and it runs on the calendar whether or not the company is watching it.
Delaware is the sharpest version because so many venture-backed companies are chartered there. Delaware requires every domestic corporation to file an annual report and pay its franchise tax on or before March 1 each year. A corporation that misses the deadline is assessed a flat $200 penalty plus interest of 1.5% per month on the unpaid tax and penalty combined — a compounding number, not a one-time fee, and it keeps compounding for as long as the report stays unfiled.
California adds a second filer and a second regulator to the same failure
California runs the same idea through two agencies at once. Every corporation and LLC registered there must file a Statement of Information with the Secretary of State on a recurring cycle keyed to its formation month — an entity formed in January files by the end of August, one formed in February by the end of September, and so on every year (or every two years for some entity types) after that. The Secretary of State's own guidance is direct about what happens if that filing lapses: failure to file may result in penalties assessed by the Franchise Tax Board and suspension or forfeiture of the entity.
Suspension is the part that actually stops a business: a suspended or forfeited entity loses the right to sue or defend itself in a California court, its contracts become voidable at the other party's option, and its name protection lapses. None of that requires a scandal — it requires one missed filing repeated long enough for the state to notice.
What actually closes a state adjudication file
The engagement's method transfers exactly, because a regulator asking about a compliance gap always wants the same three things: the history, the fix, and proof it will not recur. CapEasy's part was reviewing the compliance history to establish what actually happened and when, coordinating rectification of the outstanding defaults themselves, and building a monitoring system so the same gap could not reopen — the representations to the regulator were built on top of that record, not in place of it.
A US company facing a delinquency notice, a suspension, or a franchise-tax collection letter needs the identical three things before anyone talks to the state: a clean filing history showing exactly which reports and payments are outstanding and for which years, the actual back-filings and payments to bring the entity current, and a forward calendar so the state does not open the same file again next year. The reinstatement or revivor paperwork that clears suspension always asks for that history in one form or another — a state does not restore good standing on a promise, it restores it on a record.
CapEasy prepares that record — the filing history reconstructed year by year, the outstanding reports and franchise-tax figures assembled from the books, and the compliance calendar that keeps the next deadline from being missed. Filing the annual report or Statement of Information itself, and any legal representation in a state proceeding, runs through your registered agent, your counsel, and the partner CPA firms we work with across 15 US states.
What to take from it
- A US company has its own regulator-opens-a-file moment — it runs through the Secretary of State and franchise-tax office, not only the IRS.
- Delaware's $200-plus-1.5%-monthly-interest penalty compounds for every month an annual report stays unfiled — it does not reset or cap itself.
- California suspension makes contracts voidable and blocks the company from suing or defending itself in court — a filing lapse becomes a legal-standing problem, not just a fee.
- A regulator investigating a compliance gap wants three things: the filing history, the rectification, and proof it will not recur — build the record before the representation.
- Reinstatement is granted on a reconstructed record, never on a promise — the same discipline that closed a company-registry adjudication file closes a state suspension.