While there was certainly no lack of press coverage around the 2023 Tennessee legislative session, one broad change to Tennessee business laws that successfully avoided the mainstream spotlight involves the modification of Tennessee business entity statutes relating to registered agent requirements.

As a refresher, all business entities with limited liability characteristics that are formed or qualified to do business in Tennessee must continuously maintain a registered office and registered agent within Tennessee.[1] The registered agent generally serves as an entity’s agent for service of process, notice or demand.

Senate Bill No. 1174 (SB1174), which was recently enacted and will go into effect on July 1, proposed streamlining revisions to the various business entity statutes that address required characteristics of registered agents. These amendments serve to both expand the scope of characteristics that can qualify a person or entity to serve as a registered agent in Tennessee and also create consistency across business entity statutes that did not exist prior to these amendments.

A comparison of the pre-amendment registered agent requirements under the Tennessee Business Corporation Act (T.C.A. § 48-15-101(a)(2)) and the Tennessee Revised Limited Liability Company Act (T.C.A. § 48-249-109(a)(2)) highlights the historical inconsistencies across entity statutes that have been remedied through the SB1174 amendments.

Prior to the SB1174 amendments, only (i) an individual residing in Tennessee, (ii) a Tennessee or foreign for-profit corporation or (iii) a Tennessee or foreign nonprofit corporation could serve as a registered agent for a Tennessee for-profit corporation. Under the Tennessee Revised Limited Liability Company Act, however, the scope of qualified registered agents was more expansive, allowing for limited liability companies (Tennessee or foreign) and limited liability partnerships (Tennessee or foreign) to also serve as registered agents (in addition to those permitted under the Tennessee Business Corporation Act). This resulted in an arguably illogical inconsistency between the two entity types.

The SB1174 amendments expand the scope of permissible registered agent entity types across all Tennessee entity statutes to now include (i) an individual residing in Tennessee, (ii) a Tennessee or foreign for-profit corporation, (iii) a Tennessee or foreign nonprofit corporation, (iv) a Tennessee or foreign limited liability company, (v) a Tennessee or foreign general partnership, (vi) a Tennessee or foreign limited partnership and (vii) a Tennessee or foreign registered limited liability partnership.

From a practical perspective, the SB1174 amendments may incentivize more commercial vendors to offer registered agent services to business entities in Tennessee, as the administrative burden of complying with inconsistent registered agent definitions as a registered agent vendor in Tennessee has been eliminated.

Nathan Harris is the immediate past chair of the TBA Business Law Section. His practice covers the entire business lifecycle, from assisting with entity formation and providing guidance on commercial transactions and fundraising to advising buyers and sellers in connection with complex M&A transactions. He has experience representing clients in a wide variety of industries, including technology startups, electronic payments companies, pharmaceutical wholesalers, veterinary practices, community banks and restauranteurs.