BUSINESS ORGANIZATIONS ACT
SECTION
1-101. SHORT TITLE. This [act] may be cited as the Business
Organizations Act.
SECTION
1-102. DEFINITIONS. In this [act]:
(1) “Acquired entity” means the entity all of one or more
classes or series of interests in which are acquired in an interest exchange
authorized by Section 2-301.
(2) “Acquiring entity” means an entity that acquires all
of one or more classes or series of interests of the acquired entity in an
interest exchange authorized by Section 2-301.
(3) “Annual report” means the report required by Section
3-16.22, 4-16.22, 6-210, 7-209, 8-207, or 9-211.
(4) “Appointment of agent” means a statement appointing
an agent for service of process filed by a domestic entity that is not a filing
entity or nonqualified foreign entity under Section 1-410.
(5) “Approve” means, in the case of an entity, an action
by its governors and interest holders to take the steps necessary under its
organic rules, organic law, and other law to:
(A) propose a transaction subject to
this [act];
(B) adopt and approve the terms and
conditions of the transaction; and
(C) conduct any required proceedings or
otherwise obtain any required votes or consents of the governors or interest
holders.
(6) “Articles of incorporation” means the public organic
document of a business corporation or nonprofit corporation. With respect to a business corporation, the
term includes the original articles of incorporation, amendments thereof, any
articles of merger, and any other documents with respect to a domestic business
corporation filed in the office of the
[Secretary of State] under any provision of this [act] except the annual report
required by Section 3-16.22, 4-16.22, 6-210, 7-209, 8-207, or 9-211. With respect to a domestic nonprofit
corporation subject to [Article] 4, the term includes articles of incorporation
as defined in Section 4-1.40(2). If any
document filed under this [act] restates the articles in their entirety, the
articles do not include any previously filed documents. With respect to a foreign corporation or
foreign nonprofit corporation, the term means the corresponding document filed
with the jurisdiction under the law of which the business corporation or
nonprofit corporation is formed.
(7) “Articles of organization” means the public organic
document of a domestic limited cooperative association subject to [Article]
8. In the case of a foreign cooperative,
the term includes all records that:
(A) have a function similar to articles of organization
under [Article] 8; and
(B) are required to be filed in the office of
the [Secretary of State] or other official having custody of articles of
organization in the jurisdiction under the law of which the foreign cooperative
is organized.
(8) “Authorized shares” means the shares of all classes a
domestic or foreign corporation is authorized to issue.
(9) “Business” includes every trade, occupation, and
profession.
(10) “Bylaws” means the code of rules, other than the
articles of incorporation, adopted pursuant to this [act] for the regulation or
management of the affairs of a corporation irrespective of the name or names by
which the rules are designated.
(11) “Certificate of authority” means a certificate
issued by the [Secretary of State] which authorizes a foreign entity to
transact business, or engage in other activities, in this state.
(12) “Commercial registered agent” means an individual or
a domestic or foreign entity listed under Section 1-404.
(13) “Conspicuous” means so written or displayed that a
reasonable person against which the record is to operate should have noticed it,
such as using italics, boldface, contrasting colors, capital letters, or
underscoring.
(14) “Conversion” means a transaction authorized by
Section 2-401.
(15) “Converted entity” means a converting entity as it
continues in existence after a conversion.
(16) “Converting entity” means a domestic entity that
approves a plan of conversion pursuant to Section 2-403 or a foreign entity
that approves a conversion pursuant to the law of its jurisdiction of
organization.
(17) “Cooperative” means a limited cooperative
association formed under [Article] 8 or an entity organized under any
cooperative law of any other jurisdiction.
(18) “Corporation” means, in the case of a business
corporation, a for-profit corporation incorporated under or subject to
[Article] 3. In the case of a nonprofit
corporation, the term means a public-benefit, mutual-benefit, or religious corporation
incorporated under [Article] 4.
(19) “Debtor in bankruptcy” means a person that is
the subject of:
(A) an order for relief under Title 11 of the
United States Code or a comparable order under a successor statute of general
application; or
(B) a comparable order under federal, state,
or foreign law governing insolvency.
(20) “Delivery” includes delivery by hand, mail,
commercial delivery, and electronic transmission, except that delivery
to the [Secretary of State] means actual receipt by the [Secretary of
State].
(21) “Distribution” means transfer of property, including
cash, from an entity to an interest holder of the entity in the recipient’s
capacity as an interest holder. The term
includes a dividend, redemption or purchase of an ownership interest, and
liquidating distribution.
(22) “Domestic”, with respect to an entity, means
governed as to its internal affairs by the law of this state.
(23) “Domesticated entity” means a domesticating entity
as it continues in existence after a domestication authorized by Section 2-501.
(24) “Domesticating entity” means a domestic entity that
approves a plan of domestication pursuant to Section 2-503 or a foreign entity
that approves a domestication pursuant to the law of its jurisdiction of
organization.
(25) “Domestication” means a transaction authorized by
Section 2-501.
(26) “Effective date”, when referring to a document filed
by the [Secretary of State], means the time and date determined in accordance
with Section 1-204.
(27) “Entity” means:
(A) a business corporation;
(B) a nonprofit corporation;
(C) a general partnership, including
a limited liability partnership;
(D) a limited partnership, including
a limited liability limited partnership;
(E) a limited liability company;
(F) a business trust;
(G) an unincorporated nonprofit
association; or
(H) any other person that has a separate
legal existence or has the power to acquire an interest in real property in its
own name other than:
(i) an individual;
(ii) a testamentary, inter vivos,
or charitable trust, with the exception of a statutory trust or similar trust;
(iii) an association or
relationship that is not a partnership solely by reason of [Section 202(c) of
the Revised Uniform Partnership Act] [Section 7 of the Uniform Partnership Act]
or a similar provision of the law of another jurisdiction;
(iv) a decedent’s estate; or
(v) a government, a governmental
subdivision, agency, or instrumentality, or a quasi-governmental
instrumentality.
(28) “Entity-law” filing means a record meeting the
requirements of Section 1-201 delivered for filing to the Secretary of State
pursuant to Section 1-202.
(29) “Filed document” means a document filed by the
[Secretary of State] pursuant to this [act], whether or not it is
effective.
(30) “Filing entity” means an entity that is created by
the filing of a public organic document.
(31) “Foreign”,
with respect to an entity, means governed as to its internal affairs by the law
of a jurisdiction other than this state.
(32) “Foreign-filing entity” means a foreign entity that
is created by filing of a public organic document.
(33) “Foreign-qualification document” means an
application for a certificate of authority or other foreign-qualification
filing with the [Secretary of State] by a foreign entity.
(34) “General partner” means a partner in a general
partnership or a general partner in a limited partnership.
(35) “General partnership” means a domestic general
partnership or foreign general partnership.
(36) “Governance interest” means the right under the
organic law or organic rules of an entity, other than as a governor, agent,
assignee, or proxy, to:
(A) receive or demand access to information
concerning, or the books and records of, the entity;
(B) vote for the election of the governors of
the entity; or
(C) receive
notice of or vote on issues involving the internal affairs of the entity.
(37) “Governor” means a person under whose authority the
powers of an entity are exercised and under whose direction the business and
affairs of the entity are managed pursuant to the organic law and organic
rules.
(38) “Interest” means:
(A) a governance interest in an
unincorporated entity;
(B) a transferable interest in an
unincorporated entity; or
(C) a share or membership in a corporation.
(39) “Interest exchange” means a transaction authorized
by Section 2-301.
(40) “Interest holder” means a direct holder of an
interest.
(41) “Interest-holder liability” means:
(A) personal liability for a liability of an
entity that is imposed on a person:
(i) solely by reason of the
status of the person as an interest holder; or
(ii) by the organic rules pursuant to a provision of the organic law
authorizing the organic rules to make one or more specified interest holders or
categories of interest holders liable in their capacity as interest holders for
all or specified liabilities of the entity; or
(B) an obligation of an interest holder under
the organic rules of an entity to contribute to the entity.
(42) “Jurisdiction” means the United States, a state, a foreign
country or other foreign governmental authority, or any agency,
instrumentality, or subdivision thereof.
(43) “Jurisdiction of organization” of an entity means
the jurisdiction whose law includes the organic law of the entity.
(44) “Liability” means a debt, an obligation, or any
other liability arising in any manner, whether or not it is secured or
contingent.
(45) “Limited liability company” means a domestic limited
liability company or foreign limited liability company.
(46) “Limited liability limited partnership” means a
domestic limited liability limited partnership or foreign limited liability
limited partnership.
(47) “Limited liability partnership” means a domestic
limited liability partnership or foreign limited liability partnership.
(48) “Limited partner” means a limited partner in a
limited partnership.
(49) “Limited partnership” means a domestic limited
partnership or foreign limited partnership.
(50) “Mail” means deposit with the United States Postal
Service, properly addressed, first-class postage prepaid or registered,
certified, express, or priority mail for which the proper fee has been paid.
(51) “Mailing address” means a street address or a post
office box number with the appropriate United States postal code.
(52) “Manager” means a person that under the operating
agreement of a manager-managed limited liability company is responsible, alone
or in concert with others, for performing the management functions stated in
Section 7-407(c).
(53) “Manager-managed limited liability company” means a
limited liability company described in Section 7-407(a).
(54) “Member” means:
(A) in the case of a limited liability
company, a person that has become a member of a limited liability company under
Section 7-401 and has not dissociated under Section 7-602;
(B) in the case of a limited cooperative
association, a patron member or investor member of the limited cooperative
association which has not dissociated as a member;
(C) in the case of a nonprofit association, a
person that, under the rules or practices of a nonprofit association, may
participate in the selection of persons authorized to manage the affairs of the
nonprofit association or in the development of policy of the nonprofit
association; or
(D) in the case of a nonprofit corporation,
without regard to how a member is defined in the articles of incorporation or
bylaws, any person that on more than one occasion, pursuant to the articles or
bylaws, is entitled to vote for the election of a director or directors, except
that the term does not include a person merely because that person has rights:
(i) as a delegate;
(ii) to designate a director or directors; or
(iii) as a director.
(55) “Member’s interest” in the case of a limited
cooperative association, means the interest of a patron member or investor
member under Section 8-501.
(56) “Members’ meeting” means an annual or special
members’ meeting.
(57) “Membership”, in the case of a nonprofit
corporation, means the rights and obligations a member or members have pursuant
to the articles and bylaws and this [act].
(58) “Merger” means a transaction in which two or more
merging entities are combined into a surviving entity pursuant to a filing with
the [Secretary of State]..
(59) “Merging entity” means an entity that is a party to
a merger and exists immediately before the merger takes place.
(60) “Noncommercial registered agent” means a person that
is not listed as a commercial registered agent under Section 1-404 and is:
(A) an
individual or a domestic or foreign entity that serves in this state as the
agent for service of process of an entity; or
(B) an
individual who holds the office or other position in an entity that is designated
as the agent for service of process pursuant to Section 1-403(a)(2)(B).
(61) “Nonfiling entity” means an unincorporated entity
that is not created by filing a public organic document.
(62) “Nonprofit association” means a domestic nonprofit
association subject to [Article] 9 or a foreign nonprofit association.
(63) “Nonprofit corporation” means a domestic nonprofit
corporation subject to [Article] 4 or a foreign nonprofit corporation.
(64) “Nonprofit entity” means a nonprofit corporation or
a nonprofit association.
(65) “Nonqualified foreign entity” means a foreign entity
that is not a qualified foreign entity.
(66) “Nonresident limited liability partnership statement”
means:
(A) a
statement of qualification of a domestic limited liability partnership that
does not have an office in this state; or
(B) a
statement of foreign qualification of a foreign limited liability partnership
that does not have an office in this state.
(67) “Operating
agreement” means the agreement, whether or not referred to as an operating
agreement, and whether oral, in a record, implied, or in any combination
thereof, of all the members of a limited liability company, including a sole
member, concerning the matters described in Section 7-110(a). The term includes the agreement as amended or
restated.
(68) “Organic law” means the statutes, if any, other than
this [Article], governing the internal affairs of an entity.
(69) “Organic rules” means the public organic document
and private organic rules of an entity.
The term includes a partnership agreement.
(70) “Partner” means a general partner or limited
partner.
(71) “Partnership” means a domestic general partnership,
foreign general partnership, domestic limited partnership, or foreign limited
partnership.
(72) “Partnership agreement” means the partnership
agreement of a domestic general partnership or a domestic limited partnership
or the functional equivalent for a foreign general partnership or a foreign
limited partnership.
(73) “Person” means an individual, corporation, estate,
trust, partnership, limited liability company, statutory trust, association,
joint venture, public corporation, government or governmental subdivision,
agency, or instrumentality, or any other legal or commercial entity.
(74) “Plan” means a plan of merger, interest exchange,
conversion, or domestication under Section 2-202.
(75) “Principal office” means the office, in or outside
this state, designated by an entity as its principal office in the document
most recently delivered by the entity to the [Secretary of State] for filing
and filed by the [Secretary of State] that contains such designation, including
any statement of change of principal office.
(76) “Private organic document” means a document, other
than the public organic document, if any, which determines the internal
governance of an unincorporated entity.
(77) “Private organic rules” means the rules, whether or
not in a record, which govern the internal affairs of an entity, are binding on
all of its interest holders, and are not part of its public organic document,
if any.
(78) “Proceeding” includes a civil suit, arbitration, or
mediation and a criminal, administrative, or investigatory action.
(79) “Protected agreement” means:
(A) a record evidencing indebtedness and any related agreement in effect on the
[effective date of this [act]];
(B) an agreement that is binding on an entity
on the [effective date of this [act]];
(C) the organic rules of an entity in effect
on the [effective date of this [act]]; or
(D) an agreement that is binding on any of
the governors or interest holders of an entity on the [effective date of this
[act]].
(80) “Public organic document” means the public record
the filing of which creates an entity and any amendment or restatement of that
record.
(81) “Qualified foreign entity” means a foreign entity
that is authorized to transact business in this state pursuant to a filing with
the [Secretary of State].
(82) “Receipt” means actual receipt. “Receive” has a
corresponding meaning.
(83) “Record” means information that is inscribed on a
tangible medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(84) “Registered agent” means a commercial registered
agent or a noncommercial registered agent required to be maintained by an
entity pursuant to [Part] 4.
(85) “Registered agent filing” means:
(A)
the public organic document of a domestic filing entity;
(B) a
nonresident limited liability partnership statement;
(C) a
foreign-qualification document; or
(D) an
appointment of a registered agent.
(86) “Represented entity” means:
(A) a
domestic filing entity;
(B) a
domestic or qualified foreign limited liability partnership that does not have
an office in this state;
(C) a
qualified foreign entity;
(D) a
domestic or foreign unincorporated nonprofit association for which an
appointment of an agent has been filed;
(E) a
domestic entity that is not a filing entity for which an appointment of an
agent has been filed; or
(F) a
nonqualified foreign entity for which an appointment of an agent has been
filed.
(87) “Sign” means, with present intent to authenticate or
adopt a record:
(A) to execute or adopt a tangible symbol; or
(B) to attach to or logically associate with
the record an electronic sound, symbol, or process.
(88) “State” means
a state of the United States,
the District of Columbia,
Puerto Rico, the United States Virgin Islands,
or any territory or insular possession subject to the jurisdiction of the United States.
(89) “Street
address” means the street name and number, city, state, and, if not the United States,
country and the postal code, if any, that is required for delivery of mail to
the location. If there is no street name
and number, city, or town, the term means an appropriate description fixing as
nearly as possible the actual physical location, including, for all locations
in the United States,
the United States
postal code and rural free delivery route, if any.
(90) “Surviving
entity” means the entity that continues in existence after or is created by a
merger authorized by Section 2-201.
(91) “Transferable
interest” means the right under an entity’s organic law to receive
distributions from the entity.
(92) “Type”, with regard to an entity, means a
generic form of entity:
(A) recognized at common law; or
(B) organized under an organic law, whether
or not some entities organized under that organic law are subject to provisions
of that law that create different categories of the form of entity.
Comment
In
general. Many of the definitions in this section were
developed for use in the Model Entity Transactions Act (META). Definitions that are common to this Act and META are:
“acquired entity”
“acquiring entity”
“approve”
“conversion”
“converted entity”
“converting entity”
“domestic” (corresponding to the META term “domestic entity”)
“entity”
“filing entity”
“foreign” (corresponding to the META term “foreign entity”)
“governance interest”
“governor”
“interest”
“interest exchange”
“interest holder”
“interest-holder liability”
“jurisdiction of organization”
“liability”
“merger”
“merging entity”
“nonqualified foreign entity”
“organic law”
“organic rules”
“person”
“plan”
“private organic rules”
“protected agreement”
“public organic document”
“qualified foreign entity”
“record”
“sign”
“surviving entity”
“transferable interest”
“type”
The comments below with respect to defined
terms taken from META are substantively the
same as the corresponding comments in META.
Other
definitions in this Act were developed for use in the Model Registered Agents
Act (MRRA). Definitions that are common
to this Act and to MRAA (in addition to those found in META
as well) are:
“appointment
of agent”
“commercial
registered agent”
“foreign-qualification
document”
“noncommercial
registered agent”
“nonresident
limited liability partnership statement”
“registered
agent”
“registered
agent filing”
“Appointment
of agent.” [(4)] – An
appointment of agent is an optional filing that may be made by an entity that
does not otherwise make a public filing in the state naming an agent for
service of process. If a state has not
enacted the Uniform Unincorporated Nonprofit Association Act, paragraph (A) of
this definition should be omitted.
“Commercial
registered agent.” [(12)] – A
commercial registered agent is an individual or entity that is in the business
of serving as a registered agent in the state and that files a listing
statement under Section 1-404. Being
listed as a commercial registered agent is voluntary and persons serving as
registered agents are not required to be listed under Section 1-404. The benefits to the registered agent of being
listed under Section 1-404, however, are substantial and most registered agents
will elect to be so listed. Although
this definition and Section 1-404 do not expressly require that a foreign
entity that is listed as a commercial registered agent be qualified to do
business in the state, the activity of serving as a registered agent is one
that requires such registration.
“Domestic.”
[(22]) – The term
“domestic”, with respect to an entity, means in this Act an entity whose
internal affairs are governed by the organic laws of the adopting state. Except in the case of general partnerships
and unincorporated nonprofit associations, this will mean an entity that is
formed, organized, or incorporated under domestic law. In the case of a general partnership
organized under the Uniform Partnership Act (1997) (RUPA), it will mean a
general partnership whose governing law under RUPA § 106 is the law of the
adopting state. Under RUPA § 106 the
governing law is determined by the location of the partnership’s chief
executive office, except for limited liability partnerships where the governing
law is the state where the statement of qualification is filed. It is a factual question whether the
activities and organization of an unincorporated nonprofit association make it
a domestic or foreign entity.
This definition is patterned after Model
Entity Transactions Act § 102(8) (“domestic entity”), a term which is also
defined in Model Registered Agents Act § 2(3).
“Entity.” [(27)] – This definition determines the overall scope
of the Act.
This definition is
intended to include all forms of private organizations, regardless of whether
organized for profit, and artificial legal persons other than those excluded by
paragraphs (H)(i)-(v). Thus, this
definition is broader than the definition of “business entity” in, e.g., Code
of Ala. § 10-15-2(2)
which does not include nonprofit entities.
This definition does not exclude regulated entities such as public
utilities, banks and insurance companies.
Inter vivos and
testamentary trusts are treated in many states as having a separate legal
existence, but they have been excluded from the definition of “entity.” Trusts that carry on a business, however,
such as a Massachusetts
trust, real estate investment trust, Illinois
land trust, or other common law or statutory business trusts are “entities.”
Section 4 of the
Uniform Unincorporated Nonprofit Association Act gives an unincorporated
nonprofit association the power to acquire an estate in real property and thus
an unincorporated nonprofit association organized in a state that has adopted
that act will be an “entity.” At common
law, an unincorporated nonprofit association was not a legal entity and did not
have the power to acquire real property.
Most states that have not adopted the Uniform Act have nonetheless
modified the common law rule, but states that have not adopted the Uniform Act
should analyze whether they should modify the definition of “entity” to add an
express reference to unincorporated nonprofit associations.
There is some
question as to whether a partnership subject to the Uniform Partnership Act
(1914) (UPA) is an entity or merely an aggregation of its partners. That question has been resolved by Section
201 of the Uniform Partnership Act (1997) (RUPA), which makes clear that a
general partnership is an entity with its own separate legal existence. Section 8 of UPA gives partnerships subject
to it the power to acquire estates in real property and thus such a partnership
will be an “entity.” As a result, all general
partnerships will be “entities” regardless of whether the state in which they
are organized has adopted RUPA.
Paragraph (H)(i) of
this definition excludes a sole proprietorship from the concept of “entity.”
Paragraph (H)(iii)
of this definition excludes from the concept of an “entity” any form of
co-ownership of property or sharing of returns from property that is not a
partnership under RUPA § 202(c) or UPA § 7.
In that connection, Section 202(c) of RUPA provides in part:
In determining whether
a partnership is formed, the following rules apply:
(1) Joint
tenancy, tenancy in common, tenancy by the entireties, joint property, common
property, or part ownership does not by itself establish a partnership, even if
the co-owners share profits made by the use of the property.
(2) The sharing
of gross returns does not by itself establish a partnership, even if the
persons sharing them have a joint or common right or interest in property from
which the returns are derived.
A virtually
identical provision appears in UPA §
7(3)-(4).
Limited liability partnerships and limited
liability limited partnerships are “entities” because they are general
partnerships and limited partnerships, respectively, that have made the
additional required election claiming LLP or LLLP status. A limited liability partnership is not,
therefore, a separate type of entity from the underlying general or limited
partnership that has elected limited liability partnership status.
This definition is patterned after Model
Entity Transactions Act § 102(12) (“entity”).
The same definition appears in the Model Registered Agents Act § 2(4).
“Filing entity.” [(30)] –
Whether an entity is a filing entity is determined by reference to whether its
legal existence is attributable to the filing of a document with the state
filing officer. While the statute refers
to an entity that is “created,” it is intended to encompass corporations which
are “incorporated,” limited liability companies which are “organized,” and
limited partnerships which are “formed” by a filing required by the organic law
governing the entity. Business trusts
(sometimes referred to as “statutory trusts”) present a special problem. In some states, for example, a business trust
is a filing entity, while in other states business trusts are recognized only
by common law.
The term does not
include a limited liability partnership because an election filed by a general
partnership claiming that status (e.g., a statement of qualification
under Uniform Partnership Act (1997), § 1001) does not create the entity. A limited liability limited partnership, on
the other hand, is a filing entity because the underlying limited partnership
is created by filing a certificate of limited partnership.
This definition is patterned after Model
Entity Transactions Act § 102(13) (“filing entity”). The same definition appears in Model
Registered Agents Act § 2(5). See also
Model Business Corporation Act § 1.40(9B) (“filing entity”).
“Foreign.” [(31)] – The term
“foreign”, with respect to an entity, includes any non-domestic entity of any
type. Where a foreign entity is a filing
entity, the entity is governed by the laws of the state of filing. A nonfiling foreign entity is governed by the
laws of the state governing its internal affairs. It is a factual question whether a general
partnership whose internal affairs are governed by the Uniform Partnership Act
(1914) (UPA) is a domestic or foreign partnership. A UPA partnership will likely be deemed to be
a domestic entity where the greatest nexus of contacts are found. Similar issues arise with respect to
determining the domestic or foreign status of unincorporated nonprofit
associations. The domestic or foreign
characterization of partnerships under the Uniform Partnership Act (1997)
(RUPA) that have not registered as limited liability partnerships will be
governed by RUPA § 106(a) (“state where the partnership’s chief executive
office is located”).
This definition is patterned after Model
Entity Transactions Act § 102(14) (“foreign entity”). The same definition is found in Model
Registered Agents Act § 2(6).
“Foreign-qualification
document.” [(33)] – This definition should be construed broadly
to include filings in the state that are required when a foreign entity is
conducting activities in the state, regardless of whether the process is
referred to as “obtaining a certificate of authority to do business,”
“qualifying to do business,” “being authorized to transact business,” or some
other formulation.
“Governance
interest.” [(36)] – A governance interest is typically only part of the interest that a
person will hold in an entity and is usually coupled with a transferable
interest (or economic rights). However,
memberships in some nonprofit corporations and unincorporated nonprofit
associations consist solely of governance interests and memberships in other
nonprofit entities may not include either governance interests or transferable
interests. In some unincorporated
business entities, there is a more limited right to transfer governance
interests than there is to transfer transferable interests. An interest holder in such an unincorporated
business entity who transfers only a transferable interest and retains the
governance interest will also retain the status of an interest holder. Whether a transferee who acquires only a
transferable interest will acquire the status of an interest holder is
determined by the definition of “interest holder.”
Shares in a
business corporation that are nonvoting nonetheless have a governance interest
because they entitle the holder to certain rights of access to information and
to certain statutory voting rights on amendments of the articles of
incorporation.
Governors of an
entity have the kinds of rights listed in the definition of “governance
interest” by reason of their position with the entity. For a governor to have a “governance
interest,” however, requires that the governor also have those rights for a
reason other than the governor’s status as such. A manager who is not a member in a limited
liability company, for example, will not have a governance interest, but a manager
who is a member will have a governance interest arising from the ownership of a
membership interest.
This definition is patterned after Model
Entity Transactions Act § 102(15) and Model Registered Agents Act § 2(8)
(“governance interest”).
“Governor.” [(37)] – This term has been chosen to provide a way
of referring to a person who has the authority under an entity’s organic law to
make management decisions regarding the entity that is different from any of
the existing terms used in connection with particular types of entities. Compare Colo. § 7-90-102(35.7) which
uses the term “manager” to refer to this concept, even though “manager” is also
a term of art in connection with limited liability companies. Depending on the type of entity or its organic
rules, the governors of an entity may have the power to act on their own
authority, or they may be organized as a board or similar group and only have
the power to act collectively, and then only through a designated agent. In other words, a person having only the
power to bind the organization pursuant to the instruction of the governors is
not a governor. Under the organic rules,
particularly those of unincorporated entities, most or all of the management
decisions may be reserved to the members or partners. Thus, if a manager of a limited liability
company were limited to having authority to execute management decisions made
by the members and did not have any authority to make independent management
decisions, the manager would not be a governor under this definition.
Except as described
above, the term “governor” includes:
·
Director
of a business corporation.
·
Director
or trustee of a nonprofit corporation.
·
General
partner of a general partnership.
·
General
partner of a limited partnership.
·
Manager
of a limited liability company.
·
Member
of a member-managed limited liability company.
·
Trustee
of a business or statutory trust.
This definition is patterned after Model
Entity Transactions Act § 102(16) and Model Registered Agents Act § 2(9)
(“governor”).
“Interest.”
[(38)] – In the usual case, the interest held by an interest holder will
include both a governance interest and a transferable interest (or economic
rights). Members in many nonprofit
corporations or unincorporated nonprofit associations do not have a
transferable interest because they do not receive distributions, but they
nonetheless may hold a governance interest in which case they would have the
status of interest holders under the Act.
An interest holder in an unincorporated business entity may transfer all
or part of the interest holder’s transferable interest without the transferee
acquiring the governance interest of the transferor. In that case, whether the transferor will
retain the status of an interest holder will be determined by the applicable
organic law and the transferee will have the status of an interest holder under
paragraph (B) of this definition. That
paragraph will also apply to subsequent transferees from the original
transferee.
The term “interest”
includes:
·
Beneficial
interest in a business or statutory trust.
·
Membership
in a nonprofit corporation.
·
Membership
in an unincorporated nonprofit association.
·
Membership
interest in a limited liability company.
·
Partnership
interest in a general partnership.
·
Partnership
interest in a limited partnership.
·
Shares
in a business corporation.
This definition is patterned after Model
Entity Transactions Act § 102(17) and Model Registered Agents Act § 2(10)
(“interest”).
“Interest holder.” [(40)] – This Act does not refer to
“equity” interests or “equity” owners or holders because the term “equity”
could be confusing in the case of a nonprofit entity whose members do not have
an interest in the assets or results of operations of the entity but only have
a right to vote on its internal affairs.
Compare Code of Ala.
§ 10-15-2(4)
(“equity owner”).
The term “interest
holder” includes:
·
Beneficiary
of a business or statutory trust.
·
General
partner of a general partnership.
·
General
partner of a limited partnership.
·
Limited
partner of a limited partnership.
·
Member
of a limited liability company.
·
Member
of a nonprofit corporation.
·
Member
of an unincorporated nonprofit association.
·
Shareholder
of a business corporation.
This definition is patterned after Model
Entity Transactions Act § 102(19) (“interest holder”). See also Model Business Corporation Act §
1.40(13B) (“interest holder”).
“Jurisdiction
of organization.” [(43)] – The
term “jurisdiction of organization” refers to the jurisdiction whose laws
include the organic law of the entity.
This definition is patterned after Model
Entity Transactions Act § 102(21) and Model Registered Agents Act § 2(12)
(“jurisdiction of organization”).
“Noncommercial
registered agent.” [(60)] – A noncommercial registered agent is a
person that serves as an agent for service of process but that is not listed
under Section 1-404. All agents for
service of process that are not commercial registered agents are noncommercial
registered agents.
This definition is patterned after Model
Registered Agents Act § 2(13) (“noncommercial registered agent”).
“Nonqualified
foreign entity.” [(65)] – A nonqualified foreign entity is a foreign
entity for which there is no foreign-qualification document in effect in the
adopting state.
This definition is patterned after Model
Entity Transactions Act § 102(26) “nonqualified foreign entity”). See also Model Registered Agents Act § 2(14)
(“nonqualified foreign entity”).
“Nonresident
limited liability partnership statement.” [(66)] – A nonresident limited liability partnership statement
is the filing that is made by a limited liability partnership under Section
1001 of the Uniform Partnership Act (1997).
This definition is patterned after Model
Registered Agents Act § 2(15) (“nonresident limited liability partnership statement”).
“Organic law.”
[(68)] – Organic law means statutes other than this Article that govern the
internal affairs of an entity. Organic law includes the entity specific
articles of this Act, but does not include Article 2 based on the Model
Business Entity Transaction Act. Entity
laws in a few states purport to require that some of their internal governance
rules applicable to a domestic entity also apply to a foreign entity with
significant ties to the state. See,
e.g., Cal. Gen. Corp. Law § 2115, N.Y. N-PCL §§ 1318-1321, 15 Pa.C.S. §
6145. Such a “sticky fingers” law is
included within the definition of “organic law” for purposes of the Act.
This definition is patterned after Model
Entity Transactions Act § 102(27) and Model Registered Agents Act § 2(16)
(“organic law”). See also Model Business
Corporation Act § 1.40(15B) (“organic law”).
“Organic rules.”
[(69)] – The term “organic rules” means an entity’s public organic document and
its private organic rules.
This definition is patterned after Model
Entity Transactions Act § 102(28) and Model Registered Agents Act § 2(17)
(“organic rules”).
“Person.”
[(73)] – The term “person”
has the standard meaning of that term in uniform acts.
“Private organic
rules.” [(77)] – The term private
“organic rules” is intended to include all governing rules of an entity that
are binding on all of its interest holders, whether or not in written form,
except for the provisions of the entity’s public organic document, if any. The term is intended to include agreements in
“record” form as well as oral partnership agreements and oral operating
agreements among LLC members. Where
private organic rules have been amended or restated, the term means the private
organic rules as last amended or restated.
The term “private organic
rules” includes:
·
Bylaws
of a business corporation.
·
Bylaws
of a business or statutory trust.
·
Bylaws
of a nonprofit corporation.
·
Constitution
and bylaws of an unincorporated nonprofit association.
·
Operating
agreement of a limited liability company.
·
Partnership
agreement of a general partnership.
·
Partnership
agreement of a limited partnership.
This definition is patterned after Model
Entity Transactions Act § 102(31) and Model Registered Agents Act § 2(19)
(“private organic rules”). Compare Model
Business Corporation Act § 1.40(17A) (“private organic document”).
“Public organic document.” [(80)] –
A “public organic document” is a document that is filed of public record to
form, organize, incorporate, or otherwise create an entity. The term does not include a statement of
partnership authority filed under Section 303 of the Uniform Partnership Act
(1997) or any of the other statements that may be filed under that act since
those statements do not create a new entity.
A limited liability partnership is the same entity as the partnership
that files the statement. For the same
reason, the term also does not include a statement of qualification filed under
Section 1001 of that act to become a limited liability partnership. Similarly, the term does not include a
statement of authority filed under Section 5 of the Uniform Unincorporated
Nonprofit Association Act or a statement appointing an agent filed under
Section 10 of that act. Where a public
organic document has been amended or restated, the term means the public
organic document as last amended or restated.
The term “public
organic document” includes:
·
Articles
of incorporation of a business corporation.
·
Articles
of incorporation of a nonprofit corporation.
·
Certificate
of limited partnership.
·
Certificate
of organization of a limited liability company.
·
In those states where a deed of
trust or other instrument is publicly filed to create a business trust, that
filing will constitute a public organic document. But in those states where a business trust is
not created by a public filing, the deed of trust or similar document will be
part of the private organic rules of the business trust.
This definition is patterned after Model
Entity Transactions Act § 102(33) and Model Registered Agents Act § 2(20) (“public
organic document”).
“Qualified
foreign entity.” [(81)] – A qualified foreign entity is a foreign entity for which there is a
foreign-qualification document in effect in the adopting state.
This definition is patterned after Model
Entity Transactions Act § 102(34) and Model Registered Agents Act § 2(21)
(“qualified foreign entity”).
“Record.”
[(83)] – The term “record”
has the standard meaning of that term in uniform acts.
“Registered
agent.” [(84)] – This term
is used in the Act to refer to agents for service of process in contexts where
it is not necessary to differentiate between commercial registered agents and
noncommercial registered agents.
The definition is patterned after Model
Registered Agents Act § 2(23).
“Registered
agent filing.” [(85)] – Some states require that filings in addition
to those listed in this definition, such as articles of amendment or articles
of merger, state the registered agent information of the entity making the
filing. In states where that is the
case, this definition should be amended to add the following additional
provision:
“(E) any other filing with the [Secretary of
State] under an entity’s organic law that must include the information required
by Section 1-404(a).”
“Represented
entity.” [(86)] – This definition
lists the various classes of entities for which registered agents act as agents
for service of process.
“Sign.”
[(87)] – The term “sign” has
the standard meaning of that term in uniform acts.
“Transferable interest.” [(91)] – The term “transferable interest” is taken
from Section 102(22) of the Uniform Limited Partnership Act (2001).
This definition is patterned after Model
Entity Transactions Act § 102(38) (“transferable interest”).
“Type.” [(92)] – The term “type” has been developed in an
attempt to distinguish different legal forms of entities. It is sometimes difficult to decide whether
one is dealing with a different form of entity or a variation of the same
form. For example, a limited
partnership, although it has been defined as a partnership, is a different type
of entity from a general partnership, while a limited liability partnership is
not a different type of entity from a general partnership. In some states cooperative corporations are categories
of business corporations or nonprofit corporations, while in other states
cooperatives are a separate type of entity.
This definition is patterned after Model
Entity Transactions Act § 102(39) (“type”).
SECTION
1-201. ENTITY-LAW FILING REQUIREMENTS.
(a) To be filed by the [Secretary of State] pursuant to
this [act], an entity-law filing must be delivered to the office of the
[Secretary of State] for filing and must satisfy the following requirements and
the requirements of other provisions of this [act] which add to or vary these
requirements:
(1) The entity-law filing in the office of
the [Secretary of State] must be required or permitted by this [act].
(2) The entity-law filing must be in a
record.
(3) The entity-law filing must be in English,
but the name of the entity need not be in English if written in English letters
or Arabic or Roman numerals.
(4) The entity-law filing must state the name
and capacity of the individual who signed it but need not contain a corporate
seal, attestation, acknowledgment, or verification.
(b) When an entity-law filing is delivered to the office
of the [Secretary of State] for filing, the correct filing fee and any
franchise tax, license fee, or penalty required to be paid under this [act] or
law other than this [act] must be paid in a manner permitted by the [Secretary
of State].
Comment
The documents filed
under this Act are referred to as “entity-law filings” in order to
differentiate them from filings under corporation laws, which are typically
referred to as “articles,” and from filings under partnership and other
unincorporated entity laws, which are typically referred to as “certificates.”
The provisions of this
Part are derived from Appendix A-1 of META. The comments are adapted from comments to the
sections of META Appendix A-1.
1. Form of documents.
A document may be
filed in typewritten or printed form through physical delivery to the Secretary
of State or by electronic transmission. Electronic transmission includes the
evolving methods of electronic delivery, including facsimile transmissions,
electronic transmissions between computers via modems and filings through
delivery of magnetic tapes or computer diskettes, all as may be permitted by
the Secretary of State. To be eligible for filing, a document must be typed or
printed or electronically transmitted in a format that can be retrieved or
reproduced in typewritten or printed form and in the English language (except
to the limited extent permitted by subsection (a)(4)). The Secretary of State
is not authorized to prescribe forms (except to the extent permitted by Section
1-203) and as a result may not reject documents on the basis of form (see
Section 1-206) if they contain the information called for by the specific
statutory requirement and meet the minimal formal requirements of this section.
2. Signature.
To be filed a document
must be signed by the appropriate person. No specific officer is designated as
the appropriate person to sign in the case of a corporation. Similarly, an
unincorporated entity is given the authority to designate the person to sign on
its behalf. See Section 1-102 for a description of the manner in which a
document may be “signed.”
The requirement in
some state statutes that documents must be acknowledged or verified as a
condition for filing has been eliminated. These requirements serve little
purpose in connection with documents filed under organic laws. On the other
hand, many organizations, like lenders or title companies, may desire that
specific documents include acknowledgements,
verifications, or seals; subsection (a)(4) therefore provides that the
addition of these forms of execution does not affect the eligibility of the
document for filing.
3. Contents.
A document must be
filed by the Secretary of State if it contains the information required by this
Act. The document may contain additional information or statements and their
presence is not ground for the Secretary of State to reject the document for
filing. These documents must be accepted for filing even though the Secretary
of State believes that the language is illegal or unenforceable. In view of
this very limited discretion granted to Secretaries of State under this
section, Section 1-206(d) defines
the Secretary of State’s role as “ministerial” and provides that no inference
or presumption arises from the fact that the Secretary of State accepted a
document for filing. See the Comments to Sections 1-206 and 1-208.
SECTION
1-202. DELIVERY OF ENTITY-LAW FILINGS TO
[SECRETARY OF STATE]. Delivery of an
entity-law filing to the [Secretary of State] may be made by electronic
transmission if and to the extent permitted by the [Secretary of State]. If an entity-law filing is delivered for
filing in written form and not transmitted electronically, the [Secretary of
State] may require one exact or conformed copy to be delivered with the
entity-law filing.
Comment
Number of copies.
The Secretary of
State is permitted to require an exact or conformed copy if the document is
being filed in typewritten or printed form, providing the secretary of state
flexibility to determine whether or not such copies serve any purpose. There is
no such requirement with respect to documents transmitted electronically.
SECTION
1-203. FORMS. The [Secretary of State] may prescribe and
furnish on request forms for entity-law filings required or permitted to be
filed by this [act], but their use is not required.
Comment
As described in the
Comments to Section 1-201, documents are entitled to filing if they meet the
substantive and formal requirements of this Act; they may also contain
additional information if the person submitting the document so elects. In
these circumstances it is not appropriate to vest the Secretary of State with
general authority to establish mandatory forms for use under the Act. This
section authorizes (but does not require) the Secretary of State to prepare
forms suitable for filing under the Act. However, the use of these forms is permissive
and cannot be required by the Secretary of State.
SECTION
1-204. EFFECTIVE TIME AND DATE. Except as otherwise provided in Section
1-205, an entity-law filing accepted for filing is effective:
(1) on the date and at the time of delivery of the
entity-law filing to the [Secretary of State].
(2) on the date of filing at the time specified in the
entity-law filing as its effective time, if later than the effective time for
filing under paragraph (1);
(3) at a specified delayed effective time and date not
more than 90 days after the date of filing, if permitted by this [act]; or
(4) if a delayed effective date as permitted by this
[act] is specified, but no time is specified, at 11:59
p.m. on the date specified.
Comment
Documents accepted for
filing become effective at the date and time of filing, or at another specified
time on that date, unless a delayed effective date is selected. This section
gives express statutory authority to the common practice of most Secretaries of
State of ignoring processing time and treating a document as effective as of
the date it is submitted for filing even though it may not be reviewed and
accepted for filing until several days later.
This section requires
Secretaries of State to maintain some means of recording the date and time of
filing of documents and provides that documents become effective at the
recorded time on the date of filing. This provision should eliminate any doubt
about situations involving same-day transactions in which a document, for
example, a statement of merger, is filed on the morning of the date the merger
is to become effective. This section contemplates that the time of filing, as
well as the date, will be routinely recorded.
Paragraph (3) does not
authorize or contemplate the retroactive establishment of an effective date
before the date of filing.
SECTION
1-205. CORRECTING FILING.
(a) A domestic or foreign entity, or if this [act]
permits an entity-law filing to be delivered for filing by another person, that
person, may correct an entity-law filing filed by the [Secretary of State] if:
(1) the entity-law filing contains an
inaccuracy;
(2) the entity-law filing was defectively
signed; or
(3) the electronic transmission of the
entity-law filing to the [Secretary of State] was defective.
(b) An entity-law filing is corrected by filing with the
[Secretary of State] a statement of correction that:
(1) describes the entity-law filing to be
corrected and states its filing date or has attached a copy of the entity-law
filing;
(2) specifies the inaccuracy or defect to be
corrected; and
(3) corrects the inaccuracy or defect.
(c) A statement of correction is effective on the
effective date of the entity-law filing it corrects except as to persons relying
on the uncorrected document and adversely affected by the correction. As to
those persons, a statement of correction is effective when filed.
Comment
This section permits
making corrections in filed documents without refiling the entire document. Under
subsection (c), the correction relates back to the original effective date of
the document being corrected, except as to persons relying on the original
document and adversely affected by the correction. As to these persons, the
effective date of the statement of correction is the date the statement is
filed.
A document may be
corrected either because it contains an inaccuracy or because it was
defectively executed (including defects in optional forms of execution that do
not affect the eligibility of the original document for filing). In addition,
the document may be corrected if its electronic transmission was defective.
This is intended to cover the situation where an electronic filing is made but,
due to a defect in transmission, the filed document is later discovered to be
inconsistent with the document intended to be filed. If no filing is made
because of a defect in transmission, a statement of correction may not be used
to make a retroactive filing. Therefore, an entity making an electronic filing
should take steps to confirm that the filing was received by the Secretary of
State.
A provision in a
document setting an effective date may be corrected under this section, but the
corrected effective date must comply with the requirements of this Act limiting
delayed effective dates to within 90 days after filing. A corrected effective
date is thus measured from the date of the original filing of the document
being corrected, i.e., it cannot be before the date of filing of the document
or more than 90 day thereafter.
SECTION
1-206. DUTY OF [SECRETARY OF STATE] TO
FILE.
(a) The [Secretary
of State] shall file an entity-law filing delivered to the [Secretary of State]
for filing which satisfies the requirements of Section 1-201.
(b) The [Secretary of State] files an entity-law filing
by recording it as filed on the date and at the time of its delivery. After
filing an entity-law filing, the [Secretary of State] shall deliver to the
domestic or foreign entity or its representative a copy of the entity-law
filing with an acknowledgement of the date and time of filing.
(c) If the [Secretary of State] refuses to file an
entity-law filing, the [Secretary of State] shall return the entity-law filing
to the domestic or foreign entity or its representative not later than five
days after the entity-law filing is
delivered, together with a brief
explanation in a record of the reason for the refusal.
(d) The duty of the [Secretary of State] to file
entity-law filings under this section is ministerial. The filing of or refusal to file an
entity-law filing does not:
(1) affect the validity or invalidity of the
entity-law filing in whole or in part;
(2) relate to the correctness or
incorrectness of information contained in the entity-law filing; or
(3) create a presumption that the entity-law
filing is valid or invalid or that information contained in the entity-law
filing is correct or incorrect.
Comment
1. Filing duty in general.
Under this section the
Secretary of State is required to file a document if it “satisfies the
requirements of Section 1-201.” The purpose of this language is to limit the
discretion of the Secretary of State to a ministerial role in reviewing the
contents of documents. If the document submitted is in the form prescribed and
contains the information required by Section 1-201 and the applicable provision
of this Act, the Secretary of State must file it even though it contains
additional provisions the Secretary of State may feel are irrelevant or not
authorized by the Act or by general legal principles. Consistently with this
approach, subsection (d) states that the filing duty of the Secretary of State
is ministerial and provides that filing a document with the Secretary of State
does not affect the validity or invalidity of any provision contained in the
document and does not create any presumption with respect to any provision.
Persons adversely affected by provisions in a document may test their validity
in a proceeding appropriate for that purpose. Similarly, the attorney general
of the state may also question the validity of provisions of documents filed
with the Secretary of State in an independent suit brought for that purpose; in
neither case should any presumption or interference be drawn about the validity
of the provision from the fact that the Secretary of State accepted the
document for filing.
2. Mechanics of filing.
Subsection (b)
provides that when the Secretary of State files a document, the Secretary of
State records it as filed on the date and time of receipt, retains the original
document for the state’s records, and delivers a copy of the document to the
entity or its representative with an acknowledgement of the date and time of
filing. In the case of a document transmitted electronically, delivery may be
made by electronic transmission. The copy returned will be the exact or
conformed copy if one has been required by the Secretary of State, or will be a
copy made by the Secretary of State if an exact of conformed copy was not
required. Of course, a person desiring a certified copy of any filed document
may obtain it from the office of the Secretary of State by paying the fee
prescribed in Section 1-210(b).
3. Elimination of certificates and similar documents.
Subsection (b)
provides that acceptance of a filing is evidenced merely by the issuance of a
fee receipt or acknowledgement of receipt if no fee is required. The Act does
not provide for the Secretary of State to issue a formal certificate of filing.
A single document – the fee receipt or acknowledgement – should sufficiently
indicate that the document has been accepted for filing.
4. Rejection of document by Secretary of State.
Because of the
simplification of formal filing requirements and the limited discretion granted
to the Secretary of State by this Act, it is probable that rejection of
documents for filing will occur only rarely. Subsection (c) provides that if
the Secretary of State does reject a document for filing, the Secretary of
State must return it to the entity or its representative within five days
together with a brief written explanation of the reason for rejection. In the
case of a document transmitted electronically, rejection of the document may be
made electronically by the Secretary of State or by a mailing to the entity.
SECTION
1-207. PENALTY FOR FALSE OR MISLEADING
STATEMENT. An
individual who signs an entity-law filing the individual knows is false or
misleading in any material respect with intent that the entity-law filing be
delivered to the [Secretary of State] for filing commits a [insert appropriate
class of misdemeanor] misdemeanor.
Comment
This section makes it
a criminal offense for any person to sign a document that he knows is false in
any material respect with intent that the document be submitted for filing to
the secretary of state. As provided in Section 1-102, “sign” includes any
manual, facsimile, conformed or electronic signature.
SECTION
1-208. POWERS OF [SECRETARY OF STATE]. The [Secretary of State] has the power
reasonably necessary to perform the duties required by this [act].
Comment
This section is
intended to grant the Secretary of State the authority necessary for the
efficient performance of the filing and other duties imposed by the Act, but is
not intended to provide general authority to establish public policy. The most
important aspects of modern organic laws relate to the creation and maintenance
of relationships among persons interested in or involved with an entity; these
relationships basically should be a matter of concern to the parties involved
and not subject to regulation or interpretation by the Secretary of State.
SECTION
1-209. DELIVERY BY [SECRETARY OF STATE]. The [Secretary of State] may deliver any
record to any person by delivering or mailing it to the address of the person’s
registered agent, to the principal office address of the person, or to another
address that the person provided the [Secretary of State] for delivery, unless
otherwise specified in Section 3-14.21, 4-14.21, or 7-810 or by an organic law
other than this [act].
[SECTION
1-210. FEES.
Alternative A
(a) The [Secretary of State] shall collect the following
fees for copying and certifying the copy of any entity-law filing filed under
this [act]:
(1) $____ per page for copying; and
(2) $____ for the certificate.
(b) The [Secretary of State] shall collect the following
fees when the entity-law filings described are delivered for filing:
(1) Statement of merger
...................................................... $____
(2) Statement of abandonment of
merger............................ $____
(3) Statement of interest
exchange....................................... $____
(4) Statement of abandonment of interest
exchange…........ $____
(5) Statement of conversion ................................................
$____
(6) Statement of abandonment of
conversion….................. $____
(7) Statement of domestication
........................................... $____
(8) Statement of abandonment of
domestication................. $____]
Alternative B
The [Secretary of State] shall promulgate rules, in
accordance with the [state’s administrative procedure act] setting fees for
statements for entity-law filings authorized to be delivered for filing in the
office of the [Secretary of State] under this [act].
End of Alternatives
Legislative Note:
States
that combine fees in centralized statutes should add these fees to that
statute. States that normally establish
fees of this kind by administrative rule may want to select Alternative B.
Comment
This section
establishes the filing fees for all documents that may be filed under the Act.
The dollar amounts for each document should be inserted by each state as it
adopts the Act.
Subsection (b)
establishes standard fees for copying filed documents and certifying that the
copies are true copies. The dollar amounts for these services should be
conformed to the fees charged for similar services under other provisions of
law.
SECTION
1-301. PROHIBITED NAME.
(a) Except as otherwise provided in subsection (b), a
domestic filing entity may not have a name, and a foreign-filing entity may not
register to transact business in this state under a name, that is not
distinguishable on the records of the [Secretary of State] from:
(1) the name of another existing filing
entity or limited liability partnership;
(2) the name of a foreign-filing entity or
foreign limited liability partnership that is registered under [Part] 5;
(3) a name that is reserved under Section
1-302;
(4) a name that is registered under Section
1-303; or
(5) an assumed name registered under [state’s
assumed name statute].
(b) Subsection (a) does not apply if the other entity or
the person for which the name is reserved or registered, as appropriate,
consents in a record to the use of the name and submits an undertaking in a
form satisfactory to the [Secretary of State] to change its name to a name that
is distinguishable on the records of the [Secretary of State] from the name for
which the application was made.
(c) In determining whether a name is the same as or not
distinguishable on the records of the [Secretary of State] from the name of
another entity, words, phrases, or abbreviations indicating the type of entity,
such as “corporation”, “corp.”, “incorporated”, “Inc.”, “limited partnership”,
“limited liability partnership”, “LLP”, “registered limited liability
partnership”, “RLLP”, “limited liability company”, or “LLC” may not be taken into account unless waived
by the holder of the name.
SECTION
1-302. RESERVATION OF NAME.
(a) A person may reserve the exclusive use of an entity
name, including a fictitious name for a foreign entity whose corporate name is
not available, by delivering an application to the [Secretary of State] for
filing. The application must set forth the name and address of the applicant
and the name proposed to be reserved. If
the [Secretary of State] finds that the entity name applied for is available, the
[Secretary of State] shall reserve the name for the applicant’s exclusive use
for a 120-day period.
(b) The owner of a reserved entity name may transfer the
reservation to another person by delivering to the [Secretary of State] a
signed notice in a record of the transfer that states the name and
address of the transferee.
Comment
This section is patterned on Model Business Corporation
Act section 4.02. It should be noted that the Texas Business Organizations
Code, section 5.105, unlike the Model Business Corporation Act provision,
allows renewal of reservation of names for successive 120 day periods, by
filing an application for renewal during the 30 day period preceding expiration
of the reservation.
SECTION
1-303. REGISTRATION OF NAME. A foreign-filing entity or foreign limited
liability partnership not registered to
do business in this state under [[Part]
5 may register its name, or its name with any addition required by Section
1-505, if the name is distinguishable upon the records of the [Secretary of
State] from the names that are not
available under Section 1-301.
SECTION
1-304. APPLICATION FOR REGISTRATION OF
NAME.
(a) A foreign-filing entity applies to register its name,
or its name with any addition required by Section 1-505, by delivering to the
[Secretary of State] for filing an application setting forth its name, or its
name with any addition required by Section 1-505, certifying that the entity
exists and stating the state or country and date of its formation. The name is
registered for the applicant’s exclusive use upon the effective date of the
application.
(b) If the
[Secretary of State] finds that the name applied for is available, the
[Secretary of State] shall register the name for the applicant’s
exclusive use.
SECTION
1-305. DURATION OF REGISTRATION OF NAME. The registration of a name under this [act]
is effective for one year from the last day of the month in which the
application was filed.
SECTION
1-306. RENEWAL OF REGISTRATION. A foreign entity whose registration is
effective may renew the registration for
successive one-year periods by delivering, not later than three months
preceding the expiration of the registration year, to the [Secretary of State]
for filing a renewal application that complies with the requirements of Section 1-304. When filed, the renewal application renews
the registration for a succeeding one-year period.
SECTION
1-307. QUALIFICATION AS FOREIGN ENTITY
OR CONSENT TO USE OF REGISTERED NAME. A foreign entity whose registration is
effective may qualify as a foreign-filing entity under the registered name or
consent in a record to the use of that name by a domestic filing entity formed
under this [act] or by another
foreign-filing entity authorized to transact business in this state.
SECTION
1-401. ENTITIES REQUIRED TO DESIGNATE
AND MAINTAIN REGISTERED AGENT AND REGISTERED OFFICE. Each domestic filing entity, foreign-filing
entity qualified to do business in this state pursuant to [Part] 5, and foreign
registered limited liability partnership qualified to transact business in this
state pursuant to [Part] 5 and any domestic registered limited liability
partnership that does not maintain a place of business in this state shall
designate and continuously maintain in this state:
(1) a registered agent; and
(2) a registered office.
Legislative Note: States adopting this section
should delete parallel provisions in their entity specific laws.
Comment
This section is derived from Texas Business Organizations
Code Section 5.201(a). A similar
provision appears in the Draft Alabama Business and Nonprofit Entity Code as
Section 10A-1-5.31. The Model
Registered Agents Act, from which this [Part] of this Act is largely drawn,
does not contain a provision mandating which entities must designate a
registered agent and registered office, leaving that to the specific entity
statutes. The Texas statute and the Alabama Draft attempt
to do that in the “Hub”. This would
ultimately entail deletions in the respective entity statutes.
Like the Texas
statute, this section covers domestic and qualified foreign filing
entities. It also covers, as does the
Alabama Draft, registered limited liability partnerships in the circumstances
in which RLLPs are required to maintain an
agent for service of process under Uniform Partnership Act (2001)
Section 1001 (c)(3) (domestic RLLP) or Section 1102(a)(3) (foreign RLLP), even
though those sections do not use the term “registered agent.”
Notice that the Model Registered Agent does provide for elective
designation of a registered agent by domestic nonfiling entities and by
nonqualifed foreign entities. Model
Registered Agent Act Section. 12. Those
provisions have been imported into this Act as Section 1-410, below.
SECTION
1-402. ADDRESSES IN FILINGS. If a provision of this [act] other than
Section 1-409(a)(4) requires that a filing state an address, the filing must
state:
(1) a street
address in this state; and
(2) a mailing
address in this state, if different from the address described in paragraph (1).
Comment
When
this Act requires that a filing state an address, the address used must always
be a geographic location. Where a person
uses a post office box as its mailing address, paragraph (2) requires that the
post office box address also be stated.
This
section, and the accompanying Comment, is derived from Model Registered Agent
Act Section 4.
SECTION
1-403. APPOINTMENT OF REGISTERED AGENT.
(a) A registered
agent filing must state:
(1)
the name of the represented entity’s commercial registered agent; or
(2) if
the entity does not have a commercial registered agent:
(A) the name and address of the entity’s
noncommercial registered agent; or
(B) the title of an office or other position with
the entity if service of process is to be sent to the person holding that
office or position, and the address of the business office of that person.
(b) The
appointment of a registered agent pursuant to subsection (a)(1) or (2)(A) is an
affirmation by the represented entity that the agent has consented to serve as
such.
(c) The [Secretary
of State] shall make available in a record as soon as practicable a daily list
of filings that contain the name of a registered agent. The list must:
(1) be
available for at least 14 calendar days;
(2)
list in alphabetical order the names of the registered agents; and
(3)
state the type of filing and name of the represented entity making the
filing.
Legislative Note: Subsection (c) may be omitted
if (i) the records of the [Secretary of State] are searchable electronically in
a manner that permits filings to be identified by the date of the filing and by
the name of the registered agent named in the filing, and (ii) the searchable
database is updated frequently.
Comment
Subsection
(a)(1) gives an entity the option of listing just the name of its commercial
registered agent in a registered agent filing and omitting the address of the
registered agent. If the commercial
registered agent subsequently changes its address, that change will be
reflected in the filing made by the agent under Section 1-404, as amended under
Section 1-408, but no change will be necessary in the registered agent filing
of any of the entities represented by the commercial registered agent. The address of an entity’s commercial
registered agent may be ascertained from the records of the Secretary of State
by consulting its listing under Section 1-404.
The
address of an entity’s noncommercial registered agent is usually not a business
address of the represented entity. On
the other hand, subsection 1-403(a)(2)(B) permits an entity to designate a
person within the organization, such as its general counsel, to serve as its
registered agent; and in that circumstance the address of the registered agent
may very well be a business address of the represented entity.
The
addresses required by subsection (a) to be stated in a registered agent filing
must satisfy the requirements in Section 1-402.
Subsection
(b) avoids the need to include with a registered agent filing a consent of the
registered agent to serve as such.
Subsection
(c) creates a procedure that will permit registered agents to determine if they
have been named in filings of which they were not aware by periodically
consulting the list prepared by the Secretary of State. Subsection (c) requires the registered agents
to be listed in alphabetical order to facilitate the use of the list by
registered agents and also to indicate the type of filing (e.g., articles of
incorporation, certificates of limited partnership, appointments of agents
under Section 1-410 of this Act, etc.) in which each registered agent is
named. Subsection (c) will not be
necessary under the circumstances described in the Legislative Note because
registered agents may consult the regular database maintained by the Secretary
of State to verify when they have been named as a registered agent.
Subsection
(a) is a generalization of Section 5.01 of the Model Business Corporation Act,
Section 114 of the Uniform Limited Partnership Act, and Section 108 of the
Uniform Limited Liability Company Act.
This
section and the accompanying Comment is derived from Section 5 of the Model
Registered Agents Act.
SECTION
1-404. LISTING OF COMMERCIAL REGISTERED
AGENT.
(a) An
individual or a domestic or foreign entity may become listed as a commercial
registered agent by filing with the [Secretary of State] a commercial
registered agent listing statement signed by or on behalf of the person which
states:
(1)
the name of the individual or the name, type, and jurisdiction of
organization of the entity;
(2)
that the person is in the business of serving as a commercial registered
agent in this state; and
(3)
the address of a place of business of the person in this state to which
service of process and other notice and documents being served on or sent to
entities represented by the person may be delivered.
(b) A commercial
registered agent listing statement may include the information regarding
acceptance of service of process in a record by the commercial registered agent
provided for in Section 1-411(d).
(c) If the name of
a person filing a commercial registered agent listing statement is not
distinguishable on the records of the [Secretary of State] from the name of
another commercial registered agent listed under this section, the person must
adopt a fictitious name that is distinguishable and use that name in its
statement and when it does business in this state as a commercial registered
agent.
(d) A commercial
registered agent listing statement takes effect on filing.
(e) The [Secretary
of State] shall note the filing of the commercial registered agent listing
statement in the index of filings maintained by the [Secretary of State] for
each entity represented by the registered agent at the time of the filing. The statement has the effect of deleting the
address of the registered agent from the registered agent filing of each of
those entities.
Legislative Note: If the Secretary of State is
not able to identify from the records maintained by the Secretary of State all
of the entities represented by a registered agent, subsection (e) should be
amended to read:
“(e) The commercial
registered agent listing statement must be accompanied by a list in
alphabetical order of the entities represented by the person. The [Secretary of State] shall note the
filing of the commercial registered agent listing statement in the index of
filings maintained by the [Secretary of State] for each listed entity. The statement has the effect of deleting the
address of the registered agent from the registered agent filing of each of
those entities.”
Comment
This
section is a substantial simplification of practice because it removes the need
to amend the filed record of every entity represented by a commercial
registered agent when the agent changes its address.
Subsection
(a)(3) only permits a commercial registered agent to list one address where
service of process and other notices may be sent to entities represented by the
agent. This may require a change in
practice for registered agents who have previously maintained more than one
address in a state and have permitted represented entities to choose which
address they would use in their registered agent filings. A corporation, for example, located in one
part of a state might include in its articles of incorporation an address for
its registered agent which is the address of an office of the agent located
close to the corporation and which is different than the address used by a
corporation in another part of the state which has the same registered agent
but uses a different office of the agent.
In the example given, the registered agent will need to pick just one
address in the state where all service of process will be sent to it. If a commercial registered agent wishes to
maintain more than one office in a state where service of process will be
received by it, it can accomplish that result by organizing separate entities
to conduct its business in the state and filing separate statements for each
entity under this section.
The
address required by subsection (a)(3) to be stated in a commercial registered
agent listing statement must satisfy the requirements in Section 1-402 above.
Subsection
(e) is a transitional provision that deals with the effect on the entities
represented by a registered agent at the time the agent is first listed under
this section. The effect is to amend the
registered agent filing of each such entity to delete the address of the
registered agent consistent with Section 1-403(a)(1).
This
section is drawn from Section 6 of the Model Registered Agents Act, which in
turn is patterned generally after 15 Pa. Consol. Stat. § 109.
SECTION
1-405. TERMINATION OF LISTING OF
COMMERCIAL REGISTERED AGENT.
(a) A commercial registered
agent may terminate its listing as a commercial registered agent by filing with
the [Secretary of State] a commercial registered agent termination statement
signed by or on behalf of the agent which states:
(1)
the name of the agent as currently listed under Section 1-404;
and
(2)
that the agent is no longer in the business of serving as a commercial
registered agent in this state.
(b) A commercial
registered agent termination statement takes effect on the 31st day after the
day on which it is filed.
(c) The commercial
registered agent shall promptly furnish each entity represented by the agent
with notice in a record of the filing of the commercial registered agent
termination statement.
(d) When a
commercial registered agent termination statement takes effect, the registered
agent ceases to be an agent for service of process on each entity formerly
represented by it. Until an entity
formerly represented by a terminated commercial registered agent appoints a new
registered agent, service of process may be made on the entity as provided in
Section 1-411. Termination of the
listing of a commercial registered agent under this section does not affect any
contractual rights a represented entity may have against the agent or that the
agent may have against the entity.
Comment
This
section provides a procedure for a commercial registered agent to withdraw from
the business of providing registered agent services. Use of the procedure in this section will
terminate the status of the registered agent as the agent for service of
process of all the entities represented by the agent. Thus, the procedure in this section differs
from the procedure in Section 1-409, which permits a registered agent to resign
with respect to just a single represented entity instead of resigning generally
with respect to all of its represented entities.
This
section and its accompanying comment is derived from Section 7 of the Model
Registered Agents Act.
(a) A represented
entity may change the information currently on file under Section 1-403(a) by
filing with the [Secretary of State] a statement of change signed on behalf of
the entity which states:
(1)
the name of the entity; and
(2)
the information that is to be in effect as a result of the filing of the
statement of change.
(b) The interest
holders or governors of a domestic entity need not approve the filing of:
(1) a
statement of change under this section; or
(2) a
similar filing changing the registered agent or registered office of the entity
in any other jurisdiction.
(c) The
appointment of a registered agent pursuant to subsection (a) is an affirmation
by the represented entity that the agent has consented to serve as such.
(d) A statement of
change filed under this section takes effect on filing.
(e) As an
alternative to using the procedures in this section, a represented entity may
change the information on file under Section 1-304(a) by amending its most
recent registered agent filing in the manner provided by the laws of this state
other than this [act] for amending that filing.
Comment
Changes
of the registered agent or the office address of a registered agent are usually
routine matters that do not affect the rights of the interest holders of the
represented entity. This section permits
those changes to be made without a formal amendment of an entity’s public
organic document, without approval of its interest holders, and, indeed, even
without formal approval by its governors (i.e., the persons managing the
entity’s affairs, such as the board of directors of a corporation).
Subsection
(c) avoids the need to file with a statement of change a consent of the new
registered agent being designated.
Subsection
(e) makes clear that the procedures in this section are not exclusive. A common way in which an entity changes its
registered agent or registered office is to include the change in an amendment
of its public organic document.
Subsection
(a) is a generalization of Section 5.02(a) of the Model Business Corporation
Act, Section 115 of the Uniform Limited Partnership Act, and Section 109 of the
Uniform Limited Liability Company Act.
As to subsection (c), compare Section 5.02(a)(5) of the Model Business
Corporation Act. Subsection (d) is
patterned after Section 115(b) of the Uniform Limited Partnership Act.
This
section, and the accompanying comment, is derived from Section 8 of the Model
Registered Agents Act.
(a) If a
noncommercial registered agent changes its name or its address as currently in
effect with respect to a represented entity pursuant to Section 1-403(a), the
agent shall file with the [Secretary of State], with respect to each entity
represented by the agent, a statement of change signed by or on behalf of the
agent which states:
(1)
the name of the entity;
(2)
the name and address of the agent as currently in effect with respect to
the entity;
(3) if
the name of the agent has changed, its new name; and
(4) if
the address of the agent has changed, the new address.
(b) A statement of
change filed under this section takes effect on filing.
(c) A
noncommercial registered agent shall promptly furnish the represented entity
with notice in a record of the filing of a statement of change and the changes
made by the filing.
Comment
This
section permits a noncommercial registered agent to change the name and address
of the agent that appears in the registered agent filing of an entity
represented by the agent. Because the
noncommercial registered agent is not listed under Section 1-404, the agent
will not be able to use the procedures in Section 338 which permit commercial
registered agents to make only one filing to change their name and address for
all entities represented by them. Thus
the noncommercial registered agent will need to make a filing under this
section for each entity represented by the agent.
An
address included in a statement of change must satisfy the requirements in
Section 1-402.
This
section is derived from Model Registered Agent Act section 9, which in turn is
patterned after 15 Pa Consol. Stat. § 108.
(a) If a
commercial registered agent changes its name, its address as currently listed
under Section 1-404(a), or its type or jurisdiction of organization, the agent
shall file with the [Secretary of State] a statement of change signed by or on
behalf of the agent which states:
(1)
the name of the agent as currently listed under Section 1-304(a);
(2) if
the name of the agent has changed, its new name;
(3) if
the address of the agent has changed, the new address; and
(4) if
the type or jurisdiction of organization of the agent has changed, the new type
or jurisdiction of organization.
(b) A commercial
registered agent’s filing of a statement of change under subsection (a) is
effective to change the information regarding the agent with respect to each
entity represented by the agent.
(c) A statement of
change filed under this section takes effect on filing.
(d) A commercial
registered agent shall promptly furnish each entity represented by it with
notice in a record of the filing of a statement of change relating to the name
or address of the agent and the changes made by the filing.
(e) If a
commercial registered agent changes its address without filing a statement of
change as required by this section, the [Secretary of State] may cancel the
listing of the agent under Section 1-404.
A cancellation under this subsection has the same effect as a
termination under Section 1-405.
Promptly after canceling the listing of an agent, the [Secretary of
State] shall serve notice in a record in the manner provided in Section
1-411(b) or (c) on:
(1)
each entity represented by the agent, stating that the agent has ceased
to be an agent for service of process on the entity and that, until the entity
appoints a new registered agent, service of process may be made on the entity
as provided in Section 1-411; and
(2)
the agent, stating that the listing of the agent has been canceled under
this section.
Comment
This
section permits a commercial registered agent to make a single filing that has
the effect of changing the name or address of the agent for all of the entities
represented by it.
An
address included in a statement of change must satisfy the requirements in
Section 1-402.
Subsection
(e) provides a procedure by which the Secretary of State may cancel the listing
of a commercial registered agent when the Secretary of State learns that the
agent has changed its address without amending its listing as a commercial
registered agent. When the Secretary of
State acts to cancel the listing of a commercial registered agent, the
Secretary of State is required to notify both (i) the entities represented by
the agent that they no longer have a valid registered agent and (ii) the agent
that it no longer is listed as a commercial registered agent. Unlike in the case of a resignation under
Section 11 which is initiated by the registered agent and thus does not require
a notice from the Secretary of State to the agent, notice by the Secretary of
State to the agent is needed under this section so that the agent has notice
that its representation of the entities it previously represented has
terminated under Section 335.
This
section is derived from section 10 of the Model Registered Agents Act, which in
turn is patterned after 15 Pa.Consol. Stat. § 109(b).
SECTION
1-409. RESIGNATION OF REGISTERED AGENT.
(a) A registered
agent may resign at any time with respect to a represented entity by filing
with the [Secretary of State] a statement of resignation signed by or on behalf
of the agent which states:
(1)
the name of the entity;
(2)
the name of the agent;
(3)
that the agent resigns from serving as agent for service of process for
the entity; and
(4)
the name and address of the person to which the agent will send the
notice required by subsection (c).
(b) A statement of
resignation takes effect on the earlier of the 31st day after the day on which
it is filed or the appointment of a new registered agent for the represented
entity.
(c) The registered
agent shall promptly furnish the represented entity notice in a record of the
date on which a statement of resignation was filed.
(d) When a
statement of resignation takes effect, the registered agent ceases to have
responsibility for any matter tendered to it as agent for the represented
entity. A resignation under this section
does not affect any contractual rights the entity has against the agent or that
the agent has against the entity.
(e) A registered
agent may resign with respect to a represented entity whether or not the entity
is in good standing.
Comment
Resignation
under this section may be accomplished solely by action of the registered agent
and does not require the cooperation or consent of the represented entity. Whether a resignation violates a contract
between the registered agent and the represented entity is beyond the scope of
this Act and subsection (d) preserves whatever claims a represented entity may
have against its registered agent for a wrongful termination. Even if a resignation were to violate such a
contract, the resignation would still be effective if the provisions of this
section are followed.
Resignation
under this section relates only to the entity named in the statement of
resignation. Thus, the procedure in this
section differs from the procedure in Section 1-405 which terminates the status
of the agent as agent for all of the entities represented by it.
The
requirements of Section 1-402 with respect to addresses do not apply to
subsection (a)(4) because the registered agent may not have all the required
information available.
Subsection
(b) delays the effectiveness of a statement of resignation for 31 days to allow
the notice of the resignation that must be sent under subsection (c) to reach
the represented entity and to allow the represented entity to arrange for a
substitute registered agent.
Subsection
(e) makes clear that a registered agent may resign with respect to an entity
that is not in good standing and supersedes the contrary administrative
practice in some states of refusing to accept any filings with respect to an
entity that is not in good standing until the problem with the entity’s
standing is cured.
Subsection
(a) is a generalization of Section 5.03(a) of the Model Business Corporation
Act, Section 116(a) of the Uniform Limited Partnership Act, and Section 110(a)
of the Uniform Limited Liability Company Act.
Subsection (b) is a generalization of Section 5.03(c) of the Model
Business Corporation Act, Section 116(c) of the Uniform Limited Partnership
Act, and Section 110(c) of the Uniform Limited Liability Company Act. Subsection (c) is derived from Section
5.03(b) of the Model Business Corporation Act, Section 116(b) of the Uniform
Limited Partnership Act, and Section 110(b) of the Uniform Limited Liability
Company Act, except that notice under this Act is to be given by the resigning
registered agent rather than the Secretary of State.
This
section and the accompanying comment are derived from section 11 of the Model
Registered Agents Act.
SECTION
1-410. APPOINTMENT OF AGENT BY NONFILING
OR NONQUALIFIED FOREIGN ENTITY.
(a) A domestic
entity that is not a filing entity or a nonqualified foreign entity may file
with the [Secretary of State] a statement appointing an agent for service of
process signed on behalf of the entity which states:
(1)
the name, type, and jurisdiction of organization of the entity; and
(2)
the information required by Section 1-403(a).
(b) A statement
appointing an agent for service of process takes effect on filing.
(c) The appointment
of a registered agent under this section does not qualify a nonqualified
foreign entity to do business in this state and is not sufficient alone to
create personal jurisdiction over the nonqualified foreign entity in this
state.
(d) A statement
appointing an agent for service of process may not be rejected for filing
because the name of the entity filing the statement is not distinguishable on
the records of the [Secretary of State] from the name of another entity
appearing in those records. The filing
of a statement appointing an agent for service of process does not make the
name of the entity filing the statement unavailable for use by another entity.
(e) An entity that
has filed a statement appointing an agent for service of process may cancel the
statement by filing a statement of cancellation, which shall take effect upon
filing, and must state the name of the
entity and that the entity is canceling its appointment of an agent for service
of process in this state. A statement
appointing an agent for service of process is effective for five years after
the date of filing unless canceled earlier.
(f) A statement
appointing an agent for service of process for a nonqualified foreign entity
terminates automatically on the date the entity becomes a qualified foreign
entity.
Comment
Filing
under this section is elective, and no inference should be drawn from the
failure of an entity to make such a filing.
This
section and the accompanying comment are drawn from Section 12 of the Model
Registered Agents Act. Subsection (a),
in turn, is patterned after Section 10 of the Uniform Unincorporated Nonprofit
Association Act.
SECTION
1-411. SERVICE OF PROCESS ON ENTITY.
(a) A registered
agent is an agent of the represented entity authorized to receive service of
any process, notice, or demand required or permitted by law to be served on the
entity.
(b) If an entity
that previously filed a registered agent filing with the [Secretary of State]
no longer has a registered agent, or if its registered agent cannot with
reasonable diligence be served, the entity may be served by registered or
certified mail, return receipt requested, addressed to the governors of the
entity by name at its principal office in accordance with any applicable
judicial rules and procedures. The
names of the governors and the address of the principal office may be as shown
in the most recent annual report filed with the [Secretary of State]. Service is perfected under this subsection at
the earliest of:
(1)
the date the entity receives the mail;
(2)
the date shown on the return receipt, if signed on behalf of the entity;
or
(3)
five days after its deposit with the United States Postal Service, if
correctly addressed and with sufficient postage.
(c) If process, notice,
or demand cannot be served on an entity pursuant to subsection (a) or (b),
service of process may be made by handing a copy to the manager, clerk, or
other person in charge of any regular place of business or activity of the
entity if the person served is not a plaintiff in the action.
(d) Service of
process, notice, or demand on a registered agent must be in the form of a
written document, except that service may be made on a commercial registered
agent in such other forms of a record, and subject to such requirements as the
agent has stated in its listing under Section 1-404 that it will accept.
(e) Service of
process, notice, or demand may be perfected by any other means prescribed by
law other than this [act].
Legislative Note: The conforming amendments in
the Appendix to the Model Registered Agents Act recommend that provisions
similar to subsections (b) through (e) be repealed to the extent they appear in
a state’s individual entity organic laws.
In a state with that statutory scheme, subsections (b) through (e) will
be needed to replace the repealed provisions.
On the other hand, a state that does not have provisions similar to
subsections (b) through (e) in its individual entity organic laws, and instead
provides rules for service of process on entities in a statute separate from
its entity organic laws or in rules of court, should omit subsections (b)
through (e). If subsections (b) through
(e) are omitted, a conforming change must be made to Section1-408(e).
Comment
Subsection
(c) provides a means for serving process on an entity that cannot be served
under subsection (a) or (b). Some entity
organic laws require that service of process in that circumstance be made on
the Secretary of State, but that leaves unanswered the question of what the
Secretary of State should do with the process.
Subsection (c) is patterned after Pa. R.Civ.Proc. 423(3) and
424(2). A similar approach is taken by
Fed. R.Civ.Proc. 4(h)(1).
Subsections
(a) and (d) are a generalization of Section 5.04(a) and (c) of the Model
Business Corporation Act, Section 117(a) and (f) of the Uniform Limited
Partnership Act, and Section 111(a) and (e) of the Uniform Limited Liability
Company Act. Subsection (b) is a
generalization of Section 5.04(b) of the Model Business Corporation Act.
This
section is derived from Section 13 of the Model Registered Agents Act.
SECTION
1-412. DUTIES OF REGISTERED AGENT. The only duties under this [act] of a
registered agent that has complied with this [act] are:
(1) to forward to
the represented entity at the address most recently supplied to the agent by
the entity any process, notice, or demand that is served on the agent;
(2) to provide the
notices required by this [act] to the
entity at the address most recently supplied to the agent by the entity;
(3) if the agent
is a noncommercial registered agent, to keep current the information required
by Section 1-403(a) in the most recent registered agent filing for the entity;
and
(4) if the agent
is a commercial registered agent, to keep current the information listed for it
under Section 1-404(a).
Comment
This
section is limited to prescribing the duties of a registered agent under this
Act. An agent may undertake other
responsibilities to a represented entity, such as by contract or course of
dealing, but those duties will be determined under other law.
The
Delaware General Corporation Law has been amended to add a new Section
132(b)(1), 8 Del.
Code § 132(b)(1), requiring a registered agent to be generally available in the
state to accept service of process. It
was not considered necessary to include that provision in the Act because
Section 341 provides alternative means of serving process if a registered agent
cannot with reasonable diligence be served.
The
Delaware General Corporation has also been amended to require a represented
corporation to notify its registered agent when the corporation changes its
business address and to permit a registered agent to resign if it is not
supplied with current contact information.
8 Del.
Code § 132(d). Section 339 of the
Act provides registered agents with a broader right to resign than is available
under the Delaware
amendment.
This
section is derived from Section 14 of the Model Registered Agents Act.
SECTION
1-413. JURISDICTION AND VENUE. The appointment or maintenance in this state
of a registered agent does not by itself create the basis for personal
jurisdiction over the represented entity in this state. The address of the agent does not determine
venue in an action or proceeding involving the entity.
Comment
As discussed in the
Introduction to the Act, one of the purposes of the Act is to eliminate the
registered office address as a means of determining where venue is to be laid
in an action involving a represented entity.
Consistent with that purpose, this section makes clear that the address
of a registered agent does not determine venue.
This section may be inconsistent with other law or procedural rules in a
state, and thus existing law on venue should be reviewed when this Act is
considered for adoption in a state. Compare Cooper v. Chevron U.S.A., Inc.,
132 N.M. 382, 49 P.3d 61 (N.M. 2002) (applying New Mexico statute permitting venue “in the
county where the statutory agent designated by the foreign corporation
resides”).
This
section is drawn from Section 15 of the Model Registered Agents Act.
SECTION
1-501. GOVERNING LAW.
(a) The law of the
state or other jurisdiction in which a foreign entity is a domestic entity
governs:
(1) the internal affairs of the entity;
(2) the liability of an interest holder as
interest holder and governor as governor for the liabilities of the entity; and
(3)
the determination of the entity’s status.
(b) The [Secretary
of State] may not deny a foreign entity a certificate of authority because of
any difference between the laws of the jurisdiction under which the entity is
formed and the laws of this state.
(c) A certificate
of authority does not authorize a foreign entity to engage in any business or
exercise any power that a domestic entity of the same type may not engage in or
exercise in this state.
Comment
This
section is a generalized version of
Uniform Limited Partnership Act (2001) Section 901, Revised Uniform Limited
Liability Company Act Section 801, Uniform Limited Cooperative Association Act
(2007 Draft), Section 1301, and Uniform Statutory Trust Act (2006 Draft), Section 701.
The Model Business Corporation Act and the Model NonProfit Corporation
Act do not contain an explicit parallel provision.
SECTION
1-502. EFFECT OF FAILURE TO HAVE
CERTIFICATE OF AUTHORITY.
(a) A foreign-filing entity transacting business in this
state may not maintain an action or proceeding in this state unless it has a
certificate of authority to transact business in this state.
(b) The failure of a foreign-filing entity to have a
certificate of authority to transact business in this state does not impair the
validity of a contract or act of the entity or prevent the entity from
defending an action or proceeding in this state.
(c) A member or manager of a foreign-filing entity is not
liable for the liabilities of the entity solely because the entity transacted
business in this state without a certificate of authority.
(d) If a foreign-filing entity transacts business in this
state without a certificate of authority or cancels its certificate of
authority, it authorizes service of process for rights of action arising out of
the transaction of business in this state to be made by any legal method.
Comment
This section is a generalized version of Uniform Limited Liability Company Act
Section 808 and parallel provisions of other entity statutes.
SECTION
1-503. APPLICATION FOR CERTIFICATE OF
AUTHORITY. A
foreign-filing entity may apply for a certificate of authority by delivering an
application to the [Secretary of State] for filing. The application must state:
(1) the name of the entity and, if the name does not
comply with the applicable provisions of Section 1-301, an alternate name
adopted pursuant to Section 1-505(a);
(2) the name of the state or other jurisdiction under
whose law the entity is organized, together with the entity’s certification of
its existence;
(3) the street and mailing address of the entity’s
principal office and, if the laws of the jurisdiction under which the entity is
organized require the entity to maintain an office in that jurisdiction, the
street and mailing address of the required office; and
(4) the name and street and mailing address of the
entity’s initial agent for service of
process in this state.
Comment
This section is a
generalized version of Uniform Limited Liability Company Act, Section 802. Similar provisions are found in Uniform
Limited Partnership Act (2001), Section
902, and in Section 702 of the Statutory Trust Act Draft and Section
1302 of the Limited Cooperative Association Draft. Similar requirements are imposed on
corporations under Revised Model Business Corporation Act Section 15.03 and
Model Nonprofit Corporation Act Section 15.03.
In all instances other than the Uniform Limited Liability Company Act
provision and the Statutory Trust Act Draft, the governors of the entity also
be listed, e.g., the general partners of a limited partnership, and the current
directors or officers of a corporation, business or nonprofit. This Draft has followed the lead of the
Uniform Limited Liability Company Act and the Statutory Trust Draft in omitting
this requirement.
SECTION
1-504. ACTIVITIES NOT CONSTITUTING
TRANSACTING BUSINESS.
(a) Activities of a foreign filing entity which do not
constitute transacting business in this state within the meaning of this [act]
include:
(1) maintaining, defending, mediating,
arbitrating, or settling an action or proceeding;
(2) carrying on any activity concerning its
internal affairs, including holding meetings of its interest holders or
governors;
(3) maintaining accounts in financial
institutions;
(4) maintaining offices or agencies for the
transfer, exchange, and registration of the entity’s own interests or
maintaining trustees or depositories with respect to those interests;
(5) selling through independent contractors;
(6) soliciting or obtaining orders by any
means if the orders require acceptance outside this state before they
become contracts;
(7) creating or acquiring indebtedness,
mortgages, or security interests in real or personal property;
(8) securing or collecting debts or enforcing
mortgages or other security interests in property securing the debts and
holding, protecting, or maintaining property;
(9) conducting an isolated transaction that
is completed not later than 30 days and is not in the course of similar
transactions; and
(10) transacting business in interstate
commerce.
(b) For purposes of this [act], the ownership in this
state of income-producing real property or tangible personal property, other
than property excluded under subsection (a), constitutes transacting business
in this state.
(c) This section does not apply in determining the
contacts or activities that may subject a foreign-filing entity to service of
process, taxation, or regulation under law of this state other than this [act].
Comment
This section is a
generalized version of Uniform Limited Liability Company Act, Section 803. Similar provisions appear in Uniform Limited
Partnership Act (2001), Section 903; and in Section 704 of the Statutory Trust
Act Draft and in Section 1303 of the Limited Cooperative Association Act Draft,
as well as in Section 15.01(b) of the Revised Model Business Corporation Act;
and Sections 15.01(b) of the Model Non-Profit Corporation Act.
SECTION
1-505. NONCOMPLYING NAME OF FOREIGN ENTITY.
(a) A foreign-filing entity whose name does not comply
with the applicable provisions of Section 1-301
for an entity of its type may not obtain a certificate of authority
until it adopts, for the purpose of transacting business in this state, an
alternate name that complies with Section 1-301. A foreign-filing entity
that adopts an alternate name under this subsection and obtains a certificate
of authority with the alternate name need not comply with [fictitious or
assumed name statute]. After obtaining a certificate of authority with an
alternate name, a foreign-filing entity shall transact business in this state
under the alternate name unless the entity is authorized under [fictitious or
assumed name statute] to transact business in this state under another name.
(b) If a
foreign-filing entity authorized to transact business in this state changes its
name to one that does not comply with Section 1-301, it may not transact
business in this state until it complies with subsection (a) and obtains an
amended certificate of authority.
Comment
This
section is a generalized version of Uniform Limited Liability Company Act
Section 805, and of the parallel provisions of other entity statutes.
SECTION
1-506. REVOCATION OF CERTIFICATE OF AUTHORITY.
(a) A certificate of authority of a foreign-filing entity
may be revoked by the [Secretary of State] in the manner provided in
subsections (b) and (c) if the entity does not:
(1) pay, not later than 60 days after the due
date, any fee, tax, or penalty due to the [Secretary of State] under this [act] or law other than this [act];
(2) deliver, not later than 60 days after the
due date, the annual report, if any, required of foreign-filing entities of its
type;
(3) have an agent for service of process as
required by Section 1-401; or
(4) deliver for filing a statement of a
change under [Part] 4 not later than 30 days after a change has occurred in the
name or address of the agent.
(b) To revoke a certificate of authority of a
foreign-filing entity, the [Secretary of State] must prepare, sign, and file a
notice of revocation and send a copy to the entity’s agent for service of
process in this state, or if the entity does not have a proper agent in this
state, to the entity’s principal office as designated in Section
1-403(a). The notice must state:
(1) the
effective date of the revocation, which must be at least 60 days after
the date the [Secretary of State] sends the copy; and
(2) the grounds for revocation under
subsection (a).
(c) The authority of a foreign-filing entity to
transact business in this state ceases on the effective date of the notice of
revocation unless before that date the entity cures each ground for revocation
stated in the notice filed under subsection (b). If the entity cures each
ground, the [Secretary of State] shall file a record so stating.
Comment
This section is a generalized
version of Uniform Limited Liability Company Act Section 806 and parallel
provisions of other entity statutes.
SECTION
1-507. CANCELLATION OF CERTIFICATE OF AUTHORITY.
To cancel its certificate of authority, a foreign-filing entity must deliver to
the [Secretary of State] for filing a notice of cancellation stating the name
of the entity and that the entity desires to cancel its certificate of
authority. The certificate is canceled when the notice becomes effective.
Comment
This
section is a generalized version of Uniform Limited Liability Company Act
Section 807, and parallel provisions of other entity statutes.
[SECTION
1-508. ACTION BY [ATTORNEY GENERAL]. The [Attorney
General] may maintain an action to enjoin a foreign-filing entity from
transacting business in this state in violation of this [act].]
Comment
This section is a
generalized version of Uniform Limited Liability Company Act Section 809, and
parallel provisions of other entity statutes.
[ARTICLE] 2
MERGERS, CONVERSIONS, AND DOMESTICATIONS
[ARTICLE] 3
BUSINESS CORPORATIONS
[ARTICLE] 4
NONPROFIT CORPORATIONS
[ARTICLE] 5
GENERAL PARTNERSHIPS
[ARTICLE] 6
LIMITED PARTNERSHIPS
[ARTICLE] 7
LIMITED LIABILITY COMPANIES
[ARTICLE] 8
COOPERATIVE LIMITED ASSOCIATIONS
[ARTICLE] 9
NONPROFIT ASSOCIATIONS
[ARTICLE] 10
BUSINESS TRUSTS
[ARTICLE] 11
MISCELLANEOUS PROVISIONS
