Which statement accurately describes jurisdiction of incorporation and foreign qualification for a corporation?

• A. A corporation may be incorporated in the state where its headquarters is located.
• B. A corporation cannot be incorporated in more than one state.
• C. The home state changes automatically when the company operates in another state.
• D. Without being properly qualified as a foreign corporation, you cannot maintain an action in the foreign state's courts.

Answer: (D)

The key idea here is foreign qualification: a corporation is created in its state of incorporation, and to operate in another state it must obtain authority to transact business there as a foreign corporation. Courts in that foreign state generally won’t allow the corporation to maintain a lawsuit there unless it has that authorization. If you try to sue in a foreign state without being properly qualified, the case can be dismissed for lack of authority to bring suit.

That’s why the statement about not being able to maintain an action in the foreign state's courts is correct—you need the proper foreign qualification to sue in that state. The other statements aren’t accurate: a corporation isn’t limited to incorporating only where its headquarters are, since incorporation can take place in a variety of states; being incorporated in one state doesn’t automatically prevent or require incorporation in others, and the home state does not change automatically just because the company operates elsewhere.