NRAI Compliance Updates

NRAI Compliance Updates - April, 2007

Greetings,

Twenty-three bills reported in this newsletter were signed into law in the last month. The trend toward statutory changes and adjustments to corporate governance continues. New York introduced AB 6884 that proposes owners of 20% or more stock be entitled to elect the same proportion of directors. Vermont introduced HB 517, called the “Catamount Corporate Code”, which is designed to protect shareholders of publicly traded corporations. On the federal side, two pieces of legislation were introduced to change Sarbanes-Oxley. Unknown at this time is whether these are substantive measures or political posturing.

Robert K. Rowell
General Counsel

New, Pending and Passed Legislation

Federal Legislation

HB 1780

To improve the implementation of section 404 of the Sarbanes-Oxley Act of 2002.

Full Text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1780ih.txt.pdf

Current Bill Status: March 29, 2007 Referred to the House Committee on Financial Services.

SB 869

A bill to reform certain provisions of section 404 of the Sarbanes-Oxley Act of 2002, to make compliance with that section more efficient, with the goal of maintaining United States capital market global competitiveness.

Full Text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s869is.txt.pdf

Current Bill Status: March 14, 2007 referred to the Committee on Banking, Housing, and Urban Affairs.

Alaska

HB 195

An Act relating to limited liability companies.

Full Text available at: http://www.legis.state.ak.us/basis/get_bill_text.asp?hsid=HB0195A&session=25

Current Bill Status: March 14, 2007 referred to Labor & Commerce Committee.

Arkansas

HB 2218

An Act to require a Subchapter S Corporation to attach a copy of its federal income tax return to its Arkansas income tax return; to require that Subchapter S election and shareholder consent be filed on forms prescribed by the Director of the Department of Finance and Administration; and for other purposes.

Full Text available at: http://www.arkleg.state.ar.us/ftproot/bills/2007/public/HB2218.pdf

Current Bill Status: March 19, 2007 signed by Governor as Act 380.

HB 2693

An Act To Require The Secretary Of State To Provide Notice To Registrants Of Corporate, Fictitious, Or Assumed Names That The Registration Does Not Grant The Registrant The Right To Use The Name In Violation Of A Third Party's Trademark Rights.

Full Text available at: http://www.arkleg.state.ar.us/ftproot/bills/2007/public/HB2693.pdf

Current Bill Status: April 3, 2007 Signed by Governor at Act 1008.

HB 2702

An Act To Amend The Arkansas Nonprofit Corporation Act Of 1993 To Require An Annual Disclosure Of Corporate Information; And For Other Purposes.

Full Text available at: http://www.arkleg.state.ar.us/ftproot/bills/2007/public/HB2702.pdf

Current Bill Status: March 28, 2007 approved by Governor as Act 569.

Colorado

HB 1135

Business Entity Merger Conversion

Full text available at: LINK

Current Bill Status: March 26, 2007 signed by Governor. Effective Date of May 29, 2007

Florida

SB 2116

Corporations not for Profit; requires document that is electronically transmitted to be in format that can be retrieved in typewritten or printed form; requires Department of State to collect fee for filing agent's statement of resignation from inactive corporation; provides that certain stock certificates constitute certificates of membership; provides that repeal or amendment of statute does not affect certain operations & proceedings.

Full Text available at: http://www.flsenate.gov/data/session/2007/Senate/bills/billtext/pdf/s2116.pdf

Current Bill Status: March 15, 2007 Referred to Commerce Committee.

Idaho

SB 1019

The Idaho Entity Transactions Act will allow conversion of one kind of business organization to another, or the merger of two or more business organizations into one organization.

Full Text available at: http://www3.state.id.us/oasis/S1019.html#billtext

Current Bill Status: March 15, 2007 Signed by Governor as Session Law Chapter 116 effective July 1, 2007.

Indiana

HB 1555

Adopts the Uniform Securities Act. Establishes: (1) registration and filing requirements for securities offerings; and (2) registration requirements for securities professionals. Establishes and restricts penalties, liability, and disciplinary actions for violations of registration, filing, and other requirements concerning securities and securities professionals. Makes: (1) fraudulent practices involving securities unlawful; and (2) conforming changes. Repeals the current securities regulation statute.

Full Text available at: http://www.in.gov/legislative/bills/2007/HE/HE1555.1.html

Current Bill Status: April 9, 2007 Signed by Governor.

SB 553

Secretary of state fees. Decreases certain filing fees charged by the secretary of state, if a document is filed electronically.

Full Text available at: http://www.in.gov/legislative/bills/2007/ES/ES0553.1.html
Current Bill Status: April 2, 2007 Signed by Senate President

Iowa

HB 258

A bill for an act relating to the duties of directors of nonprofit corporations.

Full Text available at: http://coolice.legis.state.ia.us/Cool-ICE/default.asp?Category=BillInfo&Service=Billbook&ga=82&menu=text&hbill=HF258

Current Bill Status: March 14, 2007 Signed by Governor with an effective date of July 1, 2007

SB 547

A bill for an act relating to the taxation of deposits made into accounts of foreign trusts and shell corporations, requiring the reporting of the establishment of such accounts, and including effective and applicability date provisions.

Full Text available at: http://coolice.legis.state.ia.us/Cool-ICE/default.asp?Category=BillInfo&Service=Billbook&ga=82&menu=text&hbill=SF547

Current Bill Status: March 14, 2007 referred to Ways and Means Committee.

Kansas

SB 162

Corporations, actions taken without meeting, notice or vote. An Act relating to corporations; concerning certain actions taken without meeting, notice or vote, consent; amending K.S.A. 2006 supp. 17-6518 and repealing the existing section.

Full Text available at: http://www.kslegislature.org/bills/2008/162.pdf

Current Bill Status: March 28, 2007 approved by Governor.

Kentucky

HB 334

Creates and amends various statutes relating to business entities to accomplish the following: make consistent the provisions of the corporate and other business organization acts regarding business entity names such that equivalent rules will govern the names of business corporations, nonprofit corporations, cooperatives, associations, partnerships, limited partnerships, limited liability companies, and business trusts; modify procedural rules across the various business entity acts such that they will contain equivalent if not identical provisions; update provisions of KRS Chapter 271B to reflect the more current provisions of the Model Business Corporation Act; allow limited liability companies to enter into a share exchange with a corporation, be created by conversion from a corporation, have statutory rules governing nonprofit status, and to provide for their existence after the death or other termination of their members; provide rules for business trusts to create uniformity in regard to other forms of business organizations; allow dentists to practice dentistry within a business organized as a limited liability company; receive several sections of KRS ch. 362 that were repealed with a delayed effective date in 2006 Ky. Acts. ch. 149; confirm new repeal of other sections of KRS ch. 362 that were also repealed in 2006 Ky. Acts ch. 149; confirm amendments to certain statutes whose effectiveness was made contingent upon the approval by the voters of proposed constitutional changes in 2002; and to make minor technical corrections.

Full Text available at: http://www.lrc.ky.gov/record/07RS/HB334/bill.doc

Current Bill Status: April 5, 2007 signed by Governor (Acts Ch. 137).

Mississippi

SB 2684

An Act To Make Technical Corrections To The Model Business Corporation Act; To Revise Definitions Under The Act; To Clarify Notice; To Create Section 79-4-1.44, Mississippi Code Of 1972, To Authorize Householding As It Relates To Providing Individual Notices; To Revise Election Of Directors At The Annual Meeting; To Clarify Court-Ordered Meetings; To Revise Action By Written Consent In Lieu Of Meeting; To Create Section 79-4-7.48, Mississippi Code Of 1972, To Specify A Shareholder Action To Appoint A Custodian Or Receiver; To Revise Definitions; To Revise The Right To Appraisal; To Revise The Notice Of The Right To Appraisal; To Revise The Notice Of Intent To Demand Payment And The Consequences Of Voting Or Consenting; To Revise Requirements Pertaining To The Appraisal Notice And Form; To Revise The Perfection And Rights And The Right To Withdraw; To Clarify After-Acquired Shares' Obligations; To Revise Court Costs And Expenses; To Create Section 79-4-13.40, Mississippi Code Of 1972, To Limit Other Remedies; To Revise The Grounds For Judicial Dissolution; To Revise Receivership And Custodianship; To Clarify The Election To Purchase In Lieu Of Dissolution Of A Corporation; And For Related Purposes.

Full Text available at: http://billstatus.ls.state.ms.us/documents/2007/html/SB/2600-2699/SB2684SG.htm

Current Bill Status: March 15, 2006 approved by Governor

Montana

HB 158

An Act Generally Revising Filing Requirements For Corporations And Limited Liability Companies; Defining "Authorized Agent"; Allowing The Secretary Of State To Correct Certain Errors On Documents Caused By A Filing Officer; Expanding The Type Of Instruments That May Be Filed With The Secretary Of State As Surety For Seismic Exploration Activity; And Amending Sections 32-1-422, 35-1-113, 35-1-217, 35-1-1104, 35-1-1309, 35-2-119, 35-2-1109, 35-8-102, 35-8-208, 82-1-104, And 82-1-107, MCA. An Act Generally Revising Filing Requirements For Corporations And Limited Liability Companies; Defining "Authorized Agent"; Allowing The Secretary Of State To Correct Certain Errors On Documents Caused By A Filing Officer; Expanding The Type Of Instruments That May Be Filed With The Secretary Of State As Surety For Seismic Exploration Activity; And Amending Sections 32-1-422, 35-1-113, 35-1-217, 35-1-1104, 35-1-1309, 35-2-119, 35-2-1109, 35-8-102, 35-8-208, 82-1-104, And 82-1-107, MCA.

Full Text available at: http://data.opi.mt.gov/bills/2007/billhtml/HB0158.htm

Current Bill Status: March 22, 2007 signed by Governor as Chapter 33.

Nevada

HB 371

An Act relating to business entities; requiring certain foreign business entities to publish annually in this State certain statements concerning the business entities; providing a civil penalty for refusal or neglect to publish such required statements; and providing other matters properly relating thereto.

Full Text available at: http://leg.state.nv.us/74th/Bills/AB/AB371.pdf

Current Bill Status: March 16, 2007 Referred to Committee on Judiciary.

New Jersey

A3460/SB 2611

Requires foreign corporations providing electronic communication services or remote computing services to comply with New Jersey subpoenas, court orders and search warrants and supplementing Title 2A of the New Jersey Statutes.

Full Text available at: http://www.njleg.state.nj.us/2006/Bills/S3000/2611_I1.HTM

Current Bill Status: March 15, 2007 Introduced and Referred to Senate Judiciary Committee.

New York

AB 6884

An Act to amend the business corporation law, in relation to authorizing any shareholder owning twenty percent or more of the issued shares to elect that proportion of the directors which is equal to such shareholder’s ownership of corporate shares

Full Text available at: http://assembly.state.ny.us/leg/?bn=A06884&sh=t

Current Bill Status: March 22, 2007 Referred to Corporations, Authorities and Commissions

SB 3826

Relates to shareholder votes in mutual companies.

Full Text available at: http://assembly.state.ny.us/leg/?bn=S03826&sh=t

Current Bill Status: March 16, 2007 Introduced and referred to Housing, Construction and Community Development.

SB 4037

Authorizes a corporation which has an office anywhere in the state to file a commercial claim in New York city civil court.

Full Text available at: http://assembly.state.ny.us/leg/?bn=S04037&sh=t

Current Bill Status: March 23, 2007 referred to Judiciary Committee.

North Carolina

HB 746

An Act to extend liability limitations to all partnerships.

Full Text available at: http://www.ncga.state.nc.us/Sessions/2007/Bills/House/HTML/H746v1.html

Current Bill Status: March 15, 2007 referred to Judiciary Committee.

SB 1019

AN ACT to require domestic corporations, limited liability companies, and limited partnerships to maintain the name of the individual who is the custodian of record; and to give the secretary of state the authority to serve interrogatories on limited liability partnerships.

Full Text available at: http://www.ncga.state.nc.us/Sessions/2007/Bills/Senate/PDF/S1019v1.pdf

Current Bill Status: March 21, 2007 referred to Judiciary Committee.

Ohio

HB 134

To amend sections 1701.55, 1701.782, 1701.792, 1705.21, and 1775.14 of the Revised Code to modify corporation law relating to the election of directors and to conform conversion provisions of Chapter 1701. of the Revised Code with parallel provisions in Chapters 1705., 1775., and 1782. of the Revised Code.

Full Text available at: http://www.legislature.state.oh.us/bills.cfm?ID=127_HB_134

Current Bill Status: March 27, 2007 Introduced.

Tennessee

HB 1662/SB 1897

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/HB1662.pdf

Current Bill Status: March 27, 2007 referred to Commerce, Labor, and Agriculture Committee.

Utah

HB 53

This bill modifies provisions for assessing corporate shares. This bill: defines terms; describes how shares may be assessed; provides rules for assessing shares; and allows enforcement of assessments by various methods, including sale of shares with unpaid assessments.

Full Text available at: http://le.utah.gov/~2007/bills/hbillenr/hb0053.htm

Current Bill Status: March 20, 2007 Signed by Governor.

HB 271

This bill makes changes relating to the election and service of corporate directors. This bill: addresses the resignation of a director; allows a corporation to require that a nominee receive a majority of votes to serve a full term as a director; provides for a nominee's brief service as a director despite the failure to receive a majority of votes; and makes technical changes.

Full Text available at: http://le.utah.gov/~2007/bills/hbillenr/hb0271.htm

Current Bill Status: March 8, 2007 Signed by Governor.

SB 99

This bill clarifies a definition concerning corporate distributions. This bill: clarifies the definition of "distribution" in Title 16, Chapter 10a, Utah Revised Business Corporation Act; and makes technical changes.

Full Text available at: http://le.utah.gov/~2007/bills/sbillenr/sb0099.htm

Current Bill Status: February 26, 2007 signed by Governor.

Vermont

HB 517

Business corporations; organization; alternative - This bill proposes to provide an alternative to Vermont’s traditional business corporate code, to be called the Catamount Corporate Code, that protects the rights of shareholders in publicly traded corporations and restricts the adoption of supermajority and poison pill provisions.

Full Text available at: http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/intro/H-517.HTM

Current Bill Status: March 14, 2007 referred to Commerce Committee.

Virginia

HB 2103

Professional corporations and professional limited liability companies. Authorizes the board of directors of a professional corporation to delegate managerial duties and tasks related to the corporation’s operations to its agents, officers, and employees and, pursuant to an agreement, to other persons. An analogous amendment allows members or managers of a professional limited liability company to do likewise.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?071+ful+CHAP0629

Current Bill Status: March 20, 2007 Approved by Governor-Chapter 629 (effective 7/1/07).

HB 2142

Limited partnerships and partnerships. Prohibits the transaction of business as a limited partnership unless the business is a Virginia limited partnership or a foreign limited partnership registered to transact business in Virginia. The measure includes numerous technical amendments that ensure that terminology in the Virginia Limited Partnership Act and Partnership Act conforms to provisions of other Virginia business entity laws. Other provisions centralize and expand the delayed effective date provisions for Virginia limited partnership organizational documents; move the provisions for the conversion of a partnership to a limited partnership to the Limited Partnership Act; amend the filing fees for limited partnership and registered limited liability partnership amendments and cancellations; and transfer responsibility for the filing of amended and restated certificates of limited partnership in circuit court from the Commission to the limited partnership.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?071+ful+CHAP0631

Current Bill Status: March 20, 2007 Approved by Governor-Chapter 631 (effective 7/1/07).

HB 2292/SB 794

Limited liability companies; parties to actions, professional entities and recordation tax. Clarifies that a member of a limited liability company is not barred from being a party in an action against a limited liability company when the member has an interest in the action independent of being a member of the limited liability company. The measure also provides that (i) the terms of a limited liability company's articles of organization or operating agreement cannot alter the definition of "membership interest" as a member's share of the profits and the losses of the limited liability company and the right to receive distributions of the limited liability company's assets and (ii) the term "professional corporation" shall not be deemed to include a professional limited liability company when it is used in any section of the Virginia Professional Limited Liability Company Act or in Chapter 7 of Title 13.1, which pertains to professional corporations. Finally, the measure provides that the state recordation tax levied on every deed admitted to record and on every contract or memorandum thereof relating to real or personal property admitted to record shall not apply to any deed conveying real estate or lease of real estate to the surviving or new limited partnership or business trust upon a merger to which two or more business entities are parties.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?071+ful+CHAP0233

Current Bill Status: March 12, 2007 Approved by Governor-Chapter 233 (effective 7/1/07)

HB 2603

State Corporation Commission; annual registration and filing fees. Clarifies that articles of domestication shall not be filed for a foreign stock or nonstock corporation, limited liability company, or business trust until all fees, including the annual registration fee, are paid. The measure also allows business entity documents to be filed without payment of the annual registration fee on or before, rather than prior to, the due date of the annual registration fee; moves the due date for the payment of an annual registration fee for a business trust or limited partnership from September 1 to October 1; and makes other technical amendments.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?071+ful+HB2603ER

Current Bill Status: : March 23, 2007 Approved by Governor-Chapter 810 (effective 7/1/07).

SB 1238

Withholding tax; pass-through entities. Requires pass-through entities to withhold and remit to the Tax Commissioner an amount equal to five percent of the allocable Virginia taxable income of all nonresident owners of the pass-through entity. A nonresident owner may take as a credit against Virginia income tax due his or its allocable Virginia income tax withheld and remitted to the Tax Commissioner by the pass-through entity.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?071+ful+SB1238ER

Current Bill Status: March 23, 2007 Approved by Governor-Chapter 796 (effective 7/1/07).

SB 1286

Virginia Nonstock Corporation Act. Updates the Virginia Nonstock Corporation Act to make several provisions consistent with changes to the Virginia Stock Corporation Act that were enacted in 2005, based upon recent amendments to the Model Business Corporation Act. Specific areas of substantive change include setting forth procedures for the approval of a business opportunity; defining "disinterested director"; permitting several corporate actions to be taken electronically; updating provisions regarding member voting and elections; staggering the terms of directors; indemnifying directors and officers; streamlining the process for combining corporations with other types of business entities; asserting claims against dissolved corporations; and confirming that provisions in corporate documents filed with the State Corporation Commission may be made dependent on statistical or market indices or other objectively ascertainable facts.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?071+ful+SB1286ER2

Current Bill Status: April 4, 2007 House: Enacted, Chapter 925 (effective 7/1/07).

Washington

HB 1042

AN ACT Relating to business transactions; and amending RCW 23B.19.040. Modifying the share acquisition time period for engaging in a significant business transaction.

Full Text available at: http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bills/House%20Passed%20Legislature/1042.PL.pdf

Current Bill Status: April 11, 2007 delivered to Governor.

West Virginia

SB 531

An Act to amend and reenact §31D-5-504 of the Code of West Virginia, 1931, as amended, relating to the process of filing with the office of the Secretary of State service of process on corporations in class action suits.

Full Text available at: http://www.legis.state.wv.us/Bill_Text_HTML/2007_SESSIONS/RS/BILLS/sb531%20enr.htm

Current Bill Status: March 16, 2007 approved by Governor.

Wyoming

HB 4

An Act relating to limited partnerships and registered limited liability partnerships; providing for reinstatement within two years of administrative dissolution or lapse of registration for failure to pay fees; and providing for an effective date.

Full Text available at: http://legisweb.state.wy.us/2007/Enroll/HB0004.pdf

Current Bill Status: Approved by Governor February 14, 2007 effective July 1, 2007.

For an archive of NRAI Legislative Updates, visit www.nrai.com and select Research Center.

NRAI's eFile Center

The new feature provides you with several tools for filing your annual reports. You can use our Corporate eFile tool to electronically file your annual franchise reports in Delaware, Massachusetts and North Carolina Annual Registration reports. Additional states will be coming soon. You can review various state eLinks to determine what reports can be filed electronically and the requirements to do so. You can also search for your corporate ID number, too. Or, if your preference is to let someone else handle the entire process, visit our corporate service specialists at Annual Registration Management Services (ARMS). Whatever your needs, the eFile Center can assist you.

NOTICE: Delaware LPs, LLCs and GPs are due by June 1, 2007

To learn more about NRAI's eFile Center, please contact us at info@nrai.com

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For more information regarding NRAI services, please contact us at 800.550.6724 or info@nrai.com