Uniform Law Enforcement
Access to
NATIONAL CONFERENCE OF COMMISSIONERS
March 27,April 8, 2009 Reporter’s Draft
NATIONAL CONFERENCE OF
COMMISSIONERS
______________________________________________________________________________________
The ideas and conclusions set forth in this draft,
including the proposed statutory language and any comments or reporter’s notes,
have not been passed upon by the National Conference of Commissioners on
Uniform State Laws or the Drafting Committee.
They do not necessarily reflect the views of the Conference and its Commissioners
and the Drafting Committee and its Members and Reporter. Proposed statutory language may not be used
to ascertain the intent or meaning of any promulgated final statutory proposal.
UNIFORM LAW ENFORCEMENT ACCESS TO
SECTION 1. SHORT TITLE. This [act] may be cited as the Uniform Law Enforcement Access to Entity Information Act.
SECTION 2. DEFINITIONS. In this [act]:
(1) “Appropriate request” means:
(A) a civil, criminal, or administrative subpoena or summons from a [local, state, or] federal law enforcement authority, [state agency,] federal agency, or committee or subcommittee of the United States Congress [or a state legislature]; or
(B) a request in the form of a record made by a federal agency on behalf of another country under:
(i) an international treaty, agreement, or convention; or
(2) “Conventional privately-held entity” means a domestic filing entity that has, or will have on the effective date of its initial public organic record, no more than 50 interest holders and:
(A) in which one or more domestic or foreign entities with more than 50 interest holders each do not hold, directly or indirectly, more than 25% of the outstanding interests;
(B) that is not subject to regulation as a bank or other depository institution, trust company, insurance company, public utility, or securities or commodities broker or dealer;
(C) that is not registered as an “investment company” under the Investment Company Act of 1940;
(D) that is not registered as an “investment advisor” under the Investment Advisors Act of 1940 or the law of any state;
(E) in which one or more domestic or foreign entities of the types described in subparagraph (B), (C), or (D) do not hold, directly or indirectly, a majority of the outstanding interests; and
(F) that does not own a majority of the outstanding interests in a domestic or foreign entity of a type described in subparagraph (B), (C), or (D).
Legislative Note:
Subparagraph (B) should be revised to omit any of the types of entities listed that
are formed under a law that applies only to that type of entity, for example a
banking corporation act or insurance company act. Those entities should also not be included in
the definition of “domestic filing entity” because this act does not need to
include those entities for any purpose.
(3) “Domestic,” with respect to an entity, means an entity whose internal affairs are governed by the law of this state.
(34) “Domestic filing entity” means:
(A) a domestic business corporation;
(B) a domestic nonprofit corporation;
(C) a domestic limited liability partnership that is not also a limited partnership;
(D) a domestic limited partnership, including a limited liability limited partnership;
(E) a domestic limited liability company;
(F) a domestic limited cooperative association; [or]
(G) a domestic statutory trust entity[; or]
[(H) list other types of entities authorized by the law of the state].
Legislative
Note: The entities referred
to in this definition are illustrative only and. The list
as enacted by a state should include simply those types of entities
that may be incorporated, organized or otherwise formed under the various model
and uniform entity lawsall the types of non-governmental entities that may be created
under the state’s laws where a filing must be made with the Secretary of State
to create or confirm the status or existence of the entity. An enacting state
should revise this definition so that (i) the entities are referred to in the
manner they are referred to in the state’s other laws and (ii) the definitionit includes
all of the types of non-governmental
entities that may be created under the state’s laws where a filing must be made
with the Secretary of State to create or confirm the status or existence of the
entityentities
that fit within the concept and are recognized by the laws of the state.
It is not necessary to list in this definition entities
that are a subset of a type of entity listed if reference to the more generic
type of entity includes entities in that subset. For example, if professional corporations are
subject to the state’s business corporation law so that referring to business
corporations includes professional corporations, this definition does not need
to list professional corporations; but if professional corporations are
incorporated under a separate statute and a reference to business corporations
would not include professional corporations, then professional corporations
should be listed separately.
If a type of entity described in subparagraph (B) of the definition of “unregulatedconventional privately-ownedheld entity” is formed under a law that applies only to that type of entity, for example a banking corporation act or insurance company act, that type of entity may be omitted from this definition because “domestic filing entity” does not need to include that type of entity for any purpose under this act.
(45) “Entity information statement” means the initial or amended statement described in Section 4(a) or (c).
(57) “Governance interest” means the right under the organic law or organic rules of an unincorporated entity, other than as a governor, agent, assignee, or proxy, to:
(A) receive or demand access to:
(i) information concerning the entity; or
(ii) the books and records of the entity;
(B) vote for the election of the governors of the entity; or
(C) vote on issues involving the internal affairs of the entity.
(A) a director of a business corporation [or a shareholder of a close corporation that is managed by its shareholders instead of a board of directors];
(B) a director [or member of a designated body] of a nonprofit corporation;
(C) a general partner of a limited liability partnership that is not also a limited partnership;
(D) a
general partner of a limited partnership;
(E) a manager of a limited liability company or other person that materially participates in the management of a limited liability company pursuant to its organic law and organic rules;
(F) a director of a limited cooperative association; [or]
(G) a trustee of a statutory trust entity[; or]
[(H) list governors of other types of entities authorized by the law of the state].
Legislative
Note: An enacting state
should revise this definition so that it refers to the appropriate persons with
respect to each type of entity listed in the definition of “domestic filing
entity.”
If an enacting state authorizes a
business corporation with a limited number of shareholders to dispense with a
board of directors in favor of management by its shareholders, the optional
phrase at the end of subparagraph (A) should be included with appropriate
changes to conform to the terminology used in the enacting state.
The Model Nonprofit Corporation Act
permits a nonprofit corporation to give some of the responsibilities and
obligations of the board of directors to another group of persons known as a
“designated body.” If the law of an
enacting state permits that type of governance structure, the optional phrase
in subparagraph (B) should be included with appropriate changes to conform to
the terminology used in the enacting state.
(C) a share of a business corporation; or
(D) a membership in a nonprofit corporation.
(810) “Interest holder” of an entity means:
(A) a shareholder of a business corporation;
(B) a member of a nonprofit corporation;
(C) a general partner of a limited liability partnership that is not also a limited partnership;
(D) a general partner of a limited partnership;
(E) a limited partner of a limited partnership;
(F) a member of a limited liability company;
(G) a member of a limited cooperative association; [or]
(H) a beneficiary of a statutory trust entity[; or]
[(I) list similar persons in other types of entities authorized by the law of the state].
Legislative
Note: An enacting state
should revise this definition so that it includes references to the appropriate
persons with respect to each type of entity listed in the definition of
“domestic filing entity.”
(911) “Non-US entity” means an entity whose internal affairs are governed by the laws of a jurisdiction other than a state or the United States.
(12) “Organic law” means the statutes of an entity’s jurisdiction of incorporation, organization, or other formation which govern the internal affairs of the entity.
(1013) “Organic rules” means the public organic record and private organic rules of an entity.
(1114) “Person” means an individual, corporation, estate, trust, partnership, limited liability company, business or similar trust, cooperative, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
(1215) “Private organic rules” means:
(A) the bylaws of a business corporation;
(B) the bylaws of a nonprofit corporation;
(C) the partnership agreement of a limited liability partnership that is not a limited partnership;
(D) the partnership agreement of a limited partnership;
(E) the operating agreement of a limited liability company;
(F) the bylaws of a limited cooperative association;
(G) the trust instrument of a statutory trust entity; [and]
(H) [list similar documents for other types of entities authorized by the law of the state; and
(I)] any other rules, whether or not in a record, that govern the internal affairs of a domestic filing entity, are binding on all of its interest holders, and are not part of its public organic record, if any.
Legislative Note: An enacting state should revise this definition so that it refers to the appropriate item with respect to each type of entity listed in the definition of “domestic filing entity.”
(1316) “Public organic record” means:
(A) the articles of incorporation of a business corporation;
(B) the articles of incorporation of a nonprofit corporation;
(C) the statement of qualification of a limited liability partnership that is not a limited partnership;
(D) the certificate of limited partnership of a limited partnership;
(E) the certificate of organization of a limited liability company;
(F) the articles of organization of a limited cooperative association; [and]
(G) the certificate of trust of a statutory trust entity[; and]
[(H) list similar documents for other types of entities authorized by the law of the state].
Legislative
Note: An enacting state
should revise this definition so that it refers to the appropriate document
with respect to each type of entity listed in the definition of “domestic
filing entity.”
(1417) “Record,” used as a noun, 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.
(1518) “Records contact” for an unregulated privately-owned entity means an individual whose principal residence is in the United States and who has access to and can produce within the United States on a timely basis upon appropriate request the information relating to the entity described in Section 7(a).
(1619) “Responsible individual” means an individual who, directly or indirectly, participates in the control or management of an entity or, in the case of an entity being formed, will participate in the control or management of the entity.
(1720) “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.
(1821) “Transferable interest” means the right under the organic law of an unincorporated entity to receive distributions from the entity.
(1922) “Transferee” means a person to which all or part of a transferable interest has been transferred without a governance interest, whether or not the transferee is an interest holder.
(2023) “Unincorporated entity” means an entity that is not a corporation.
(21) “Unregulated privately-owned entity” means a domestic filing entity that has, or will have on the effective date of its initial public organic record, no more than 50 interest holders and:
(A) in which one or more domestic or foreign entities with more than 50 interest holders do not hold, directly or indirectly, more than 25% of the outstanding interests;
(B) that is not subject to regulation as a bank or other depository institution, trust company, insurance company, public utility, or securities or commodities broker or dealer;
(C) that is not registered as an “investment company” under the Investment Company Act of 1940;
(D) that is not registered as an “investment advisor” under the Investment Advisors Act of 1940 or the law of any state;
(E) in which one or more domestic or foreign entities of the types described in subparagraph (B), (C), or (D) do not hold, directly or indirectly, a majority of the outstanding interests; and
(F) that does not own a majority of the outstanding interests in a domestic or foreign entity of a type described in subparagraph (B), (C), or (D).
Legislative Note: Subparagraph (B) should be revised to delete any of the types of entities listed that are formed under a law that applies only to that type of entity, for example a banking corporation act or insurance company act. Those entities should also not be included in the definition of “domestic filing entity” because this act does not need to include those entities for any purpose.
“Appropriate request.” This definition is patterned after Section 2009(a)(1)(D) of the Homeland Security Act of 2002 (6 U.S.C. § 601 et seq.), as proposed to be added by S. 569).569.
“Governor.” The second clause of subparagraph (E) of this definition, which refers to persons who are not managers of a limited liability company but participate materially in its management, is patterned after 6 Del. Code § 18-109(a). It is not intended that the power to elect or otherwise select or to participate in the election or selection of a person to be a manager of a limited liability company will, by itself, constitute participation in the management of the company.
“Interest holder.” Whether a person is a member of a nonprofit corporation will be determined under a state’s nonprofit corporation law. Many nonprofit corporations refer to their contributorsfinancial supporters as “members” as a fund-raising technique even though those contributors do not have the status of true membersgovernance rights under the organic law and organic rules of the corporation.
“Responsible individual.” A responsible individual may be an individual who is a governor of the entity, an agent of another person, or an agent or officer of the entity itself, or who meets the requirements of this definition because of ownership of an interest in the entity or other factors. To qualify as thea responsible individual, what is required is that the individual participate in the control or management of the entity. A responsible individual may have sole responsibility for the management of the entity or may share that responsibility with others. The term has been created for use in this act and is not intended to change the law with respect to the governance of any form of entity.
(a) When the initial public organic record of a domestic filing entity that is an unregulateda conventional privately-ownedheld entity is delivered to the [Secretary of State] for filing, it must be accompanied by an initial entity information statement.
(b) The public organic record of a domestic filing entity must include, in addition to any other information required by its organic law, a statement as to whether or not the entity is an unregulateda conventional privately-ownedheld entity. The delivery to the [Secretary of State] for filing of an initial or amended public organic record constitutes an affirmation under the penalties of perjury by the entity and by theany person deliveringsigning the record that the statement required by this subsection is correct.
Legislative Note: States should consider adding a reference
to the requirements of subsection (b) in the section of the organic law of each
domestic filing entity dealing with the entity’s public organic record so that
people consulting that law will be aware of the requirements of subsection (b). Such a reference in the section of the
organic law of an entity dealing with the contents of its public organic record
might read, for example, “the statement required by [Section 3(b) of the
Uniform Law Enforcement Access to Entity Information Act].”
(c) If the statement required by subsection (b) becomes incorrect, the entity must promptly deliver to the [Secretary of State] for filing an amendment of its public organic record correcting the statement. [An amendment pursuant to this subsection does not need to be approved by the governors or interest holders.] [The [Secretary of State] shall not charge a fee for filing an amendment pursuant to this subsection.]
Legislative
Note: The optional
penultimate sentence of subsection (c) is intended to simplify the procedure
for approving an amendment of the public organic record so that, for example,
an amendment to the articles of incorporation of a business corporation to change the statement as to whether the corporation is an unregulateda conventional privately-ownedheld entity
may be filed without action by the board of directors or shareholders. Enacting states may choose to place that type
of provision in the individual organic
laws for each type of entity listed in the definition of “domestic filing
entity” in Section 2 or may decide to vary the rule of that sentence for some
types of entities by requiring, for example, approval by the governors.
The optional last
sentence of subsection (c) is optional because an enacting state may choose to
require a fee for filing an amendment of the public organic record that is
required under subsection (c). It will
be preferable, however, for states not to require a fee as a way of encouraging
amendments that keep the public records up to date regarding the status of an
entity. If a state chooses to impose a
fee, the fee will presumably
be the same as for filing any other
amendment to a public organic record.
Thus the possibility of a fee being charged for a filing under
subsection (c) has not been included in Section 13.
(d) An amendment filed under subsection (c) indicating that an entity has become an unregulateda conventional privately-ownedheld entity must be accompanied by an initial entity information statement.
(e) Subsection (a) does not apply to an initial public organic record delivered to the [Secretary of State] before [the effective date of this act]. Subsections (b), (c), and (d) do not apply to a domestic filing entity that is in existence on [the effective date of this act] until the date provided in Section 16.
The same individual may serve as the records contact and responsible individual for an unregulateda conventional privately-ownedheld entity. When an entity needs to be formed on a rush basis, or when a records contact or responsible individual has not yet been identified for an entity, a person forming the entity, such as an incorporator, may serve as an accommodation in the capacities of records contact and responsible individual. Regardless of the reason why the person forming the entity is also shown as the records contact or responsible individual, so long as the person is named in those capacities, the person will have the duties attendant to those positions under this act.
States should consider adding a reference to the requirements of subsection (b) in the section of the organic law of each domestic filing entity dealing with the entity’s public organic record so that people consulting that law will be aware of the requirements of subsection (b).
The public organic record of every domestic filing entity must include a statement satisfying subsection (b), either that the entity is an unregulateda conventional privately-ownedheld entity or that the entity is not an unregulateda conventional privately-ownedheld entity.
SECTION
4. ENTITY INFORMATION STATEMENT.
(a) An initial entity information statement must set forth:
(1) the name of the conventional privately-held entity;
(2) the name and a business or residential address of the records contact of the entity; and
(3) the name and a business or residential address of a responsible individual of the entity.
(b) An entity information statement must be signed as follows:
(1) an initial statement must be signed by:
(A) the records contact named in the statement; and
(B) the responsible individual named in the statement; and
(2) an amended statement must be signed by any new records contact or new responsible individual named in the amended statement.
(c) If any of the information in a filed entity information statement becomes incorrect or incomplete, the conventional privately-held entity must promptly deliver to the [Secretary of State] for filing an amended entity information statement that is correct as of the date of its delivery to the [Secretary of State] and that includes all of the information required by subsection (a).
(d) A records contact or responsible individual may change his or her address or resign by delivering to the [Secretary of State] for filing a statement of change signed by the records contact or responsible individual that sets forth:
(1) the name of the conventional privately-held entity; and
(B) a statement that the records contact or responsible individual resigns.
(e) A records contact or responsible individual who delivers to the [Secretary of State] for filing a statement of change pursuant to subsection (d) must promptly furnish the unregulatedconventional privately-ownedheld entity with notice in a record of the delivery to the [Secretary of State] of the statement of change and a copy of the statement.
(f) An initial entity information statement filed under subsection (a) takes effect upon filing or any later effective time of the initial or amended public organic record in connection with which the statement is delivered to the [Secretary of State] for filing. An amended entity information statement filed under subsection (c) or a statement of change filed under subsection (d) takes effect upon filing.
(g) The signing by a records contact or responsible individual of an entity information statement or a statement of change that reflects a change of address constitutes an affirmation under the penalties of perjury that:
(1) the address of the signing individual is correct; and
(A) the records contact understands the duties of a records contact under this [act] and has agreed to serve in that capacity; or
(B) the responsible individual meets the definition of a responsible individual in Section 2.
(h) Every signature of a records contact or responsible individual on an entity information statement or statement of change must be notarized.
Legislative Note: Subsection (h) does not specify the manner
in which the required notarizations must be submitted. That is an issue to be determined by the
enacting state and may require amendment of subsection (h) or other state law.
Some states may choose to accept only paper filings, while other states
may provide for electronic notarization. If the Secretary of State only accepts
electronic filings, an enacting state will need to provide for either
electronic notarization or the acceptance of notarized documents by electronic
means.
(i) If the principal residence of a responsible individual is outside the United States, the responsible individual must provide the records contact with a copy of a passport, driver’s license, or other government-issued photo identification document for the responsible individual.
[(j) The [Secretary of State] shall not charge a fee for filing an amended entity information statement or statement of change.]
Legislative
Note: Subsection (j) is
optional because an enacting state may choose to require a fee for filing an
amended entity information statement or statement of change. It will be preferable, however, for states
not to require a fee as a way of encouraging filings that keep the public
records up to date. If a state chooses
to impose a fee, the fee should be included in Section 13.
1. Because subsection (c) requires an amended entity information statement to include all of the information required by subsection (a), a domestic filing entity must always have a records contact and responsible individual identified in the records of the Secretary of State. But see the transitional provisions in Section 16.
2. Subsection (f) provides that a statement of change under subsection (d), which could include a resignation by a records contact or responsible individual, takes effect upon filing. That is different than the practice in some states of delaying the effectiveness of a resignation of a registered agent. See, e.g., Model Registered Agents Act § 11 (delaying a resignation for 31 days). The main function of a registered agent is simply to forward service of process to the represented entity, and delaying resignation from that position typically does not pose problems for either the registered agent or the represented entity. A records contact or responsible individual, in contrast, has an important place in the law enforcement process created by this act, making it more important for the records contact or responsible individual to be able to resign immediately in appropriate circumstances. Making a resignation effective immediately under subsection (f) also provides an earlier start to the period in which the entity must replace the records contact or responsible individual if the entity wishes to avoid administrative dissolution under Section 9.
3. The purpose of subsection (h) is to use the notarial process to provide some verification of the identity of a records contact or responsible individual since notarization requires the notary to know or verify the identity of the individual whose signature is being notarized. Notarization may include taking an acknowledgment, administering an oath or affirmation, taking a verification upon oath or affirmation, or witnessing or attesting a signature. See Uniform Law on Notarial Acts (1982) § 1(1) (“notarial act”). Modern law on notarial acts is evolving to permit notarization of electronic records, and thus even in those states where all entity filings are made electronically it should be possible to comply with subsection (h).
Subsection (h) does not impose aaddress the duty onof the Secretary of State to verify that the notarization of a signature on an entity information statement is valid. Many records contacts and responsible individuals will not be residents of the state where an unregulated privately-owned entity is organized and thus the notarizations of their signatures will be performed by notaries in other states. Thus it would be unworkable to impose an obligation on the Secretary of State to verify the validity of the notarizations.Every state has statutory law on the acceptance of notarized documents. Those laws often deal separately with notarizations performed within the state, outside of the state, under federal authority, or in foreign countries. See, e.g., Uniform Law on Notarial Acts (1982) §§ 3-6.
Subsection (h) does not specify the manner in which the required notarizations must be submitted. That is an issue that may be determined by the Secretary of State. Some states may choose to accept only paper filings, while other states may provide for electronic notarization.
SECTION
5. DUTIES OF RECORDS CONTACT.
(a) A records contact for an unregulateda conventional privately-ownedheld entity has the following duties:
(1) to enquire at the time the records contact signs an initial or amended entity information statement whether the current responsible individual is required to comply with Section 4(i) and, if the required individual is required to comply but does not do so within five business days after the [Secretary of State] files the initial or amended entity information statement, to resign as records contact in the manner provided in Section 4(d);
(2) to request promptly from the entity the information described in Section 7 when the records contact receives an appropriate request for the information;
(3) to produce on a timely basis to thea party making thean appropriate request:
(B) any information described in Section 7(a) orwhich is provided by the entity to the records contact; and
(C) any certification described in Section 7(b) which is provided by the entity to the records contact;
(4) if the records contact becomes aware, either before or after receiving an appropriate request, that a request for information by the records contact to the entity will not be honored by the entity on a timely basis, to resign as records contact in the manner provided in Section 4(d); and
(5) if information in response to an appropriate request is not provided on a timely basis by the entity upon request by the records contact, to notify the party that made the appropriate request of:
(A) the name and a business or residential address of the individual whom the records contact believed would be the source of the information; or
(B) if there is no such individual, the source or location wherefrom which the records contact believed the information could be obtained.
(b) A records contact, as such, does not have a duty to verify the accuracy of information described in Section 7(a) that is supplied to the records contact by the unregulated privately-owned entityor a certification under Section 7(b).
If there is a failure to respond to an appropriate request for information, the consequences of that failure and possible sanctions will depend on the nature of the request. For example, failure to respond to a subpoena will have the same consequences and sanctions as any other failure to respond to a subpoena under the applicable federal or state law. Whether the consequences of a failure to respond to an appropriate request for information should be imposed on the records contact or on the unregulatedconventional privately-ownedheld entity will depend on whether the records contact has performed the duties required by this section.
The requirement in subsection (a)(2) that information be produced on a “timely basis” is intended to satisfy the requirements of Recommendation 33 of the 40 Recommendations of the Financial Action Task Force. In the case of a subpoena, what will be a timely response will be controlled by the response date in the subpoena. A response date in a request made under a treaty, however, does not have the force of law and will not necessarily be binding.
A records contact may wish as a matter of good business practice to verify periodically that the records contact continues to have the required access to information, although an obligation to verify that the records contact continues to have access to information is not part of the required duties of a records contact.
Subsection (a)(34) imposes a duty on a records contact that applies at all times, regardless of whether an appropriate request for information is pending. If a records contact becomes aware at any time that information will not be provided as required by this act, the records contact has a duty to resign under subsection (a)(3) even though there is no pending appropriate request.
A records contact is defined in Section 2(18) as an individual who has access to the information required by Section 7, and when a records contact signs an entity information statement under Section 4 that signature constitutes an affirmation that the individual understands the duties of a records contact.
Subsection (b) only applies only to a records contact in the individual’s capacity as a records contact. If the individual also maintains the records required to be produced under Section 7(a) in another capacity, for example as a corporate secretary, the individual will have the obligations associated with serving in that capacity. This act does not address those obligations.
(a) Except as provided in subsection (d), when a person incorporated, organized or otherwise formed under the laws of a jurisdiction other than the United States or a state first becomes,non-US entity first becomes a transferee or interest holder in a conventional privately-held entity after [the effective date of this act], an interest holder or transferee in an unregulated privately-owned entity, whether by transfer, issuance of an interest, or admission as an interest holder, the transferee or interest holder or transferee must provide the entity with a certification signed under the penalties of perjury stating the name and a business or residential address of a responsible individual for the transferee or interest holder or transferee.
(b) If any of the information in a certification provided under subsection (a) becomes incorrect, the interest holder or transferee must promptly provide the unregulatedconventional privately-ownedheld entity with a corrected certification.
(c) A certification provided under subsection (a) or (b) that is incorrect or incomplete, or the failure of an unregulateda conventional privately-ownedheld entity to obtain a required certification, does not affect the existence of the unregulatedconventional privately-ownedheld entity, the validity of any acts of the entity, the interest of any interest holder or transferee, or the status of any interest holder or transferee as such.
(d) Subsections (a) and (b) apply only to an interest holder or transferee that would be an unregulated privately-owned entity if the interest holder or transferee were a domestic filing entity. (e) A personA non-US entity that is required to provide a certification under this section may not maintain a proceeding in any court in this state with respect to the interest giving rise to the obligation to provide the certification unless the personnon-US entity demonstrates compliance with this section.
(e) Subsections (a) and (b) apply only to an interest holder or transferee that would be a conventional privately-held entity if the interest holder or transferee were a domestic filing entity.
This section is patterned in part after Section 2009(a)(2) of the Homeland Security Act of 2002 (6 U.S.C. § 601 et seq.), as proposed to be added by S. 569.
This section is not intended to require the unregulatedconventional privately-ownedheld entity to track transfers of interest before the entity has notice of a transfer. It is the obligation of a transferee to provide the certifications required by this section.
(a) An unregulatedA conventional privately-ownedheld entity must have a records contact at all times while it is an unregulateda conventional privately-ownedheld entity. When the records contact notifies the entity that an appropriate request has been received, the entity must provide on a timely basis to the records contact information in a record that:
(1) includes the name and last known address of each current transferee of which the entity has actual knowledge, each current interest holder in the entity, and any other person to whom the entity has been instructed to send distributions;
(2) indicates for each current transferee of which the entity has actual knowledge or current interest holder in the entity that is a person incorporated, organized or otherwise formed by a public filing, whether within or outside the United States that is a foreign or domestic entity, the jurisdiction under whose laws the transferee or interest holder is incorporated, organized, or otherwise formedwhose laws govern its internal affairs;
(3) includes the name and a residential or business address for each governor of the entity;
(4) includes a copy of a passport, driver’s license, or other government-issued photo identification document for:
(A) each governor of the entity who is an individual and whose principal residence at the time the individual becomes a governor is outside the United States; and
(B) its responsible individual if the principal residence of the responsible individual is outside the United States;
(5) includes any records maintained by the entity regarding the process by which the governors of the entity are elected or otherwise designated;
(6) indicates the voting power in the entity held by each of its interest holders or describes the manner in which each interest holder’s voting power in the entity is determined;
(7) identifies the individuals responsible for preparing the information provided to the records contact as required byunder this subsection; and
(8) includes the certifications required by section 6(a) and (b).
(b) When information is provided pursuant to subsection (a), it must include a certification by the unregulatedconventional privately-ownedheld entity, signed under the penalties of perjury, that the information accurately reflects the current records of the entity.
A non -U.S. resident is not required to supply a photo identification document as a condition to becoming a governor or responsible individual under paragraph (a)(4) or (5). Those paragraphs simply require that when an appropriate request is made the unregulatedconventional privately-ownedheld entity must be able to supply the required document. The entity may obtain the document at that time, but many entities will choose to obtain the document earlier because they otherwise run the risk of being unable to obtain the document on a timely basis once an appropriate request has been made.
The obligation to provide information under paragraph (a)(76) about voting power in the unregulatedconventional privately-ownedheld entity may be satisfied by supplying a copy of the operative documents that determine that voting power. Those documents will often be simply the public organic record or private organic rules of the entity, such as the articles of incorporation of a corporation or the operating agreement of a limited liability company; but may include other documents such as shareholder agreements, voting agreements, investor rights agreements, etc.
SECTION
8. JUDICIAL DISSOLUTION.
(a) The [name or describe court or courts] may dissolve an unregulateda conventional privately-ownedheld entity in a proceeding by the attorney general if it is established that the entity materially failed to comply with Section 7 or Section 12.
(b) It is not necessary to make interest holders parties to a proceeding to dissolve an unregulateda conventional privately-ownedheld entity under this section unless relief is sought against them individually.
(c) The court may issue injunctions, appoint a receiver or custodian pendente
lite with the powers and duties the court directs, take other action required to preserve the assets of the unregulatedconventional privately-ownedheld entity wherever located, and carry on the business of the entity until a full hearing can be held.
(d) The court may appoint one or more receivers to wind up and liquidate the business and affairs of the unregulatedconventional privately-ownedheld entity. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver. The court appointing a receiver has exclusive jurisdiction over the entity and all of its property wherever located.
(e) The court may appoint an individual or a domestic or foreign entity authorized to transact business in this state as a receiver. The court may require the receiver to post bond, with or without sureties, in an amount the court directs.
(f) The court shall describe the powers and duties of the receiver in its appointing order, which may be amended from time to time. Among other powers, the receiver may:
(1) dispose of all or any part of the assets of the unregulatedconventional privately-ownedheld entity wherever located, at a public or private sale, if authorized by the court; and
(2) sue and defend in the receiver’s own name as receiver of the entity in all courts of this state.
(g) The court from time to time during the receivership may order compensation paid and expense disbursements or reimbursements made to the receiver and counsel for the receiver from the assets of the unregulatedconventional privately-ownedheld entity or from proceeds from the sale of the assets.
(h) If after a hearing the court determines that grounds for judicial dissolution of an unregulateda conventional privately-ownedheld entity under this section exist, it may enter a decree dissolving the entity and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the [Secretary of State] for filing.
(i) After entering the decree of dissolution, the court shall direct the winding-up of the business and affairs of the unregulatedconventional privately-ownedheld entity in accordance with the organic law of the entity.
Legislative
Note: If an enacting state has existing judicial dissolution
procedures for some or all of the entities included in the definition of
“domestic filing entity” in Section 2, this section may be revised so that it
only applies to those entities for which the state does not already have
judicial dissolution procedures. For those
entities excluded from the scope of this section, subsection (a) will need to
be added to the judicial dissolution provisions in the organic laws of those
entities as an additional basis for judicial dissolution.
If an unregulateda conventional privately-ownedheld entity believes that it has defenses to a proceeding to dissolve it under this section, those issues may be raised and tried in the dissolution proceeding.
An action under this section will usually involve just the unregulatedconventional privately-ownedheld entity. However, subsection (b) permits the interest holders to be made parties to the dissolution proceeding because it may be appropriate to seek relief against them, for example in a proceeding brought to dissolve an entity that has violated the prohibition in Section 12 on issuing bearer interests.
SECTION
9. ADMINISTRATIVE DISSOLUTION.
(a) The [Secretary of State] shall administratively dissolve:
(1) an unregulateda conventional privately-ownedheld entity if the records of the [Secretary of State] do not show a current records contact or responsible individual for the entity for a period of 60 consecutive days; and
(2) except as provided in Section 16, a domestic filing entity if its public organic record does not contain the statement required by Section 3(b).
(b) If the [Secretary of State] determines that a ground exists for administratively dissolving an entity under subsection (a), the [Secretary of State] shall file a record of the determination and serve the entity with a copy of the filed record.
(c) If within 60 days after service of the copy pursuant to subsection (b) the entity does not correct each ground for dissolution, the [Secretary of State] shall administratively dissolve the entity by preparing, signing, and filing a declaration of dissolution that states the grounds for dissolution. The [Secretary of State] shall serve the entity with a copy of the filed declaration.
(d) An entity that has been administratively dissolved continues in existence but, subject to subsection (i), may carry on only activities necessary to wind up its activities under its organic law.
(e) The administrative dissolution of an entity under this section does not terminate the authority of its agent for service of process or the responsibilities of a records contact or responsible individual shown in the records of the [Secretary of State] at the time of dissolution.
(f) An entity that has been administratively dissolved under this section may apply to the [Secretary of State] for reinstatement by delivering to the [Secretary of State] for filing an application signed by the entity that states:
(1) the name of the entity and the effective date of its dissolution;
(i) the name and a business or residential street address of the entity’s records contact; and
(ii) the name and a business or residential street address of the entity’s responsible individual; or
(B) that the entity is not an unregulateda conventional privately-ownedheld entity; and
(3) if the entity’s name is no longer available, a new name that satisfies the requirements of the entity’s organic law.
(g) If the statement required by Section 3(b) in the public organic record of an entity that has been administratively dissolved under this section is not consistent with the entity’s application for reinstatement under subsection (f), the application must be accompanied by an amendment of the public organic record that correctly states whether the entity is an unregulateda conventional privately-ownedheld entity.
(h) If the [Secretary of State] determines that an application under subsection (f) contains the required information and is accompanied by any required amendment of the entity’s public organic record, the [Secretary of State] shall prepare a declaration of reinstatement that states those determinations, sign and file the original of the declaration of reinstatement, and serve the entity with a copy.
(i) When a reinstatement under subsection (h) becomes effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the entity may resume its activities as if the dissolution had not occurred.
(j) This section does not apply to a domestic filing entity in existence on [the effective date of this act] until the date provided in Section 16(b).
Legislative
Note: If an enacting state has existing administrative dissolution
procedures for some or all of the entities included in the definition of
“domestic filing entity” in Section 2, this section may be revised so that it
only applies to those entities for which the state does not already have
administrative dissolution procedures.
For those entities excluded from the scope of this section, subsection
(a) will need to be added to the administrative dissolution provisions in the organic
laws of those entities as an additional basis for administrative dissolution.
This section may be conformed to
existing administrative dissolution procedures in the state. For example, if the existing practice in a
state is for the Secretary of State to mail notice of an administrative
dissolution to the entity, that practice may be substituted for the requirement
in subsection (c) that the Secretary of State serve the filed declaration of
dissolution on the entity.
Some state administrative
dissolution statutes may include a time limit on reinstatement, unlike this
section which does not impose a time limit on reinstatement. States should decide whether they wish to
impose such a limit under this section.
This section applies to all domestic filing entities and not just unregulatedconventional privately-ownedheld entities. After the transition period provided in Section 16, failure of a domestic filing entity that is not an unregulateda conventional privately-ownedheld entity to include in its public organic record the statement required by Section 3(b) will be grounds for administrative dissolution of the entity.
A consequence of administrative dissolution in many states is to permit the use of the name of the dissolved entity by another entity. Thus subsection (f)(3) requires an entity seeking reinstatement to adopt a new name if its prior name has become unavailable because it has been appropriated by another entity during the period the entity seeking reinstatement was dissolved. See, e.g., Model Business Corporation Act (4th Ed.) § 14.22(a)(3) and Uniform Limited Liability Company Act (2006) § 706(a)(3).
SECTION
10. LIMITATION ONOF
LIABILITIES.
(a) Except as provided in a contract for the provision of the services of a records contact, aA records contact is not liable for: (1) to the conventional privately-owned entity or its interest holders or transferees for producing upon an appropriate request the information described in Section 7(a) or the certification described in Section 7(b); or .
(2) (b) Except as provided in a contract for the provision of the services of a records contact, a records contact is not liable for any inaccuracy in or omission from the information described in Section 7(a) or the certification described in Section 7(b), except that this paragraph does not limit the liability of a records contact for recklessness, intentional misconduct, or criminal conduct.
(bc) A records contact or responsible individual is not liable under law other than this [act] because of being identified as a records contact or responsible individual in the records of the [Secretary of State].
(cd) Compliance or noncompliance by a domestic filing entity with the requirements of this [act] is not a ground for imposing liability on its interest holders, beneficial owners, transferees, or governors for the debts, obligations, or other liabilities of the entity.
Subsection (cd) makes clear that the failure of a domestic filing entity to comply with the requirements of this act is not a basis for piercing the veil of anythe entity. That subsection also makes clear that complying with this act is not a basis for imposing liability on the interest holders or governors of an entity on the basis of an alter ego theory.
SECTION 11. ADDRESSES. Whenever this [act] requires the provision of an address, the following information must be provided:
(1) an actual street address or rural route box number; and
(2) a mailing address, if different from the address under paragraph (1).
SECTION 12. PROHIBITION OF BEARER INTERESTS. A domestic filing entity may not issue a certificate in bearer form evidencing either a whole or fractional interest.
Legislative Note: Enacting states may choose to omit this
section and instead prohibit the issuance of bearer certificates in the
individual organic laws for each type of entity listed in the definition of
“domestic filing entity” in Section 2.
(a) The [Secretary of State] shall collect the following fees when a document is delivered for filing under this [act]:
(1) initial entity information statement $___
(2) [amended entity information statement $___
(4)] application for reinstatement following
administrative dissolution $___
Legislative Note;: With respect to optional paragraphs (2) and (3),
see the Legislative Note to Section 4(j).
(a) The [Secretary of State] shall adopt rules[, in accordance with the state’s administrative procedure act] setting the fee for filing an initial entity information statement or application for reinstatement following administrative dissolution under Section __processing filings under this [act]. The fee shall be set at an amount such that the total amount of fees collected during a year is not less than the annual costs incurred by the [Secretary of State] in administering this [act].
(b) The fees collected under subsection (a) shall be deposited into a restricted account within the General Fund. Funds in the restricted account shall be used only for the administration of this [act].
Legislative Note: Subsection (b) should be revised to conform to the enacting state’s practice in establishing special purpose funds.
SECTION 14. PROCESSING OF DOCUMENTS. The [Secretary of State] shall refuse to file a document if the document or any aspect of its delivery to the [Secretary of State] does not comply with this [act].
Legislative Note: With
respect to paragraph (1), see the Legislative Note to Section 2(1).
This section is optional because it implicates policy concerns beyond the scope of this act. Enactment or omission of this section will not affect the purpose of this act to provide law enforcement with important sources of information about conventional privately-held entities. Some states may decide that it is appropriate to keep entity contact statements confidential as permitted by this section. Other states may conclude that it is appropriate to make the contents of entity contact statements publicly available.
This section does not require that the request of a law enforcement agency for access to an entity information statement must be an “appropriate request” as defined in Section 2. Any request in a record from an authorized law enforcement agent should be honored by the Secretary of State.
SECTION
16. TRANSITIONAL PROVISION.
(a) On or before the date provided in subsection (b), a domestic filing entity in existence on [the effective date of this act] must deliver to the [Secretary of State] for filing:
(1) an amendment of its public organic record that contains the statement required by Section 3(b); and
(2) if it is an unregulateda conventional privately-ownedheld entity, an initial entity information statement.
(b) A domestic filing entity must comply with subsection (a) by the earlier of:
(1) [the second anniversary of the effective date of this act]; or
(2) the date the entity first delivers to the [Secretary of State] for filing any other document.
(c) The [Secretary of State] shall, not earlier than [the first anniversary of the effective date of this act], mail to every domestic filing entity that has not complied with subsection (a) before that date a notice advising the entity of the requirement to comply with subsection (a). Failure by the [Secretary of State] to provide the notice to any entity, or failure by any person to receive the notice, shall not relieve an entity of the obligation to comply with subsection (a).
[(d) The amendment required by subsection (a)(1) does not need to be approved by the governors or interest holders of a domestic filing entity.]
Legislative
Note: Optional subsection (d)
is intended to simplify the procedure for approving an amendment of the public
organic record so that, for example, an amendment to the articles of
incorporation of a
business corporation to adopt the
statement as to whether the corporation is an unregulateda conventional
privately-ownedheld entity may be filed without action by the board of
directors or shareholders. As with the
similar optional provision in Section 3(c), an enacting state may choose to
place that provision in the individual organic laws for each type of entity
listed in the definition of “domestic filing entity” in Section 2 or may decide
to vary the rule of subsection (d) for some types of entities by requiring, for
example, approval by the governors.
The intention of this act is that all entities will be in compliance within two years after the effective date of the act. Subsection (d) requires the Secretary of State to send out a reminder notice one year after the effective date to facilitate compliance. That notice or lack thereof does not modify or affect the requirement that all entities must comply with subsection (a) within two years after the effective date of the act. Failure of a domestic filing entity to comply with subsection (a) is grounds for administrative dissolution of the entity under Section 9.
SECTION 17. UNIFORMITY OF APPLICATION AND CONSTRUCTION. In applying and construing this uniform act, consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.
SECTION 18. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT. This [act] modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., but does not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).
SECTION 19. REPEALS. The following acts and parts of acts are repealed:
Legislative
Note: If a state chooses to
include optional Section 16,15, the state’s open records or similar law must be amended or
repealed to the extent it would require that an entity information statement or
statement of change not be kept confidential as provided in this act.Section 15.
SECTION 20. EFFECTIVE DATE. This [act] takes effect on . . . .
Document comparison by Workshare
Professional on Wednesday, April 08, 2009 11:41:04 AM
|
Input: |
|
|
Document 1 ID |
|
|
Description |
|
|
Document 2 ID |
|
|
Description |
|
|
Rendering set |
|
|
Legend: |
|
|
Inserted cell |
|
|
Deleted cell |
|
|
Moved cell |
|
|
Split/Merged cell |
|
|
Padding cell |
|
|
Statistics: |
|
|
|
Count |
|
Insertions |
|
|
Deletions |
|
|
Moved from |
|
|
Moved to |
|
|
Style change |
|
|
Format changed |
|
|
Total changes |
|