NRAI Compliance Updates - June, 2006

Connecticut – Model Business Corporation Act provisions adopted

Florida – Adoption of 2006 Internal Revenue Code

Louisiana – Conversion of Business Entities, Filing Procedures, and Dissolution by Affidavit

Maryland – Service of Process on Limited Liability Companies

Minnesota – Clarifying terms regarding Business Organizations

Missouri - Waive reinstatement fees and procedures where military service involved, Directors amendment procedure

New York – Publication of Notices for certain Business Entities removing disclosure of interest holder requirement

South Carolina – Taxing of Pass Through Income

Utah – Amends Utah Uniform Securities Act

Wisconsin – Mergers and Conversions of Business Entities

New York Senate Bill 6831/ Assembly Bill 10399 has been passed and signed with an effective date of June 1, 2006 and appears to remove the requirement of disclosing the top ten interest holders in the Business Entity. Publication is still necessary for foreign Limited Liability Companies, Limited Partnerships, and Limited Liability Partnerships with sanctions for failure.

New, Pending and Passed Legislation

Federal Legislation

HB 5405 SOX

To reduce the burdens of 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=109_cong_bills&docid=f:h5405ih.txt.pdf

Current Bill Status: May 17, 2006 Referred to the House Committee on Financial Services.

HB 5469 SEC Reporting

To require corporate income reported to the Internal Revenue Service to be included in annual reports to the Securities and Exchange Commission.

Full Text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h5469ih.txt.pdf

Current Bill Status: May 24, 2006 Referred to the House Committee on Financial Services.

Connecticut

SB 547 Model Business Corporation Act Amendments

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.

This act makes various changes to the stock and nonstock corporation laws.

It:

1. makes several changes regarding transactions that constitute a conflict of interest for a corporate director, including expanding the category of people whose interest in a transaction will be attributed to the director;

2. establishes a procedure for a director who wants to take advantage of a business opportunity that might be suitable for a corporation to first present it to the board or shareholders to obtain a disclaimer, thereby protecting him from liability;

3. clarifies the procedure for a court to dismiss a derivative proceeding after qualified directors have made a reasonable determination that the suit is not in the corporation's best interest;

4. alters the rules on which directors are qualified to approve indemnification of directors; and

5. eliminates the right of stock corporations that are not publicly traded, or their shareholders, in connection with a corporate dissolution proceeding, to purchase shares to avoid the dissolution under certain circumstances.

The act also makes several technical changes.

Full Text available at: http://www.cga.ct.gov/2006/ACT/PA/2006PA-00068-R00SB-00547-PA.htm

Current Bill Status: Signed by Governor May 19, 2006 with an effective date of October 1, 2006

Delaware

HB 452 Asbestos Liability

This Bill limits the cumulative successor asbestos-related liabilities of a corporation, in certain situations, to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation. The Bill's application is limited to those cases where the merger or consolidation occurred prior to January 1, 1972 and only applies where the successor corporation did not produce, sell or distribute asbestos products after the merger or consolidation.

Full Text available at: http://www.legis.state.de.us/LIS/lis143.nsf/vwLegislation/HB+452/$file/legis.html?open

Current Bill Status: June 1, 2006 Introduced and Assigned to Judiciary Committee in House.

SB 333

The purpose of this amendment is to add the United States Securities and Exchange Commission to the list of entities that may certify questions of law to the Delaware Supreme Court. More than half of the publicly traded companies in the United States are Delaware corporations.

Full Text available at: http://www.legis.state.de.us/LIS/lis143.nsf/vwLegislation/SB+333/$file/legis.html?open

Current Bill Status: June 1, 2006 Assigned to Executive committee in Senate.

Florida

SB 1198 Tax

Income Tax; provides for adoption of 2006 version of Internal Revenue Code; provides for retroactive operation

Full Text available at: http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=_s1198er.html&DocumentType=Bill&BillNumber=1198&Session=2006

Current Bill Status: Approved by Governor; Chapter No. 2006-46 on May 30, 2006 becoming effective retroactively to January 1, 2006.

Louisiana

HB 203 Conversion

Authorizes conversion of business entities upon application with the secretary of state. Requires that each type of entity approve conversion in the same manner as required for mergers.

Full Text available at: http://www.legis.state.la.us/billdata/streamdocument.asp?did=397983

Current Bill Status: Signed by Governor June 2, 2006 with an immediate effective date

HB 262 Filing Procedures

An Act to amend and reenact R.S. 12:2, relative to filing requirements for certain business organizations; to provide procedures for Internet filings; to provide procedures for in-person filings; to delete requirements for acknowledgments, authentic acts, or other documentation requiring a notary public under certain circumstances; and to provide for related matters.

Full Text available at: http://www.legis.state.la.us/billdata/streamdocument.asp?did=399312

Current Bill Status:  June 8, 2006 signed by the Governor as Act No. 256 with an effective date of August 15. 2006

HB 352 Corporate Dissolution

Authorizes the dissolution of a corporation by affidavit filed with the secretary of state only if the corporation owns immovable property.

Full Text available at: http://www.legis.state.la.us/billdata/streamdocument.asp?did=398005

Current Bill Status: Signed by Governor June 6, 2006 with an effective date of August 15, 2006

Maryland

HB 708/SB 736 Service of Process

Authorizing a clerk of court, if a charging document is filed against a specified limited liability company, to issue a summons to the limited liability company in the company name to appear at court to answer the charging document; establishing that, if a sheriff or other officer returns a summons in a specified manner, the limited liability company to whom the summons was issued shall be considered as in court and as appearing to the charging document; etc.

Full Text available at: http://mlis.state.md.us/2006rs/bills/sb/sb0736t.pdf

Current Bill Status: May 26, 2006, Became Law without Governor's signature per Maryland Constitution - Chapter 534 with an effective date of October 1, 2006.

Minnesota

HB 3076 Business Organizations

A bill for an act relating to business organizations; regulating business corporations; clarifying terms; updating terminology to include new forms of business activity; including references to limited liability companies and their governance attributes where appropriate; regulating limited liability companies; clarifying terms; amending Minnesota Statutes 2004, sections 302A.011, subdivisions 7, 8, 12, 21, 25, 28, 31, 41, 45, 46, 58, by adding subdivisions; 302A.111, subdivision 3, by adding a subdivision; 302A.115, subdivisions 1, 5; 302A.135, by adding a subdivision; 302A.241, by adding a subdivision; 302A.401, subdivision 3; 302A.417, subdivision 7; 302A.441, subdivision 1; 302A.447, subdivision 1; 302A.461, subdivision 2; 302A.471, subdivisions 1, 3, 4; 302A.553, subdivision 1; 302A.601, subdivisions 1, 2; 302A.611, subdivision 1; 302A.613, subdivisions 1, 2; 302A.621, subdivisions 1, 2, 3, 5, 6, by adding a subdivision; 302A.626, subdivision 1; 302A.661, subdivisions 1, 4; 322B.03, subdivisions 6, 12, 19a, 20, 23, 28, 36a, 45a; 322B.115, subdivision 3, by adding a subdivision; 322B.12, subdivision 1; 322B.15, by adding a subdivision; 322B.23; 322B.31, subdivision 2; 322B.35, subdivision 1; 322B.63, subdivision 1; 322B.66, by adding a subdivision; 322B.686, subdivision 2; 322B.70, subdivisions 1, 2; 322B.71, subdivision 1; 322B.72; 322B.74; 322B.75, subdivisions 2, 3; 322B.755, 0 subdivision 3; 322B.76; 322B.77, subdivisions 1, 4; 322B.80, subdivision 1 1; Minnesota Statutes 2005 Supplement, sections 302A.011, subdivision 4; 2 322B.02

Full Text available at: http://ros.leg.mn/bin/bldbill.php?bill=H3076.1.html&session=ls84

Current Bill Status: Signed by Governor May 31, 2006 with an effective date of  August 1, 2006.

Missouri

SB 845 Reinstatement

This act allows the Secretary of State to waive reinstatement fees and procedures otherwise required for reinstatement, in the event that a corporation was administratively dissolved due to a failure to file an annual registration report, if the secretary of state concludes that the failure was due to military service. In such a circumstance, the secretary of state shall waive all late fees for all required filings, cancel the certificate of dissolution, and reinstate the corporation.

Full Text available at: http://www.senate.mo.gov/06info/pdf-bill/tat/SB845.pdf

Current Bill Status: May 26, 2006 delivered to Governor

SB 1208 Corporate Amendment

This act allows the board of directors of a corporation to directly submit to its shareholders, a proposed amendment to the corporation's articles of incorporation.

Full Text available at: http://www.senate.mo.gov/06info/pdf-bill/tat/SB1208.pdf

Current Bill Status:  May 26, 2006 delivered to Governor after being signed by Senate President with an effective date of August 28, 2006

New Jersey

HB 3177/S 1023 Tax

Prohibits imposition of the corporation business tax on certain foreign corporations that only store personal property in this State incident to its importation.

Full Text available at: http://www.njleg.state.nj.us/2006/Bills/A3500/3177_I1.PDF

Current Bill Status: June 1, 2006 Introduced, Referred to Assembly Appropriations Committee.

New York

A 10399\S 6831 Publication

Requires notices relating to business entities to be published for 6 weeks; eliminates the listing of certain owners of a business entity in the affidavit of publication and the application for authority; requires business entities to comply within 120 days; failure to comply shall cause joint and several liability of the owners of the business.

Full Text available at: http://assembly.state.ny.us/leg/?bn=S06831&sh=t

Current Bill Status: June 2, 2006 signed by Governor. This act shall take effect on the same date and in the same manner as chapter 767 of the laws of 2005.

A 11473 Election of Directors

Any shareholder who owns 20% or more of a corporation's shares shall be entitled to elect a proportional share of the board of directors.

Full Text available at: http://assembly.state.ny.us/leg/?bn=A11473&sh=t

Current Bill Status: May 23, 2006 referred to Corporations, Authorities and Commissions Committee

North Carolina

HB 1962 Franchise Tax

Franchise Tax Loophole Closing. An Act to apply the franchise tax to certain limited liability companies and to provide a credit for additional annual report fees paid by limited liability companies subject to franchise tax.

Full Text available at: http://www.ncga.state.nc.us/Sessions/2005/Bills/House/PDF/H1962v1.pdf

Current Bill Status: In House, hearing postponed until June 19, 2006.

HB 2495 S Corporations

Deduction for S Corporation Income. An Act to provide a small business income tax exemption.

Full Text available at: http://www.ncga.state.nc.us/Sessions/2005/Bills/House/PDF/H2495v1.pdf

Current Bill Status: May 25, 2006 referred to Committee on Finance.

South Carolina

SB 1283  Pass-Through Entity Taxation

An Act to amend Section 12-6-545, code of laws of South Carolina, 1976,  relating to the application of the reduced state marginal individual income

tax rate to the active trade or business income of a pass-through business, so as to make this application optional at the annual election of the taxpayer,

to revise definitions for this application, to revise the method of deducting active trade or business loss when such loss exceeds active trade or business

income; to provide a "safe harbor" amount in determining the nonpersonal service portion of active trade or business income of a taxpayer in one or

more pass-through businesses with total gross income of less than one million dollars and taxable income of less than one hundred thousand dollars, and to

authorize the department of revenue to provide other methods of determining income deemed unrelated to personal services.

Full Text available at: http://www.scstatehouse.net/sess116_2005-2006/bills/1283.htm

Current Bill Status: May 23, 2006 signed by Governor as Act 282 with an immediate effective date.

Utah

SB 3004 Securities

This bill modifies the Utah Uniform Securities Act. This bill requires a broker-dealer to notify the division of the failure to settle certain securities transactions occurring on or after July 1, 2006; addresses liability for certain persons if the broker-dealer fails to give the required notice; defines "threshold security"; addresses what causes of action are created by the Utah Uniform Securities Act; and makes technical changes.

Full Text available at: http://www.le.state.ut.us/~2006S3/bills/sbillenr/sb3004.pdf

Current Bill Status: May 26, 2006 Signed by Governor with an effective date of October 1, 2006

Wisconsin

SB 619 Mergers and Conversions

An Act to repeal 180.0825 (2) (a), 180.0825 (5) (a) to (h) and 180.1105 (1) (a) and (b); to renumber 180.1105 (1) (c) and (d); to renumber and amend 180.0602 (3); to consolidate, renumber and amend 180.0825 (2) (intro.) and (b); to amend 77.22 (1), 179.02 (1), 179.76 (4) (c), 179.77 (6) (c), 180.0502 (3), 180.0706 (title), 180.0824 (3), 180.0825 (1), 180.1103 (1), 180.1106 (1) (b), 180.1130 (3) (a) (intro.), 180.1140 (11), 180.1150 (2), 180.1161 (4) (c), 180.1201 (title), 180.1201 (2), 180.1302 (4), 181.1106 (2), 181.1161 (4) (c), 183.1202 (1), 183.1205 (2) and 183.1207 (4) (c); to repeal and recreate 180.1130 (14); and to create 77.264, 179.76 (5) (bm), 179.77 (5) (bm), 180.0602 (3) (b), 180.0706 (3), 180.0708, 180.0825 (5) (am) and (bm), 180.11045, 180.1105 (1) (bm), (cm), (dm) and (e) to (h), 180.1161 (5) (bm), 180.1201 (1) (d), 180.1302 (1) (a) 3., 181.1105 (1m), 181.1161 (5) (bm), 183.1204 (1) (cm) and 183.1207 (5) (bm) of the statutes; relating to: mergers, conversions, and other business combinations; merger and conversion reports for real estate transfer fee purposes; the authority of the boards of directors of business corporations and corporate committees; corporate shareholder notices and meetings; the transfer of corporate property to certain affiliates; naming limited partnerships; and providing penalties.

Full Text available at: http://www.legis.state.wi.us/2005/data/acts/05Act476.pdf

Current Bill Status: Signed by Governor May 30, 2006 with an effective date of June 14, 2006

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