NRAI Compliance Updates

NRAI Compliance Updates - August, 2004

Greetings,

We hope everyone is enjoying high Summer. In the legal office of NRAI, we are putting the finishing touches on all our precedent material from the numerous July 1st statute changes. All applicable form changes have been made in our Document Library.

Legislative action has decreased during these past few months. Even so, there are some things of interest reported in this issue.

Also, we recommend that you pay some attention to the Iowa Supreme Court case, which is the first example of a court piercing the corporate veil of an LLC.

Enjoy the rest of your Summer. We are sure September will be busy.

Rob Rowell
General Counsel

Court Cases

Iowa Supreme Court Docket No. 02-906. [26], Filed May 12, 2004

ESTATE OF MARLENE R. COUNTRYMAN, et al, vs. FARMERS COOPERATIVE ASSOCIATION, KEOTA, IOWA a/k/a KEOTA COOP, Appellee., et al.

Summary edited to the matter of the LLC:

We reject Keota's suggestion that liability of an LLC member or manager for tortious conduct is limited to conduct committed outside the member or manager role. This approach is contrary to the corporate model and agency principles upon which the liability of LLC members and managers is based. A manager who takes part in the commission of a tort is liable even when the manager acts on behalf of a corporation. III. We conclude Keota is not protected from liability if it participated in tortious conduct in performing its duties as manager of Double Circle. Consequently, the district court improperly granted summary judgment. A trial is necessary to develop the facts relating to allegations of Keota's participation in the alleged torts.

Full text available at:

http://www.judicial.state.ia.us/supreme/opinions/20040512/02-0906.asp

Federal Legislative Developments

SB 1890

To require the mandatory expensing of stock options granted to executive officers, and for other purposes.
Full text available at: http://thomas.loc.gov/cgi-bin/query/z?c108:S.1890:

Bill History:

11/21/2003: Referred to the House Committee on Financial Services.

12/2/2003: Referred to the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

3/3/2004: Subcommittee Hearings Held.

5/12/2004: Subcommittee Consideration and Mark-up Session Held.

5/12/2004: Forwarded by Subcommittee to Full Committee (Amended) by Voice Vote.

6/03/2004: Committee Consideration and Mark-up Session Held.

6/15/2004: Committee Consideration and Mark-up Session Held.

6/15/2004: Ordered to be Reported (Amended) by the Yeas and Nays: 45 - 13.

6/25/2004 3:08pm: Mr. Boehlert asked unanimous consent that the Committee on Financial Services have until midnight on July 2 to file a report on H.R. 3574. Agreed to without objection.

7/15/2004 6:35pm: Reported (Amended) by the Committee on 108-609, Part I.

7/15/2004: Referred sequentially to the House Committee on Energy and Commerce for a period ending not later than July 16, 2004 for consideration of such provisions of the bill and amendment as fall within the jurisdiction of that committee pursuant to clause 1(f), rule X.

7/16/2004 3:28pm: Committee on Energy and Commerce discharged.

7/16/2004 3:28pm: Placed on the Union Calendar, Calendar No. 367.

7/19/2004 7:42pm: Rules Committee Resolution H. Res. 725 Reported to House. Rule provides for consideration of H.R. 3574 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. Measure will be considered read. Specified amendments are in order.

7/20/2004 11:30am: Rule H. Res. 725 passed House.

7/20/2004 11:56am: Considered under the provisions of rule H. Res. 725. (consideration: CR H6001-6022; text of measure as reported in House: CR H6011-6012)

7/20/2004 11:56am: House resolved itself into the Committee of the Whole House on the state of the Union pursuant to H. Res. 725 and Rule XVIII.

7/20/2004 11:56am: The Speaker designated the Honorable Tom Latham to act as Chairman of the Committee.

7/20/2004 1:10pm: H.AMDT.710 Amendment (A001) offered by Mr. Oxley. (consideration: CR H6012-6013; text: CR H6012) Amendment clarifies that a company that wishes to voluntarily expense its employee stock options may do so based on the expensing rules that companies are using today to expense their stock options.

7/20/2004 1:13pm: H.AMDT.710 On agreeing to the Oxley amendment (A001) Agreed to by voice vote.

7/20/2004 1:13pm: H.AMDT.711 Amendment (A002) offered by Mr. Sherman. (consideration: CR H6013-6014, H6019-6020; text: CR H6013) Amendment sought to eliminate the requirement in the bill that an assumption of zero volatility be used when calculating the value of stock option expense for the top-five executives.

7/20/2004 1:24pm: H.AMDT.712 Amendment (A003) offered by Mrs. Maloney. (consideration: CR H6014-6016, H6020; text: CR H6014) An amendment numbered three printed in House Report 108-616 to preserve the authority of the Securities and Exchange Commission (SEC) to establish accounting principles or standards on its own initiative as the SEC deems necessary in the public interest or for the protection of investors. It is intended to preserve the SEC's ability to prescribe the contents of public filings.

7/20/2004 1:37pm: H.AMDT.713 Amendment (A004) in the nature of a substitute offered by Mr. Kanjorski. (consideration: CR H6016-6019, H6020-6021; text: CR H6016) Amendment in the nature of a substitute sought to replace the language in the bill with the text of the "Accounting" Standards Integrity Act".

7/20/2004 2:24pm: H.AMDT.711 On agreeing to the Sherman amendment (A002) Failed by recorded vote: 126 - 296 (Roll no. 394).

7/20/2004 2:33pm: H.AMDT.712 On agreeing to the Maloney amendment (A003) Failed by recorded vote: 114 - 308 (Roll no. 395).

7/20/2004 2:40pm: H.AMDT.713 On agreeing to the Kanjorski amendment (A004) Failed by recorded vote: 127 - 293 (Roll no. 396).

7/20/2004 2:40pm: The House rose from the Committee of the Whole House on the state of the Union to report H.R. 3574.

7/20/2004 2:40pm: The previous question was ordered pursuant to the rule.

7/20/2004 2:41pm: The House adopted the amendment in the nature of a substitute as agreed to by the Committee of the Whole House on the state of the Union.

7/20/2004 2:58pm: On passage Passed by the Yeas and Nays: 312 - 111 (Roll no. 397).

7/20/2004 2:58pm: Motion to reconsider laid on the table Agreed to without objection.

7/20/2004 2:58pm: The Clerk was authorized to correct section numbers, punctuation, and cross references, and to make other necessary technical and conforming corrections in the engrossment of H.R. 3574.

7/21/2004: Received in the Senate.

HB 4796 and SB 2298

To amend the Internal Revenue Code of 1986 to improve the operation of employee stock ownership plans, and for other purposes.

Current Text available at: http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.4796:

Bill History:

7/9/2004: Introductory remarks on measure. (CR E1343-1344)
7/9/2004: Referred to the House Committee on Ways and Means.

HB 4840

To amend the Internal Revenue Code of 1986 to simplify the taxation of businesses.

Full text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_bills&docid=f:h4840eh.txt.pdf as engrossed.

Bill History

7/15/2004: Referred to the House Committee on Ways and Means.
7/21/2004 2:46pm: Mr. Portman moved to suspend the rules and pass the bill.
7/21/2004 2:46pm: Considered under suspension of the rules. (consideration: CR H6475-6483)
7/21/2004 3:28pm: At the conclusion of debate, the Yeas and Nays were demanded and ordered. Pursuant to the provisions of clause 8, rule XX, the Chair announced that further proceedings on the motion would be postponed.
7/21/2004 5:36pm: Considered as unfinished business. (consideration: CR H6497)
7/21/2004 5:44pm: On motion to suspend the rules and pass the bill Agreed to by the Yeas and Nays: (2/3 required): 424 - 0 (Roll no. 405). (text: CR H6475-6477)
7/21/2004 5:45pm: Motion to reconsider laid on the table Agreed to without objection.
7/22/2004: Received in the Senate.

State News and Active Legislation

Alaska

Note from State Web Site

The Corporations Section is in the process of implementing a new database. The first phase of these online services is scheduled for implementation in September of 2004.
This new system is image based. We will be converting our paper documents and those on microfilm and microfiche to images to allow for customer self service over the Internet. The new system is designed to provide for new online services such as registering business names and filing biennial reports.

California

HB 2167

Securities: corporate liability. An act to amend Section 1029.8 of the Code of Civil Procedure, and to amend Section 25506 of, and to add Section 25501.5 to, the Corporations Code, relating to securities.

Full text available at: http://www.leginfo.ca.gov/pub/bill/asm/ab_2151-2200/ab_2167_bill_20040804_amended_sen.html for current version as of August 4, 2004.

Bill History:

Aug. 5 Read second time. To third reading.
Aug. 4 Action rescinded whereby the bill was read third time, passed, and to Assembly. Read third time, amended. To second reading.
July 29 In Senate. Held at Desk.
July 28 Ordered returned to Senate.
July 2 In Assembly. Concurrence in Senate amendments pending. May be considered on or after July 4 pursuant to Assembly Rule 77.
July 1 Read third time, passed, and to Assembly. (Ayes 37. Noes 0. Page 4542.)
June 29 Read second time, amended, and to third reading.
June 28 From committee: Amend, and do pass as amended. (Ayes 6. Noes 0.).
May 27 Referred to Com. on JUD.
May 18 In Senate. Read first time. To Com. on RLS. for assignment.
May 17 Read third time, passed, and to Senate. (Ayes 74. Noes 0. Page 5759.)
May 6 Read second time. To Consent Calendar.
May 5 From committee: Do pass. To Consent Calendar. (May 4).
Apr. 20 In committee: Hearing postponed by committee.
Apr. 14 Re-referred to Com. on JUD.
Apr. 13 Read second time and amended.
Apr. 12 From committee: Amend, do pass as amended, and re-refer to Com. on JUD. (Ayes 11. Noes 0.) (March 31).
Mar. 25 Re-referred to Com. on B. & F. and then be re-referred to Com. on JUD. by unanimous consent.
Mar. 18 Referred to Coms. on JUD. and B. & F.
Feb. 19 From printer. May be heard in committee March 20.
Feb. 18 Read first time. To print.

HB 1776

Foreign corporations and financial institutions: production of records.

An act to amend Section 2105 of the Corporations Code, and to amend Section 7480 of the Government Code, relating to production of records.

Full text available at: http://www.leginfo.ca.gov/pub/bill/asm/ab_1751-1800/ab_1776_bill_20040726_amended_sen.html as of July 26, 2004.

Bill History:

Aug. 10 Read third time, passage refused in Senate. (Ayes 24. Noes 10.) Motion to reconsider made by Senator Florez. Reconsideration granted.
July 27 Read second time. To third reading.
July 26 Read third time, amended. To second reading.
June 17 Read second time and amended. Ordered to third reading.
June 16 From committee: Amend, and do pass as amended. (Ayes 4. Noes 1.).
June 10 From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD. 2003
Aug. 18 In committee: Hearing postponed by committee.
July 28 In committee: Hearing postponed by committee.
July 17 Joint Rule 61(a)(9) suspended. (Ayes 36. Noes 0. Page 1861.)
July 14 From committee: Do pass, and re-refer to Com. on JUD. Re-referred. (Ayes 6. Noes 3.).
June 11 In committee: Testimony taken. Hearing postponed by Committee.
May 29 Referred to Coms. on B., C. & I. T. and JUD.
May 15 In Senate. Read first time. To Com. on RLS. for assignment.
May 15 Read third time, passed, and to Senate. (Ayes 76. Noes 0. Page 1709.)
May 8 Read second time. To Consent Calendar.
May 7 From committee: Do pass. To Consent Calendar. (May 6).
Apr. 22 From committee: Do pass, and re-refer to Com. on JUD. with recommendation: To Consent Calendar. Re-referred. (Ayes 12. Noes 0.) (April 21).
Mar. 24 Referred to Coms. on B. & F. and JUD.
Mar. 19 From printer. May be heard in committee April 18.
Mar. 18 Read first time. To print.

HB 2328

Corporation tax: "S" corporation. An act to amend Sections 23809 and 24654 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

Full text available at: http://www.leginfo.ca.gov/pub/bill/asm/ab_2301-2350/ab_2328_bill_20040809_amended_sen.html as of August 9, 2004.

Bill History:

Aug. 9 From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on APPR.
Aug. 4 In committee: Placed on Appropriations suspense file.
July 29 In committee: Hearing postponed by committee.
June 29 Read second time, amended, and re-referred to Com. on APPR. (Corrected July 23)
June 28 From committee: Amend, do pass as amended, and re-refer to Com. on APPR. (Ayes 6. Noes 0.).
June 3 Referred to Com. on REV. & TAX.
May 24 In Senate. Read first time. To Com. on RLS. for assignment.
May 24 Read third time, passed, and to Senate. (Ayes 69. Noes 5. Page 5927.)
May 20 From committee: Do pass. (Ayes 20. Noes 0.) (May 19). Read second time. To third reading.
May 19 In committee: Set, first hearing. Referred to APPR. suspense file.
May 17 Re-referred to Com. on APPR.
May 13 Read second time and amended.
May 12 From committee: Amend, do pass as amended, and re-refer to Com. on APPR. (Ayes 4. Noes 2.) (May 10).
Apr. 19 In committee: Set, first hearing. Referred to REV. & TAX. suspense file.
Apr. 12 Re-referred to Com. on REV. & TAX.
Apr. 1 From committee chair, with author's amendments: Amend, and re-refer to Com. on REV. & TAX. Read second time and amended.
Mar. 4 Referred to Com. on REV. & TAX.
Feb. 20 From printer. May be heard in committee March 21.
Feb. 19 Read first time. To print.

HB 1859

Limited liability companies: certificate of cancellation. An act to add Section 17350.5 to the Corporations Code and to amend Sections 17941 and 17945 of the Revenue and Taxation Code, relating to limited liability companies.

Full text available at: http://www.leginfo.ca.gov/pub/bill/asm/ab_1851-1900/ab_1859_bill_20040727_amended_sen.html

Bill History:

Aug. 10 In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 12 pursuant to Assembly Rule 77.
Aug. 10 Read third time, passed, and to Assembly. (Ayes 35. Noes 0.)
July 28 Read second time. To third reading.
July 27 Read third time, amended. To second reading.
June 30 Read second time. To third reading. Ordered to Special Consent Calendar.
June 29 From committee: Be placed on second reading file pursuant to Senate Rule 28.8.
June 24 From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on APPR.
June 15 Read second time, amended, and re-referred to Com. on APPR.
June 14 From committee: Amend, do pass as amended, and re-refer to Com. on APPR. (Ayes 6. Noes 0.).
June 3 In committee: Hearing postponed by committee.
May 20 Referred to Com. on JUD.
May 10 In Senate. Read first time. To Com. on RLS. for assignment.
May 10 Read third time, passed, and to Senate. (Ayes 77. Noes 0. Page 5625.)
May 3 Read second time. To Consent Calendar.
Apr. 29 From committee: Do pass. To Consent Calendar. (April 28).
Apr. 20 From committee: Do pass, and re-refer to Com. on APPR. Re-referred. (Ayes 11. Noes 0.) (April 19).
Apr. 13 Re-referred to Com. on B. & F.
Apr. 12 From committee chair, with author's amendments: Amend, and re-refer to Com. on B. & F. Read second time and amended.
Mar. 31 In committee: Hearing postponed by committee.
Feb. 24 Referred to Com. on B. & F.
Feb. 3 From printer. May be heard in committee March 4.
Feb. 2 Read first time. To print.

Louisiana

HB 706

INSURERS: Deletes requirement that directors of a domestic insurance corporation must be shareholders in the company . AN ACT To repeal R.S. 22:81(2), relative to domestic insurance corporations; to repeal certain shareholder requirements for directors.

Full text available at: http://www.legis.state.la.us/leg_docs/04RS/CVT1/OUT/0000LV0M.PDF

Bill Status:
Signed by the governor as act 525 with and effective date of August 15, 2004

New York

HB 9814

Requires that requested names for limited liability companies be cross referenced with corporations and partnerships.

Full text available at: http://assembly.state.ny.us/leg/?bn=A09814&sh=t

Bill History:

02/24/2004 referred to corporations, authorities and commissions
05/24/2004 reported referred to rules
06/09/2004 rules report cal.921
06/09/2004 ordered to third reading rules cal.921
06/09/2004 amended on third reading 9814a
06/17/2004 passed assembly
06/17/2004 delivered to senate
06/17/2004 referred to rules
06/17/2004 substituted for s5937a
06/17/2004 3rd reading cal.1105
06/17/2004 passed senate
06/17/2004 returned to assembly
07/29/2004 delivered to governor

HB 11784

Exempts theatrical production companies that are limited liability companies from certain publication requirements for limited liability companies, as proposed in S. 5902-B and A. 11205-A.

Full text available at: http://assembly.state.ny.us/leg/?bn=A11784&sh=t

Bill History:

08/05/2004 referred to tourism, arts and sports development
08/06/2004 amend (t) and recommit to tourism, arts and sports development
08/06/2004 print number 11784a

Rhode Island

HB 7696 and SB 3232

An act relating to taxation - business corporation tax.

This act would provide that a taxpayer may claim a tax credit against the costs of renewing, modifying, or maintaining ISO 9000 or 14000 certification. This act would take effect on July 1, 2005.

Full text available at: http://www.rilin.state.ri.us/Billtext/BillText04/HouseText04/H7696A.pdf

Bill History:

02/11/2004 Introduced, referred to House Finance
05/06/2004 Scheduled for hearing and/or consideration
05/06/2004 Continued
06/17/2004 Scheduled for hearing and/or consideration
06/17/2004 Continued
06/23/2004 Scheduled for hearing and/or consideration
06/23/2004 Committee recommends passage of Sub A
06/23/2004 Placed on House Calendar
06/25/2004 House passed Sub A
06/25/2004 Placed on Senate Calendar
06/25/2004 Senate passed Sub A in concurrence
08/03/2004 Transmitted to Governor

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

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About NRAI

National Registered Agents, Inc. (NRAI) is a professional Registered Agent for new and established business entities. NRAI is fully licensed to maintain Registered Office and receive legal process for companies throughout the United States and around the globe.

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