Bureaucratic Fascism Gets Smacked

On a few occasions, I’ve seen the Michigan Bureau of Commercial Services reject Articles of Organization because it suspected that, due to the name on the document, the organization might be used to conduct activities that can’t be carried on by limited liability companies in Michigan.

Fortunately, the Michigan Court of Appeals has told the Bureau to knock it off. In Jackson v Department of Energy, Labor & Economic Growth, 2011 Mich App LEXIS 1159 (June 23, 2011), the Court ordered the Bureau to accept Articles for filing. The Bureau had earlier rejected the Articles on grounds that the name made the Bureau suspicious that the company might be used for banking purposes.

The Court noted that, though the statute requires that the Bureau approve Articles for filing, it does not give the Bureau any discretion to look beyond the documents actually submitted. The Bureau must simply review the documents, determine whether they substantially conform with the statute’s requirements, and, if they do, endorse and file them. Even if the Bureau suspects or knows that the organizing member intends to use the company to engage in an unlawful business activity, the Bureau must still endorse and file them.

Eric J. Scheske

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