What this is: Around the country, state lawmakers have had a busy legislative year. Below is a summary of some of the notable business entity and UCC-related bills from various states that were passed into law in 2023.
What this means: Many bills, from Arkansas to Wyoming, were introduced in 2023. They covered everything from shareholder inspection of records to addressing certain digital assets as “controllable electronic records.” We rounded them up for you.
HB 1020: Includes an amendment to a provision relating to charging orders for limited liability companies. The bill provides that upon application to a court of competent jurisdiction by a judgment creditor of a member or transferee, the court may charge the transferable interest with payment of the unsatisfied amount (of the judgment) with interest. The bill includes procedures for foreclosure of a charging lien against the sole member of a limited liability company, as well as for judgment creditor remedies when a limited liability company has more than one member. Effective August 1, 2023.
SB 205: Changes the standard for name availability for corporations and limited liability companies to “distinguishable” from an existing name as opposed to being prohibited from “being the same as or confusingly similar.” Effective August 1, 2023.
SB 513: Sets tough standards for certain domestic and foreign nonprofit corporations which are delinquent in filing their required annual disclosure statements. Reinstatement of those entities will not be allowed after 5 years from the date the charter or authority to do business in Arkansas was declared not current. Instead, they will be statutorily dissolved, and their name will become available immediately for use by another entity if deemed available by the Secretary of State. The due date for annual reports for domestic and foreign limited partnerships and domestic and foreign limited liability partnerships is changed to “by August 1.” These entities will also not be allowed to file for reinstatement after 5 years if they are delinquent in filing their annual reports and have been declared not current. They, too, will be subject to statutory dissolution with their name being available for use by another. Effective August 1, 2023.
AB 878: Currently, a fictitious business name statement has 2 means of expiring. It can expire 5 years after the date it is filed with the county clerk or within 40 days after information in the statement has changed. A change in the residence address information of a trustee, individual or general partner does not currently expire the statement. The bill removes this address exception to the reasons for the statement’s expiration. The bill also adds a requirement for filers (registrants) of fictitious name statements, statements of abandonment or statements of withdrawal to include a business mailing address. Effective January 1, 2024.
SB 22-034: The bill addresses the unauthorized or fraudulent use of personal or business identity information in corporate filings with the Secretary of State and provides a complaint process and resolution for same. It also defines a deceptive trade practice under the Consumer and Commercial Affairs statutes. Effective February 1, 2023.
In keeping with its annual tradition of amending its business entity law, Delaware’s business entity amendments generally took effect on August 1, 2023. For details on some of these amendments, please see our posts: Delaware Business Law Changes Part 1: Delaware General Corporation Law and Delaware Business Law Changes Part 2: Amendments to the LLC (Limited Liability Company) and Partnership Acts.
SB 244: This bill creates substantial changes to the Corporation Code. Some notable changes related to filings made to the Secretary of State include: An expansion of acceptance of electronic filing procedures; Secretary of State specification of required state form usage; and addition of forms (certificate of revocation of dissolution and certificate of merger or consolidation) to the Secretary of State fee schedule. The bill repeals certain statutory sections and makes procedural changes effective July 1, 2023 and January 1, 2024.
HB 4997: Amends the annual report filing fee provision for business corporations. The current $25 filing fee expiration (sunset) date of September 30, 2023, was extended until September 30, 2027. The fee falls to $15 after that date. Effective September 29, 2023.
HB 4995: Amends the annual statement of resident agent and resident office provisions for limited liability companies. The current $25 fee expiration (sunset) date of September 30, 2023, was extended until September 30, 2027. The fee falls to $15 after that date. Effective September 29, 2023.
HB 1101: Allows the Secretary of State to serve a domestic corporation or limited liability company, with written notice of his or her determination that grounds for dissolution exist via electronic means to its registered agent’s e-mail address. The option of service by first-class mail remains. The corporation or limited liability company indicates the preferred method. If the corporation or limited liability company does not correct the grounds for dissolution or show that the grounds do not exist, the bill provides for service of a certificate of dissolution of a corporation or certificate of administrative dissolution of a limited liability company in the same manner as the determination notice, e.g. by electronic mail to the registered agent or service by first-class mail as indicated. Effective July 1, 2023.
If you’d like to work with a team that can handle your corporate filings, corporate dissolutions and more, head on over to our Corporate Services page.
AB 126: Adds provisions for corporations and other business entities to correct erroneously filed records. Provisions relating to corporate governance are also revised, including a provision permitting a corporation to amend its articles of incorporation without stockholder action if the proposed amendment consists only of a change in the corporation’s name. However, stockholder approval of this action can be required in the articles of incorporation. Effective May 30, 2023.
SB 197: Adds a requirement for a good standing affirmation to be included in an application to transact business for foreign business entities. Allows limited partnerships to follow the same procedures to change their agent as other business entities. Expands permissive name abbreviation listings for domestic and foreign benefit corporations. The bill also includes provisions for fee modifications and additions. The fee for copying and certifying for domestic and foreign corporations is changed to $1 per document (instead of $1 per page). For limited liability companies, the fee for certifying any document on file is changed to $1 per document (instead of $1 per page). The fee remains $5 per certificate for corporations and limited liability companies. Effective November 1, 2023.
SB 142: Amends the corporation law to allow for conversion for business corporations. Prior to enactment of Senate Bill 142, New Jersey business corporation law did not permit conversions. Now, certain other entities may convert to domestic corporations, domestic corporations may convert to certain other entities, and certain foreign entities may convert to foreign corporations. Effective November 4, 2023.
SB 995: The LLC Transparency Act requires disclosure of the identity and information about beneficial owners of domestic and foreign limited liability companies. The bill requires the New York Secretary of State to maintain a publicly available database on its website for domestic business entities organized and foreign business entities authorized to do business in New York. The identity of beneficial owners of reporting domestic and foreign limited liability companies are to be included in the database. The bill has passed both the Assembly and the Senate. To date, it has not been signed by the Governor.
SB 477: Includes amendments to sections of the Business Corporations Act. The bill has added a detailed definition of a corporate subsidiary and sets the standard for qualified shareholders to inspect the records of subsidiary corporations. For a qualified shareholder to inspect such records either of the following must apply: The corporation must have actual possession and control of the subsidiary’s records or the corporation could obtain the records through the exercise of control over the subsidiary and as of the date of making the demand, the qualified shareholder inspection of the books and records of the subsidiary would not constitute the breach of an agreement between the corporation or the subsidiary and a person not affiliated with the corporation. The bill includes assorted effective dates for different provisions. The inspection rights provision became effective on October 1, 2023 and applies to written notices for demand or inspection given on or after that date.
HB 1084: Added a requirement that forms used for certain filings must be those prescribed by the Secretary of State. These forms relate to foreign business entity qualification, amendment and withdrawal and include such entities as foreign profit and nonprofit corporations and foreign limited liability companies. A state-prescribed form has previously been required for other filings, such as annual reports and trade name registrations. Effective August 1, 2023.
HB 1189: Adds a requirement for many filing or qualified filing entities to include on their annual report whether the entity owns any agricultural land, as defined by law, and if so, whether the entity has any foreign beneficial owners. In addition to listing the required information, an amendatory provision also permits a filing entity to include a statement of voluntary disclosure of other beneficial interests in its annual report. A new section defining foreign beneficial owner and foreign government is also included in the bill. “Foreign beneficial owner” means a foreign government, a natural person who is not a United States citizen, an entity registered outside the United States or its territories or an entity owned by a foreign government or a natural person who is not a United States citizen. “Foreign government" means a government or the state-controlled enterprise of a government, other than the United States, its states or its territories. Effective July 1, 2023.
SB 1514: Allows certain entities to transact business under an assumed name without filing an assumed name certificate as long as they are following a specified Business and Commerce Code chapter. These entities include a domestic entity, a protected series or registered series of a limited liability company or a foreign entity having authority to transact business in Texas. The bill also includes provisions for ratification of void or voidable acts or transactions with respect to limited liability companies and partnerships. Effective September 1, 2023.
SB 986 and HB 1477: Expand the period relating to availability of a corporation’s shareholders list for inspection. The shareholders’ list for notice of a meeting is now to be available for inspection by any shareholder, beginning 5 business days (was 2 business days) after notice of the meeting was given for which the list was prepared and continuing through the close of business on the late date of the meeting. The bills also eliminate the requirement for a corporation to provide for inspection at a shareholders’ meeting, the list of shareholders entitled to vote at the meeting. Effective July 1, 2023.
SB 75: Amends provisions relating to decentralized autonomous organizations. A definition for “publicly available identifier” is added to the decentralized autonomous organizations supplement. “Publicly available identifier” means an address that is available publicly and that identifies a smart contract and may include a uniform resource locator, contract address or other similar reference. This bill has added another ground for amendment of articles of organization of a decentralized autonomous organization which is when the publicly available identifier has changed. Effective July 1, 2023.
Uniform Commercial Code (UCC)
Article 12 legislation, passed this legislative year in multiple states, defines and addresses digital financial assets, controllable electronic records and related terms and phrases and establishes how electronic records pertain to the law in the Uniform Commercial Code. Subsequent amendments to Article 9 address the process of perfecting, obtaining and enforcing these security interests (in controllable electronic records).
These bills include: Alabama HB 348, effective July 1, 2024; California SB 95, effective January 1, 2024; Hawaii HB 525, effective June 29, 2023; Colorado SB 90, effective August 7, 2023; Delaware SB 157, effective August 18, 2023; Indiana SB 468, effective July 1, 2023; Nevada AB 231, effective October 1, 2023; New Hampshire HB 584, effective October 7, 2023; New Mexico HB 90, effective January 1, 2024; North Dakota HB 1082, effective August 1, 2023; and Washington (State) SB 5077, effective January 1, 2024.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.