MEMORANDUM
TO: Drafting Committee on Record Owners of Business Act
FROM: William H. Clark, Jr.
DATE: January 8, 2008
RE: Draft for January 19, 2008 Meeting
The new draft of proposed amendments to the uniform unincorporated entity laws that is being distributed for our meeting on January 19, 2008 adopts the following approach:
1. Every entity must maintain a list of the names and addresses of its record owners.
2. The list of an entity’s record owners must indicate for an owner that is not an individual:
Ř if the owner is an entity, the jurisdiction whose laws control its internal affairs;
Ř if the owner is a testamentary, inter vivos, or charitable trust, the names and addresses of its trustees; and
Ř if the owner is a decedent’s estate, the name and address of the personal representatives of the decedent.
The basic theory behind the amendments we are preparing is to provide a system under which it will be possible to trace the ownership of an entity back to the ultimate beneficial owners. Keeping the described information will assist in that process. If a record owner is an entity, knowing the jurisdiction in which it is organized will assist law enforcement to identify the individual with access to the record owners of that entity. Trustees and personal representatives will provide a similar function for record owners who are not individuals or entities.
3. There must be an individual whose principal residence is in the United States who has access to the list of an entity’s record owners.
4. The name and an address in the United States of the individual with access to the list of an entity’s record owners must be stated in the public filing that creates the entity (the “organic record”) if the entity has 25 or fewer record owners. We decided at our previous meeting to include this requirement so that information about the designated individual will be available before the entity files its first annual report. The ABA Committee on Corporate Laws will be including a similar requirement in the amendments it is preparing to the Model Business Corporation Act.
5. The annual report filed by an entity must state the name and address of the individual with access to its list of its record owners if the entity has 25 or fewer record owners. After an entity has filed its first annual report, the entity may delete from its organic record the information regarding the individual with access to its list of record owners.
6. An entity may change the information in its organic record regarding the individual with access to the list of its record owners in the same manner as the entity may make changes with respect to its agent for service of process.
7. An individual with access to the list of an entity’s record owners may change his or her address or resign in the same manner as an agent for service of process may do.
8. Prohibitions on issuance of bearer certificates evidencing a full ownership interest or a financial interest in an unincorporated entity are added to each law other than the general partnership act.
To keep the draft to a manageable length, I have omitted the Comments for the sections being amended. But to give you the context for each amendment, the full text of each section being amended is included in the draft.