NRAI Compliance Updates

NRAI Compliance Updates - March, 2005

Hello All,

There are two pieces of Federal Legislation reported, the first is the Social Security Bill I am sure you have heard much about in the media, the second is more topical being the “Broad-Based Stock Option Transparency Act”.

On the state front there continues to be what I’ll call fine tuning of the current statutes to reflect developing technology, see Alabama HB 350, as well as some states following trends from Delaware, see Illinois SB 504, with series LLC’s.

Looks like it’s going to be an interesting legislative season.

I’d like to add a note about the links we provide in this publication. When this material leaves my desk, the links are valid. Since we are giving you the direct link to the specific state legislature where the latest version of the bill will be available to you, we have no control over the continuing validity of the link. If you should find that a link is broken on a subsequent visit to the Newsletters go to http://secure.nrai.com and go to our Research Center, choose “State Web Links” from the left hand menu and then “State Legislatures”. We have all 50 States listed, nearly all these sites will provide for legislative bill searching.

Rob Rowell
General Counsel

Pending and Passed Legislation

Federal Legislation

H. R. 440

To amend title II of the Social Security Act to provide for individual security accounts funded by employee and employer Social Security payroll deductions, to extend the solvency of the old-age, survivors, and disability insurance program, and for other purposes.

Full Text available at: http://thomas.loc.gov/ and search for H440

Bill Status: 2/1/2005 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

H. B. 913

Broad-Based Stock Option Plan Transparency Act

To direct the Securities and Exchange Commission to require enhanced disclosures of employee stock options, and to require a study on the economic impact of broad-based employee stock option plans, and for other purposes.

Full Text available at: http://thomas.loc.gov/ and search for H913

Bill Status: February 17, 2005 Referred to the House Committee on Financial Services.

Alabama

HB 95

Corporations, cancellation of certain corporate charters under certain conditions, provision repealed, Section 230, Article XII, Constitution of Alabama of 1901, repealed, const. amend.

Under an existing provision to the Constitution of Alabama of 1901, corporate charters were cancelled for all existing charters under which a bona fide organization did not take place and where the business did not commence within 12 months from the ratification of the Constitution of Alabama of 1901, which was ratified in 1903. This bill would propose an amendment to the Constitution of Alabama of 1901, to repeal that provision.

Bill Status: In House Constitution and Elections Committee, last action February 17, 2005

HB 350

Business Corporation Shareholder Voting Modernization Act, corporations, voting by shareholders, use of electronic transmission over the Internet to appoint proxies authorized, Secs. 10-2B-1.40, 10-2B-7.22, 10-2B-7.24 am'd.

Under existing law, shares of a corporation may be voted by a shareholder in person or by proxy appointed by signing an appointment either personally or by the shareholder's attorney-in-fact. This bill would define electronic transmission for purposes of the Alabama Business Corporation Act. This bill would allow for shareholders to appoint proxies electronically, including by submission through the internet. Also, under existing law, if the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a shareholder, the corporation, if acting in good faith, is entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder. This bill would allow corporations to accept votes electronically, including by submission through the internet.

Bill Status: Read in House second time February 17, 2005.

Colorado

SB 76

Amends the "Colorado Business Corporation Act" to allow the minimum number of shareholders of a Colorado corporation necessary to take action on an issue to take the action without a meeting if the shareholders holding shares having at least the minimum number of votes necessary to approve the action at a meeting at which all shares entitled to vote on the action were present and voted, rather than all of the shareholders entitled to vote on the proposed action, consent in writing to the action without a meeting. Specifies that, if cumulative voting is allowed for the election of directors, shareholders may take action to elect or remove directors without a meeting only if all of the shareholders entitled to vote sign writings describing and consenting to the election or removal of the same directors. Specifies the period within which consent to corporate action must be received by the corporation in order to take the action and the method for determining the effective date of corporate action taken without a meeting. When a corporation acts without a meeting and without the unanimous consent of all the shareholders entitled to vote on the action, requires the corporation or shareholders taking action without a meeting to provide notice of the action to all shareholders who were entitled to vote on the action and who did not consent to the action without a meeting.

Full Text available at: LINK

Bill Status: February 23, 2005 Third Reading Passed in Senate, February 24, 2005 Introduced In House - Assigned to Business Affairs and Labor

Connecticut

SB 1119

An act concerning the duties and responsibilities of directors and officers of business corporations and nonstock corporations.

To amend the Connecticut Business Corporation Act to adopt recent changes to the Model Business Corporation Act concerning the duties and responsibilities of corporate directors and officers and to make similar amendments to the Connecticut Revised Nonstock Corporation Act.

Full Text available at: http://www.cga.ct.gov/2005/tob/s/2005SB-01119-R00-SB.htm

Bill Status: In Judiciary Committee as of February 17, 2005, Public Hearing held February 28, 2005

Hawaii

HB 635/SB 744

Business Registration; Housekeeping

Clarifies ambiguities and corrects errors in business registration laws.

Full Text available at: http://www.capitol.hawaii.gov/sessioncurrent/bills/sb744_.htm

Bill Status: In Senate March 4, 2005 Committee on Judiciary and Hawaiian Affairs report recommended passage on Third Reading

Idaho

HB 221

Amends existing law relating to annual reports filed with the Secretary of State by business corporations, nonprofit corporations, limited liability companies and limited liability partnerships to permit annual reports to be filed electronically; to specify information required in the annual report; and to provide the time for filing by limited
liability partnerships.

Full Text available at: http://www3.state.id.us/oasis/H0221.html#billtext

Bill Status: To third reading in House March 1, 2005

Illinois

SB 504

Amends the Limited Liability Company Act. Provides that an operating agreement may establish designated series of members, managers or limited liability company interests having separate rights, powers or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations, and to the extent provided in the operating agreement, any such series may have a separate business purpose or investment objective. Establishes the procedures for management, dissolution, and operation of a series. Provides the fee for filing articles of organization, annual reports, and certificates of designation for a series of a limited liability company. Effective July 1, 2005.

Full Text available at: http://www.ilga.gov/legislation/94/SB/PDF/09400SB0504lv.pdf

Bill Status: March 3, 2005 placed on Calendar for third reading on March 8, 2005

SB 533

Amends the Business Corporation Act of 1983. Provides that unless otherwise provided in the articles of incorporation, a shareholder who executes and delivers to the corporation a written instrument irrevocably waiving the right (i) to vote any shares held by such shareholder, whether for the election of directors or otherwise, (ii) to be a director or officer of the corporation, and (iii) in any other manner to control, directly or indirectly, corporate actions or the election or removal of any director or officer of the corporation, and who at the time of such waiver is not a director or officer of the corporation, shall have no fiduciary duty to the corporation or any of its shareholders arising out of the fact that such person is a shareholder of the corporation. Provides that the corporation shall give prompt notice of such waiver to the remaining shareholders, except that no such notice need be given by a corporation that has shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association. Effective July 1, 2005.

Full Text available at: http://www.ilga.gov/legislation/94/SB/PDF/09400SB0533lv.pdf

Bill Status: March 2, 2005 Placed on Calendar Order of 2nd Reading March 3, 2005

SB 542

Amends the Business Corporation Act of 1983. In a Section concerning shareholder examination of corporate records, changes the term "books and records of accounts" to "financial records".

Full Text available at: http://www.ilga.gov/legislation/94/SB/PDF/09400SB0542lv.pdf

Bill Status: March 3, 2005 Placed on Calendar Order of 3rd Reading March 8, 2005

Indiana

HB 1601

Provides that income received by a nonresident limited partner from a limited partnership engaged exclusively in buying, selling, dealing in, or holding securities on the limited partnership's own behalf is not subject to adjusted gross income taxation, regardless of whether the limited partnership's commercial domicile is in Indiana.

Full Text available at: http://www.in.gov/legislative/bills/2005/HB/HB1601.1.html

Bill Status: February 24, 2005 ordered Engrossed

Kansas

HB 2323

AN ACT concerning insurance companies; relating to statutory changes for compatibility with the Kansas corporation code; amending K.S.A. 40-305 and 40-502 and K.S.A. 2004 Supp. 40-306 and repealing the existing sections.

Full Text available at: http://www.kslegislature.org/bills/2006/2323.pdf

Bill Status: February 23, 2005 passed House and sent to Senate, March 2, 2005 Referred to Financial Institutions and Insurance Committee

HB 2451

Amendments to Statutes concerning Business Entities

an act concerning business entities; amending k.s.a. 2004 supp. 17-2030, 17-4634, 17-4677, 17-6003, 17-6301, 17-6401, 17-6501, 17-6518, 17-6701, 17-6705, 17-7693, 17-76,105 and 17-76,106 obviating among other things the necessity of filing balance sheets and repealing the existing sections.

Full Text available at: http://www.kslegislature.org/bills/2006/2451.pdf

Bill Status: Referred to Judiciary Committee February 14, 2005

HB 2457

Civil procedure; service of process, by delivery with return receipt.

an act concerning civil procedure; relating to service of process; amending k.s.a. 2004 supp. 60-303, 60-304, 60-308, 60-312, 61-3003 and 61-3005 and repealing the existing sections; also repealing k.s.a. 2004 supp. 61-3003a.

Full Text available at: http://www.kslegislature.org/bills/2006/2457.pdf

Bill Status: Having passed in the House on February 25, 2005 the Bill was introduced in the Senate on March 1, 2005 and referred to the Judiciary Committee on March 2,

Maine

HB 651

Act To Clearly Identify Maine Corporations

This bill requires that a corporate business name clearly identify the status of the business as being incorporated as is required by many other jurisdictions.

Full Text:

“Be it enacted by the People of the State of Maine as follows:

Sec. 1. 13-C MRSA §401, sub-§8 is enacted to read:

8.__Status as part of name.__The name of any corporation that organizes under this Title on or after January 1, 2006 or that amends its articles of incorporation after the effective date of this subsection must contain the word, or abbreviation of the word, "corporation," "incorporated" or "limited" or comparable words or abbreviations of like meaning in another language. “

Bill Status: February 22, 2005 referred to Judiciary Committee

SB 326

An Act To Amend the Maine Revised Uniform Limited Partnership Act

Full Text available at: http://www.mainelegislature.org/legis/bills/billdocs/LD098601.doc

Bill Status: Last Senate Action, February 24, 2005- Committee on Judiciary suggested and ordered printed. On motion by Senator Hobbins of York referred to the Committee on Judiciary Ordered sent down forthwith for concurrence. Last House Action, March 2, 2005 Bill referred to the Committee on Judiciary.

Maryland

HB 1135

Taxation of Corporations - Alternative Minimum Assessment

Imposing an alternative minimum assessment on corporations doing business in the State; providing for the computation of the alternative minimum assessment as a percentage of a corporation's gross receipts or gross profits, based on an election made by the corporation; limiting the alternative minimum assessment to $5,000,000 for any corporation and to $20,000,000 for affiliated groups of corporations; providing for credits against the corporate income tax under specified circumstances; etc.

Full Text available at: http://mlis.state.md.us/2005rs/bills/hb/hb1135f.pdf

Bill Status: In Ways and Means Committee as of February 11, 2005

Minnesota

HB 1043/SB 767

Corporation law recodified.

A bill for an act relating to corporations; recodifying and modernizing the law regulating the formation, structure, and operation of certain corporations; making miscellaneous technical and clarifying changes

Full Text available at: http://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=H1043.0&session=ls84

Bill Status: In Civil Law and Elections Committee in House on February 24, 2005,

HB 1061

Personal jurisdiction over foreign corporations and nonresident individuals modified.

A bill for an act relating to courts; modifying personal jurisdiction over foreign corporations and nonresident individuals in certain matters

Full Text available at: http://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=H1061.0&session=ls84

Bill Status: February 16, 2005 in Civil Law and Elections Committee

Mississippi

SB 2916

Corporation franchise tax; revise type of notice that may extend period for examining returns.

An act to revise the type of notice that may extend the three-year period for examining corporation franchise tax returns; and for related purposes.

Full Text:

Senate Bill 2916

AN ACT TO AMEND SECTION 27-13-49, MISSISSIPPI CODE OF 1972, TO REVISE THE TYPE OF NOTICE THAT MAY EXTEND THE THREE-YEAR PERIOD FOR EXAMINING CORPORATION FRANCHISE TAX RETURNS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. Section 27-13-49, Mississippi Code of 1972, is amended as follows:
27-13-49. (1) Returns shall be examined by the commissioner or his duly authorized agents within three (3) years from the due date or the date the return was filed, whichever is later, and no determination of a tax overpayment or deficiency shall be made by the commissioner, and no suit shall be filed with respect to income within the period covered by such return, after the expiration of said three-year period except as hereinafter provided.
(2) When an examination of a return made under this chapter has been commenced, and the taxpayer notified thereof by certified mail, or personal delivery by an agent of the commissioner within the three-year examination period provided in subsection (1) of this section, the determination of the correct tax liability may be made by the commissioner after the expiration of said three-year examination period, provided that said determination shall be made with reasonable promptness and diligence.
(3) Where the federal income tax return of a taxpayer has been changed by the Internal Revenue Service, the three-year examination period provided in subsection (1) of this section shall not be applicable, insofar as the Mississippi franchise tax liability is affected by the specific changes made by said Internal Revenue Service. However, no additional assessment or no refund shall be made under the provisions of this chapter after three (3) years from the date the Internal Revenue Service disposes of the tax liability in question.
(4) The three-year examination period provided in subsection (1) of this section shall not be applicable in the case of a false or fraudulent return with intent to evade tax.
(5) A taxpayer may apply to the commissioner for revision of any return filed under this chapter at any time within three (3) years from the due date, or the date the return was filed, whichever is later.
SECTION 2. This act shall take effect and be in force from and after July 1, 2005.

Bill Status: Died in Committee March 1, 2005

New York

AB 762

Provides that unless certificate of incorporation of nonprofit corporation provides otherwise, members of board and committees thereof may use teleconferencing

Full Text available at: http://assembly.state.ny.us/leg/?bn=A00762&sh=t

Bill Status: January 18, 2005 referred to Corporations, Authorities and Commissions

AB 1075

Clarifies the publication of notice requirements for limited liability companies and partnerships

Full Text available at: http://assembly.state.ny.us/leg/?bn=A01075&sh=t

Bill Status: Still in Corporations, Authorities and Commissions Committee since January 18, 2005

AB 1794

Relates to the use of assumed and corporate names pertaining to educational institutions and corporations.

AN ACT to amend the general business law, the education law, the busi- ness corporation law, the not-for-profit corporation law, the partner- ship law and the limited liability company law, in relation to the use of assumed names and corporate names pertaining to education

Full Text available at: : http://assembly.state.ny.us/leg/?bn=A01794&sh=t

Bill Status: January 21, 2005 referred to Corporations, Authorities and Commissions Committee

SB 2643

Authorizes the certificate of incorporation of a not-for-profit corporation to eliminate or limit the personal liability of directors to the corporation or its members provided that liability for acts or omissions which were in bad faith, intentional misconduct or a knowing violation of law shall not be limited or eliminated; does not apply to medical or dental corporations.

Full Text available at: http://assembly.state.ny.us/leg/?bn=s2643

Bill Status: February 24, 2005 Introduced And Referred To Committee On Senate Corporations Authorities & Commissions

Oregon

SB 683

Allows formation of close limited liability companies.

Full Text available at: http://www.leg.state.or.us/05reg/measpdf/sb0600.dir/sb0683.intro.pdf

Bill Status: February 22, 2005 referred to Business and Economic Development Committee

Rhode Island

SB 822

To amend various sections of the Rhode Island Business Corporation Act.

Full Text available at: http://www.rilin.state.ri.us/Billtext/BillText05/SenateText05/S0822.pdf

Bill Status: February 17, 2005 Introduced, referred to Senate Commerce, Housing and Municipal Government Committee

Oklahoma

SB 560

An Act relating to corporations; amending 18 O.S. 2001, Sections 1006, as amended by Section 2, Chapter 255, O.S.L. 2004, 1024, 1027, as amended by Section 7, Chapter 255, O.S.L. 2004, 1033, 1035, 1038, as amended by Section 8, Chapter 255, O.S.L. 2004, 1081, as amended by Section 20, Chapter 255, O.S.L. 2004, 1082, as amended by Section 21, Chapter 255, O.S.L. 2004, 1090.2, as amended by Section 26, Chapter 255, O.S.L. 2004, 1090.4, 1090.5, as amended by Section 28, Chapter 255, O.S.L. 2004, 1118, 2002, as amended by Section 10, Chapter 180, O.S.L. 2003, 2005, as amended by Section 34, Chapter 255, O.S.L. 2004, 2007, as amended by Section 36, Chapter 255, O.S.L. 2004, 2010, as amended by Section 37, Chapter 255, O.S.L. 2004, 2037, as amended by Section 48, Chapter 255, O.S.L. 2004, 2054.1, as amended by Section 52, Chapter 255, O.S.L. 2004, 2054.2, as amended by Section 53, Chapter 255, O.S.L. 2004, and 2055.2 (18 O.S. Supp. 2004, Sections 1006, 1027, 1038, 1081, 1082, 1090.2, 1090.5, 2002, 2005, 2007, 2010, 2037, 2054.1 and 2054.2), which relate to the Oklahoma General Corporation Act and the Oklahoma Limited Liability Company Act; allowing inclusion of certain provisions in certificates of incorporation; defining term; permitting certain changes to be made in single filing; clarifying authority of certain committee; updating reference; broadening permitted forms of certain consideration; conforming language; modifying certain time periods; clarifying form of certain amendments; expanding certain definition; requiring conversion notice under specified circumstances; clarifying applicability of certain federal law; clarifying continuance of certain company; permitting conversion of certain business entities; amending 54 O.S. 2001, Sections 1-901, as amended by Section 56, Chapter 255, O.S.L. 2004, 1-903, as amended by Section 58, Chapter 255, O.S.L. 2004, 1-904, as amended by Section 59, Chapter 255, O.S.L. 2004, 302, 310.1, 310.2, as amended by Section 61, Chapter 255, O.S.L. 2004, 310.3, as amended by Section 62, Chapter 255, O.S.L. 2004, and 311.1 (54 O.S. Supp. 2004, Sections 1-901, 1-903, 1-904, 310.2 and 310.3), which relate to the Oklahoma Revised Uniform Partnership Act and the Oklahoma Revised Uniform Limited Partnership Act; modifying definitions; requiring certain filing for conversion of certain business entities; establishing consent of certain business entities to specified jurisdiction and service of process; modifying requirements for filing certain certificates; and providing an effective date.

Full Text available at: http://www2.lsb.state.ok.us/2005-06SB/sb560_engr.rtf

Bill Status: March 2, 2005 Second Reading and referred to Judiciary Committee

Tennessee

HB 1121 /S0 421

Business Organizations - Enacts the "Tennessee Revised Limited Liability Company Act." - Amends TCA Title 48.

Full Text available at: http://www.legislature.state.tn.us/bills/currentga/BILL/SB0421.pdf

Bill Status: In Civil Practice and Procedure section of Judiciary Committee

HB 493/SB0735

Taxes, Excise - Excepts family-owned Subchapter S corporations from excise taxation. - Amends TCA Title 67, Chapter 4, Part 20.

Full Text available at: http://www.legislature.state.tn.us/bills/currentga/BILL/HB0493.pdf

Bill Status: February 7, 2005 referred to Finance Committee in House, February 15, 2005 referred to Tax Sub Committee in Senate

HB1071/SB1027

Business Organizations - Increases time from three to four months for claimant to file claim against dissolved limited partnership. - Amends TCA Title 61.

Full Text available at: http://www.legislature.state.tn.us/bills/currentga/BILL/SB1027.pdf

Bill Status: February 24, 2005 Referred to Senate Commerce, Labor and Agriculture Committee

Texas

SB 586

Relating to business entities and associations.

Bill with changes and amendments regarding electronic transmissions, document execution, general powers, etc.

Full Text available at: LINK

Bill Status: In Business and Commerce Committee as of March 1, 2005

Utah

HB 275

This bill modifies provisions addressing business entities under the Utah Revised
Business Corporation Act, Utah Revised Uniform Limited Partnership Act, and Utah
Revised Limited Liability Company Act.
This bill:
. clarifies definitions in the Utah Revised Business Corporation Act;
. clarifies notice requirements in the Utah Revised Business Corporation Act;
. addresses who may be a registered agent under the Utah Revised Uniform Limited Partnership Act;
. addresses the duration of a limited partnership under the Utah Revised Uniform Limited Partnership Act;
. modifies provisions of the Utah Revised Limited Liability Company Act, including provisions:
. defining terms;
. addressing limitations on a company's articles of organization and operating agreement;
. addressing the effect of certain filings as to third persons, members, and managers;
. addressing powers of a company;
. related to annual reports;
. related to organization of a company under the act;
. related to the duration of a company;
. related to amending articles of organization;
. related to an initial operating agreement of a company;

Full Text available at: http://www.le.state.ut.us/~2005/bills/hbillamd/hb0275.pdf

Bill Status: March 2, 2005 sent to Legislative Research and General Counsel for enrolling.

West Virginia

HB 2645

Amend and reenact §11-24-4 of the Code of West Virginia, 1931, as amended, relating to the West Virginia corporate net income tax; reducing the rate of the corporate net income tax from nine percent to six percent by reducing the rate of tax by one half of one percent per year, commencing the first day of July, two thousand five.

Full Text available at: http://www.legis.state.wv.us/Bill_Text_HTML/2005_SESSIONS/RS/BILLS/hb2645%20intr.htm

Bill Status: February 24, 2005 referred to House Finance Committee

SB 122

A Bill to amend and reenact §31A-1-2 of the Code of West Virginia, 1931, as amended; to amend and reenact §31A-2-5 of said code; and to amend and reenact §31A-4-1 and §31A-4-5 of said code, all relating to the ability of a state-chartered bank to organize as a limited liability company.

Full Text available at: http://www.legis.state.wv.us/Bill_Text_HTML/2005_SESSIONS/RS/BILLS/sb122%20eng.htm

Bill Status: February 24, 2005 passed Senate and sent to House, March 3, 2005 referred to House Judiciary Committee

Wyoming

HB 16

An Act relating to business corporations; providing for electronic meetings; and providing for an effective date.

Full Text Available at: http://legisweb.state.wy.us/2005/enroll/hb0016.pdf

Bill Status: Signed by Governor February 18, 2005 and Effective July 1, 2005

Previous issues of the NRAI Newsletter may be found at: http://secure.nrai.com/dynamic_frame.asp?page=research

Corporate Web Tools At Your Fingertips
For your reference, you may view the list of the "Eight Great Corporate Websites" as identified by Legal Assistant Today (November/December 2004 issue) at: http://secure.nrai.com/html_research/LAT_Eight_Great_Corporate_Websites.pdf. Included in this list of top websites for paralegals in corporate law departments was www.nrai.com. The National Registered Agents, Inc. website shares the spotlight with other well-known and highly-regarded business information sites, such as Hoovers Online, as well as government information sites, including EDGARpro Legal, a part of EDGAR Online.

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