Pennsylvania House Bill 1398, Laws of 2016

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Pennsylvania House Bill # 1398

Laws of 2016, effective February 21, 2017, has enacted new LLC and LP laws as well as conforming and other amendments to the Business Entities Code (Title 15, Pa.C.S.A.)  The new LLC and LP laws respectively govern LLCs and LPs as follows:  before April 1, 2017, the new laws govern LLCs and LPs formed on and after the effective date and any preexisting LLCs and LPs electing to be governed by the applicable new law; after April 1, 2017, the new laws govern all LLCs and LPs.  The Bill has also enacted a new General Partnership law.

The following are notable changes affecting our services and Precedent materials:

New LLC Law

  • Adds a domestic amendmenttrigger: when a managing member or manager knows that any information set forth in the Certificate is inaccurate, an amendment, or if appropriate, a correction must be filed.
  • Revises requirements for the executionof documents to be filed: default is now a person authorized by the company (formerly by an authorized member or manager).
  • Dissolution:

o   Requires filing of a Statement of Termination instead of a Certificate of Dissolution after all debts have been paid, discharged or provided for and all assets have been distributed; this terminates the LLC on the State’s records.

o   Authorizes a voluntary interim filing of a Certificate of Dissolution while a dissolved LLC’s affairs are being wound up; the LLC will remain active on the State’s records; no tax clearance required for this filing.

o   Authorizes delayed effective dates for Statements of Termination.

o   Provides for voluntary disposition of claims by notice or publication after dissolution.

  • Authorizes Benefit Companieswith purposes including the creation of a public or specific benefit as defined in the Bill.
  • Imposes certain obligations on organizerswhich will render inappropriate our furnishing of organizers.

New LP Law

  • Authorizes formation of LLLPs.
  • Revises requirements for the executionof documents to be filed.
  • Dissolution:

o   Requires filing of a Statement of Termination instead of a Certificate of Dissolution after all debts have been paid, discharged or provided for and all assets have been distributed; this terminates the LP on the State’s records..

o   Authorizes a voluntary interim filing of a Certificate of Dissolution while a dissolved LP’s affairs are being wound up; the LP will remain active on the State’s records; no tax clearance required for this filing.

Business Corporations

  • Repeals the requirement to file a directors’ resolution in order to qualify on conflict of name.

LLPs

  • Deletes reference to “registered” LLPs; now only refers to LLPs.
  • Authorizes administrative terminationof LLP status for annual registration delinquency after five years.
  • Imposes the Annual Registrationrequirement on LLLPs.

Multi-Entity

  • Adds exceptions to the tax clearancerequirement on dissolution based on a dissolving entity never having transacted business nor  held assets other than money for share subscriptions or analogous contributions.  Formerly, an administrative exception was afforded to business corporations never having commenced business.

Forms

  • New LLCs and LPs must use the revised formation forms on and after February 21.
  • Existing LLCs and LPs may use either the current or revised version of the other forms (e.g. amendment, dissolution etc.) until March 30.  On and after April 1, only revised forms will be acceptable.
  • The State advised that the revised forms will become available on its website on Friday, February 17.  We will work to have revised versions available in our systems as expeditiously as possible.  In the interim, the forms may be accessed on the State’s website.

The Bill may be accessed at http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2015&sessInd=0&billBody=H&billTyp=B&billNbr=1398&pn=4062

OR Draft Bill 2916 concerning substantial costs and compliance burdens

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Oregon Draft Bill # 2916

 

NPRRA using its Legislative Monitoring tool found the following statute in Oregon that you should be aware of if you are a registered agent. It is important that you familiarize yourself with this even if you are not in Oregon as bad legislation can jump from state to state and potentially affect you in the future. The crux of the bill is as follows:

 

Oregon:  Draft bill number 2916 was submitted on 12/12/2016 and is expected to be introduced sometime in 2017.  The bill if enacted in its current form would require licensing of registered agents. This would impose substantial costs and compliance burdens on registered agents and business entities formed or qualified in Oregon.  The primary focus of the bill is commercial registered agents (CRAs) that represent 50 or more entities.   The CRA licensing provisions in this bill include:

 

  • CRA must provide a full set of fingerprints, the full legal names and current street addresses for each of the CRA’s principal owners, members, directors, managers and all employees authorized to accept service of process (SOP);
  • For CRS’s to grant permission to forward said fingerprints to state police and FBI for criminal background checks;
  • There would be a nonrefundable processing fee of $500.00 for each location at which the CRA will accept SOP;
  • The CRA must submit a statement of any change or update to license information with a $100.00 fee.  The CRA must also send a copy of the statement to each represented entity and submit an affidavit of compliance with notification requirement;
  • Provides for a civil penalty of $500.00 for failure to comply with change statement or fingerprint requirements;

 

The bill draft includes a number of regulatory provisions.  The secretary of state (SOS) may deny a license if the SOS finds that the CRA or a principal owner, member, director or manager had a CRA authorization in another state denied, revoked or enjoined for conduct as a registered agent or engaged in conduct that was intended to or likely would deceive or defraud a member of the public.  A licensee may not advertise or market shell, shelf, aged shelf or similar business entities, or advertise or claim that Oregon provides “anonymity”, “secrecy” or “hidden ownership.”  The bill also includes new regulatory requirements and enforcement actions for business entities.  The draft bill:

 

  • Authorizes the SOS to investigate alleged or potential violations of business entity statutes and permits the SOS to seek dissolution or revocation of entities that violate statutes or fail to cooperate with investigations;
  • Permits the Department of Revenue to recommend dissolution of entities that fail to comply with state tax laws;
  • Subjects directors, officers, employees, members and managers of entities to claim for damages from person that suffer ascertainable loss or money or property resulting from knowing dissemination of materially false statement concerning an entity’s finances and operations;
  • Permits the attorney general to enjoin an entity from continuing violation of business entity statutes or to seek judicial dissolution or other relief to protect shareholders or remedy consequences of violations; and
  • Requires corporations and incorporators and LLCs and organizers to file documents declaring whether entity has previously filed or will file a tax return or listing the entity’s beneficial owners.

NY Assembly Bill 8116 is signed into law concerning not-for-profit organizations

new-york-legNew York Assembly Bill 8116 was signed by New York Governor Andrew Cuomo on November 28, 2016. NY A8116 allows certain not-for-profit corporations to convert to a for-profit corporation. The bill became effective November 28, 2016, and is repealed 180 days after its enactment, May 28, 2017.

In order to convert, the not-for-profit corporation is required to obtain consent from the NYS A
ttorney General. To obtain consent, the incorporator or incorporators must submit to the attorney general sworn statements under the penalties of perjury certifying the following:

(1) that legal advice had not been sought or received as to the appropriate course of action that would have resulted in correct registration allowing for the intended for-profit operation of the entity.

(2) the entity at no time received the benefits and/or privileges of being recognized as a not-for-profit corporation, such as being exempt from incurring any local, state, or federal taxes.

(3) the entity throughout its operation as a not-for-profit corporation did not at any time solicit and/or receive any private and/or public grants or charitable donations.

(4) the office of the attorney general has provided written indication that either it does not object to, or it approves of, the proposed conversion.

Please reference the bel
ow hyperlink to view the entire bill:http://nyassembly.gov/leg/?default_fld=&leg_video=&bn=A08116&term=2015&Summary=Y&Actions=Y&Memo=Y&Text=Y

California Bill Signed Considering Digital Signatures

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Effective January 1, 2017.
California Assembly Bill 2296 was signed by California Governor Jerry Brown on August 19, 2016. CA AB2296 enacted clarifies that a digital signature may be used to satisfy the requirements of an electronic signature under the Uniform Electronic Transactions Act.

Please reference the below link to view the entire bill:

http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201520160AB2296

Sign up for BillTrack50 to track industry related legislation like this. BillTrack50 is free with your NPRRA membership. Contact info@nprra.org to sign up and take advantage of this valuable tool.

Florida Bill Signed Concerning Financial Institutions

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The bill became effective January 1, 2017.

Florida Senate Bill 1104 was signed into law by Florida Governor Rick Scott on April 1, 2016. The bill allows a financial institution authorized by state or federal law to designate with the Department of State a place or registered agent as the sole location to receive service of process. Service of Process may be made on any officer, director or business agent of the financial institution at its principal place of business, or at any other branch, office or place of business in the state, if a financial institution has no registered agent.
Please reference the attached to view the entire bill.

Sign up for BillTrack50 to track industry related legislation like this. BillTrack50 is free with your NPRRA membership. Contact info@nprra.org to sign up and take advantage of this valuable tool.

SOURCE: http://laws.flrules.org/2016/180

NC Bill Signed Concerning Conversion of a Charitable or Religious Corporation to a LLC

NC SENATE BILL 1

Effective October 1, 2016.

North Carolina SB 482 (Session Law 2016-114) was signed into law by North Carolina Governor Pat McCrory on July 28, 2016. Amongst other things, the law is amended allow the conversion of a charitable or religious corporation to a LLC, if the sole member of the surviving entity immediately after the conversion is a charitable or religious corporation.

Please reference the attached to view the entire bill.

Sign up for BillTrack50 to track industry related legislation like this. BillTrack50 is free with your NPRRA membership. Contact info@nprra.org to sign up and take advantage of this valuable tool.

SOURCE: http://www.ncleg.net/Sessions/2015/Bills/Senate/PDF/S482v5.pdf

Newly Introduced Bipartisan Bill S 3268 Aims to Close Anti-Money Laundering Loopholes

Introduced on July 14, U.S. Senate Bill 3268 requires all business entities to obtain an employer identification number (EIN) from the Secretary of the Treasury.  Most entities are already required to obtain an EIN by completing IRS Form SS-4. S 3268 expands this requirement to include previously disregarded entities, such as single-member LLCs. Further, the legislation authorizes the IRS to share information gathered, including the name and any available contact information of the responsible party and any third-party designee reflected on the EIN application, with law enforcement under certain conditions. In this election year, the legislation is unlikely to pass.

Notably, S 3268 contains no provisions requiring registered agents and/or secretaries of states and equivalent agencies to collect and maintain beneficial ownership information, despite legislation in prior sessions and pending bills S 2489 and HB 4450 that contained such requirements. The process contemplated by S 3268 would bypass registered agents and state agencies.  Entities would simply be required to obtain an EIN directly from Treasury.

This bill can be found on Billtrack50 (www.billtrack50.com) on the NPRRA bill sheet entitled ‘Suggested by NPRRA Members’.  Contact NPRRA  (info@nprra.org) for more information on how to access BillTrack50 legislative monitoring queries.

-Credit to Steve Elias, Capitol Services, Inc., NPRRA Government Affairs Committee Co-Chair

AZ Bill to Amend Corporation Changes

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Effective date: August 6, 2016

Arizona Senate Bill 1356 was signed into law on May 19, 2016. The bill requires both certified copies from the foreign jurisdiction and articles of amendment will be required if the corporation changes its name, duration, or domicile, or if anything on the original Application was inaccurate when filed. The bill also eliminates the application for new authority, and replaces it with Articles of Amendment to Application for Authority (https://www.azcc.gov/Divisions/Corporations/Legislative-changes-update-May-2016.pdf). The bill became effective August 6, 2016.

Please reference the attached to view the entire bill.

Sign up for BillTrack50 to track industry related legislation like this. BillTrack50 is free with your NPRRA membership. Contact info@nprra.org to sign up and take advantage of this valuable tool.

SOURCE: https://www.azcc.gov/Divisions/Corporations/Legislative-changes-update-May-2016.pdf

MS Changes to Process of Appealing Penalties

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Effective date: July 1, 2016

Mississippi Senate Bill 2649 was signed into law by Mississippi Governor Phil Bryant on April 20, 2016. The bill amends current law to provide a process for the appeal of penalties imposed by the MS Secretary of State for violation of provisions regulating charitable corporations and certain other statues. The bill became effective July 1, 2016.

Sign up for BillTrack50 to track industry related legislation like this. BillTrack50 is free with your NPRRA membership. Contact info@nprra.org to sign up and take advantage of this valuable tool.

Please reference the attached link to view the entire bill. http://billstatus.ls.state.ms.us/documents/2016/html/SB/2600-2699/SB2649SG.htm

New Legislation Passed & Signed Into Law in Nebraska

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Effective date: July 21, 2016

NE LB 1050 was passed by the Nebraska Legislature on April 1, 2016, and was signed into law by Nebraska Governor Pete Ricketts on April 7, 2016. The bill authorizes the conversion of domestic partnerships and domestic limited liability partnerships into domestic limited liability companies or foreign limited liability companies.

SOURCE: http://nebraskalegislature.gov/FloorDocs/Current/PDF/Intro/LB1050.pdf