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New Law for Kentucky Benefit Corporations

Incorporating Services, Ltd. (Incserv) is an active member of the National Public Records Research Association (NPRRA). One of the many benefits of this membership is the continuous flow of information from other members regarding changes in policy, law and processing of public records searching and filing across the US. We received the below information from the NPRRA.

Kentucky HB35 was signed into law by Governor Matt Bevin on March 20, 2017.  The bill authorizes the formation of public benefit corporations, and is effective 90 days after the adjournment of the legislature.

Navigate using the below link to view the entire bill:

http://www.lrc.ky.gov/recorddocuments/bill/17RS/HB35/bill.pdf

If you have questions or need assistance, feel free to contact us or call 800-346-4646.

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What is a Clean Hands Certificate?

Have you ever heard of a Clean Hands Certificate?  This request seems to be frequently asked to the team in our DC office.  Deirdre Davis-Washington is the Assistant Vice President of Incorporating Services (Incserv) in Washington and is kind enough to share this explanation with us:

A Clean Hands certification form is required to be submitted with any application for a license or permit in the District of Columbia, including a Basic Business License.

A clean hands certification is used in the business license application and requires the entity and/or its owners to attest to the fact that they do not owe the District more than $100.   A new process was started which requires issuing an actual certificate to go with the business license application.   These are issued by the Office of Tax & Revenue (OTR).  A business MUST have filed the FR 500 Combined Registration Application and received a “Notice of Tax Registration” before the OTR will issue the Clean Hands Certificate.  This certificate does not attest to tax returns  filed, etc. (different from a  good standing) and usually is used just as supporting documentation.

If an applicant for a license or permit has failed to file District tax returns, they are also subject to the Clean Hands Law (DC Official Code §§47-2861 through 47-2866)and will be denied the license or permit. The Office of Tax and Revenue (OTR) Collection Division receives Clean Hands certifications from various District agencies.

What is owed to the Department of Consumer & Regulatory Affairs, (DCRA), the District’s equivalent to the Secretary of State, is totally separate.  DCRA governs the business entities and have a two-year report filing requirement.  Good Standing certificates, as it relates to the standing of the entity and fulfillment of the requirements of maintaining a business in DC, are issued by DCRA.  If they are not in good standing with DCRA, their authority to do business may be revoked.

For assistance with this or any other request from the District of Columbia, Federal Agencies and Embassies or for help in general, contact Deirdre and her team at 202-386-7575 or dcorders@incserv.com

 Nothing herein is intended to constitute legal advice on any subject or to create an attorney-client relationship. The materials presented here are in summary form. To be certain of their applicability and use for specific situations, we recommend an attorney be consulted.

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10 Things Illinois Limited Liability Companies Should Know About The New Limited Liability Company Act

Incorporating Services, Ltd. (Incserv) is pleased to be able to share the below article from Mr. Tyler J. Pratt, an Associate with Heyl, Royster, Voelker & Allen, P.C. located in Chicago, IL.  This article was posted on The National Law Review on March 2, 2017 and can be viewed in its entirety below.

The Illinois Limited Liability Company Act (Act) recently underwent a significant overhaul. Although Public Act 99-0637 does not take effect until July 1, 2017, the magnitude of the changes warrant an early review and both well-established LLCs and those still being conceived should take time to contemplate the impact of the revisions. Here are 10 of the most substantial changes.

   1.  Oral and implied operating agreements are now recognized.

Previously, oral and implied operating agreements were not explicitly recognized by the Act. The best practice is still to have a written operating agreement. This revision may not always protect members, since courts may not always find that an oral operating agreement exists, but it gives those who have failed to draft an operating agreement an alternative avenue for asserting their rights.

   2.  LLCs are now member-managed unless the operating agreement specifies otherwise.

Both member-managed and manager-managed LLCs are still recognized, but unless the operating agreement expressly provides that an LLC is manager-managed, or that the management of the company is vested in its managers, the default is to treat the LLC as member-managed.

   3.  The Act clarifies the procedures when a member wants to inspect and copy records.

Under the Act, a company shall furnish information concerning the company’s activities, financial condition, or other circumstances of the company’s business necessary to properly exercise a member’s rights under the operating agreement or the Act upon member demand. If the company knows, however, that the member already knows the information, the company does not need to honor the demand. Under the Act, when a written demand is made, the company shall provide the information within 10 days after receiving it. If the company cannot comply with the deadline, it must provide a description of the information the company will provide and state the time and location in which it will be provided. If the demand is denied, the company must do so in writing. The company may still charge the person reasonable costs of copying. The Act also clarifies that a member or dissociated member can exercise these rights. Whenever a dispute arises concerning the reasonableness of a restriction or designation, the company bears the burden of proving reasonableness. A transferee is not entitled to inspect records.

   4.  A member is no longer an agent of the LLC solely by reason of being a member.

This new requirement does not prevent or restrict a member from acting as the LLC’s agent, but limits the impact. Previously, each member was an agent of the LLC for purposes of the company’s business. Additionally, an LLC may deliver to the Secretary of State a statement of authority which identifies the member or manager of the company authorized to execute instruments transferring real property or other transactions on behalf of the company.

   5.  Except for the duty of care, fiduciary duties can be eliminated and altered.

The operating agreement may now eliminate or reduce a member’s fiduciary duties. Previously, the LLC Act did not allow the operating agreement to eliminate or reduce a member’s fiduciary duties. That provision has been removed, allowing a member’s fiduciary duties to be eliminated or reduced. The operating agreement may not, however, eliminate or reduce the obligation of good faith and fair dealing and it may not restrict or eliminate the duty of care. The operating agreement can establish the standards by which a member’s duties or rights are to be measured. The elimination of any other fiduciary duties must be clear and unambiguous within the operating agreement. The operating agreement may not authorize intentional misconduct or a knowing violation of the law. The operating agreement may identify specific types or categories of activities that do not violate any fiduciary duty and may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified after full disclosure of all material facts.

   6.  The operating agreement may provide for remedies and consequences for a member’s failure to make contributions.

The Act now allows an operating agreement to specify the consequences for a member’s failure to make required contributions. Those consequences include, without limitation: the loss of voting rights, the loss of the right to participate in the management or operating of the LLC, liquidated damages, the reduction or dilution of a member’s proportionate interest, the subordination of the member’s rights to receive distributions, a forced sale of the member’s interest, the adjustment of the interest rates for non-defaulting members, and the fixing of the value of a defaulting member’s interest by an appraisal or other formula.

   7.  A creditor’s charging order now constitutes a lien on distributional interests and transfer of distributional interests.

A charging order by a creditor now constitutes a lien on the judgment debtor’s distributional interest and requires the LLC to pay over the debtor’s distributional interest to the creditor. No other rights, however, are granted to the creditor. Consequently, the Act also provides that the transfer of a distributional interest alone does not require dissolution.

   8.  Dissolution is not always necessary.

The Act now specifically provides that a court may order a buyout of an applicant’s membership interest when the applicant has petitioned for relief due to alleged illegal, oppressive, or fraudulent conduct by the LLC’s managers or controlling members. Additionally, even if there are no members, an LLC may now continue to exist, so long as the legal representative of the last remaining member files an agreement to continue the LLC within one year after the event that caused the dissociation of the last member. In that instance, the legal representative is admitted as a member and the company will not be dissolved until a future event of dissolution occurs.

   9.  Dissociation does not relieve or discharge a member’s obligations.

Under the Act, a person’s dissociation alone does not discharge the person from any debt, obligation, or other liability owed to the company which the member incurred while a member.

   10.  The Act now provides a detailed procedure for converting and domesticating an LLC.

The Act now provides the procedures for conversion and domestication. When a company is converted, it changes its structure either from a non-LLC to an LLC or vice versa. Domestication on the other hand occurs when an LLC established under another state’s law becomes an LLC under Illinois’ laws and vice versa. In general, conversion and domestication are permitted so long as the applicable statutes permit such action and not prohibited by the laws of the U.S., Illinois, or other governing states.

Conclusion

Preparing and amending operating agreements is a very complex process and can result in unintended consequences if not done properly. The new ability to have an oral and implied operating agreement complicates this situation.

Nothing herein is intended to constitute legal advice on any subject or to create an attorney-client relationship. The materials presented here are in summary form. To be certain of their applicability and use for specific situations, we recommend an attorney be consulted.

About the author:

Tyler J. Pratt is an Associate Heyl, Royster, Voelker & Allen, P.C. Mr. Pratt concentrates his practice in the area of civil litigation, including: professional liability, tort litigation, Professional Regulation/Licensure, and truck and commercial transportation litigation.

Tyler joined Heyl Royster’s Peoria office as an associate in the fall of 2012. Prior to joining Heyl Royster, he spent nearly two years in general practice with another Peoria law firm. During law school, Tyler was a member of Valparaiso University’s Law Review and worked as an extern for Federal Judge Rudolph T. Randa in Milwaukee, Wisconsin, the U.S. Attorney’s Office in Hammond.

Contact information:
tpratt@heylroyster.com
309.676.0400
www.heylroyster.com

Special thanks to Mr. Pratt for this information on Illinois LLC’s.  Incserv is here to help, contact us for more information.

 

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UPDATE: Proposed BILL Could Increase Wyoming Statutory Annual Reporting Fees

Good morning.

Last evening we received new correspondence from the Secretary of State of Wyoming, Ed Murray.

TO:        Wyoming Commercial Registered Agents and to the Businesses You Represent

FROM:   Ed Murray, Wyoming Secretary of State

RE:        An Update on House Bill 267

In follow-up to my email of yesterday (January 31st), I want to report to you on the status of House Bill 267 now before the Wyoming Legislature.  Today, the House Appropriations Committee considered HB 267 and I voiced my opposition to the bill.

I stand firm in my belief that raising fees without thoughtful and deliberate study to assess the impact of such an increase is harmful to Wyoming businesses and could jeopardize Wyoming’s ranking as the best State to start a business.

The Committee amended HB 267 and lowered the originally proposed 200% increase in annual fees to a $25 increase in those same fees.

I want to thank the House Appropriations Committee for allowing myself and other members of the public to have a meaningful conversation about this bill.

HB 267 will now go before the full House for consideration in the coming days.

With my best regards,

 

 

Ed Murray

Wyoming Secretary of State

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Proposed BILL Could Increase Wyoming Statutory Annual Reporting Fees

As a Registered Agent in the State of Wyoming, Incorporating Services, Ltd. (Incserv) received communication from Mr. Ed Murray, the Wyoming Secretary of State. The communication was substantiated by the staff at the office in Cheyenne.

In this notice, Mr. Murray writes, “As Wyoming’s Secretary of State, I want to warn you about a bill (House Bill 267) now before the Wyoming Legislature which would significantly increase the minimum annual reporting fees for businesses by 200% – from $50 to $150 – effectively tripling fees for most of the businesses which you represent.”

The Secretary of State continues, “What HB 267 proposes – sudden and unpredictable fee increases – sends the wrong message to your clients and to all businesses here in Wyoming or to those contemplating doing business in Wyoming.”

House Bill 267 was proposed late last Friday afternoon, Jan. 27th, by Representative Jerry Obermueller (Casper). Additionally, HB 267 has been referred to the House Appropriations Committee for consideration either tomorrow, Wednesday, February 1st, or Thursday, February 2nd.

Please note: This fee increase is for the state of Wyoming’s annual reporting fees, not the registered agent fees from Incserv. Incserv will be monitoring this situation and will keep you informed.

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Louisiana Scam Alert

We received the following Scam Alert from the Louisiana Secretary of State: 

Selouisiana scam alertcretary of State Tom Schedler is notifying all business owners to be cautious when receiving mailers concerning “potential compliance violations” from a company called Business Compliance Division. Business Compliance Division is not affiliated or associated with Louisiana state government in any way. It is a private company, and Louisiana corporations are not required to call or have any dealings with this company at all. Mailers from this company should be discarded immediately.

For more information, visit www.sos.la.gov or contact a Commercial Division staff member at 225.925.4704 or commercial@sos.la.gov.

If you ever have any concerns regarding information requests from any state agency, please feel free to contact us at info@incserv.com for clarification and assistance.


The information within this post is intended for general information purposes only. Incserv and its employees cannot offer legal or financial advice. Please consult with your legal counsel for assistance in how this information may or may not affect you and your business prior to making any decisions. The above information (and any attachments) should be judged accordingly.

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Law Change Affects Conversions in NC

Law Change Affects Conversions in NC

 

north_carolina

Incorporating Services, Ltd. (Incserv) is an active member of the National Public Records Research Association (NPRRA). One of the many benefits of this membership is the continuous flow of information from other members regarding changes in policy, law and processing of public records searching and filing across the US. We received the below information from the NPRRA on Monday, August 29, 2016.

North Carolina SB 482 (Session Law 2016-114) was signed into law by North Carolina Governor Pat McCrory on July 28, 2016. Amongst other things, the law is amended to allow the conversion of a charitable or religious corporation to a LLC, if the sole member of the surviving entity immediately after the conversion is a charitable or religious corporation. The bill is effective October 1, 2016.

SECTION 3, G.S. 57D-9-20 reads as rewritten: Ҥ 57D-9-20. Conversion:

(a) An eligible entity other than an LLC may convert to an LLC if both of the following requirements are met:

(1) The conversion is permitted by the law governing the organization and internal affairs of the converting entity.

(2) The converting entity complies with the requirements of this Part and, to the extent applicable, the law governing its organization and internal affairs immediately before the conversion.

(b) The conversion of a charitable or religious corporation to an LLC is permitted by law if the sole member of the surviving entity immediately after the conversion is a charitable or religious corporation. This subsection shall not limit the ability of an eligible entity to convert to an LLC if otherwise permitted by law.

(c) For purposes of this section, charitable or Religious Corporation shall be as defined in G.S. 55A-1-40(4).”

For information and to read the full bill please go to: http://www.ncleg.net/gascripts/BillLookUp/BillLookUp.pl?Session=2015&BillID=s482

For assistance in North Carolina with Charitable or Religious Corporations, contact our office at ncorders@incserv.com.

The information within this post is intended for general information purposes only. Incserv and its employees cannot offer legal or financial advice. Please consult with your legal counsel for assistance in how this information may or may not affect you and your business prior to making any decisions. The above information (and any attachments) should be judged accordingly.

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Can Delaware Be Dethroned?

Josh Twilley, President of Incorporating Services, Ltd. shares an article from the Delaware Business Times, featuring a Professor Charles Elson, a well-recognized expert on corporate governance at the University of Delaware. Mr. Elson will be presenting at UCLA on the topic of “Can Delaware Be Dethroned?” discussing whether Delaware’s preeminence as the legal home to most of the Fortune 500 companies can be displaced.

The Delaware Business Times recently caught up with Prof. Elson for a Q&A. You can read the article in its entirety here. Below are some of the highlights from this article posted on August 15, 2016:

  • Delaware has a reputation for fairness and neutrality in determining corporate matters because other stakeholders (either corporate or individual) do not have unfair influence over the legislation. The Delaware Court of Chancery continues to be a global leader in corporate adjudication in part because of this fair balance.
  • Charles believes the movement towards federalizing corporate law is essentially already in place, in that many other states follow Delaware’s lead in new corporate regulatory law. Federalizing would create inconsistencies in the law which would result in the Supreme Court taking up many corporate cases, which they have little interest in doing.
  • Corporate law alone is not strong enough to prevent bad actors from using the corporate structure for illegal means. Delaware is no more complicit in allowing bad actors to use the corporate legal structure than any other state. (I would add that Delaware is less complicit because many other states have a less thoroughly developed corporate legal structure — in a less regulated environment, bad actors can get away with more…)

If you’d like to learn more about forming an entity in Delaware, contact us and a Corporate Specialist will assist you.

The information within this post is intended for general information purposes only. Incserv and its employees cannot offer legal or financial advice. Please consult with your legal counsel for assistance in how this information may or may not affect you and your business prior to making any decisions. The above information (and any attachments) should be judged accordingly.

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New AZ Senate Bill Makes Several Changes

KAZ imageim Sharpe, Assistant Vice President based in North Carolina updates us on the changes to Arizona law as described below:

Arizona Senate Bill 1356 was signed into law on May 19, 2016 and is effective as of August 6, 2016. Highlights of the bill are as follows:

Certificate of Disclosure (all corporations)
The period of disclosure of felony convictions for fraud in the Certificate of Disclosure is changed to five years instead of seven.

Foreign Corporations
A foreign corporation is required to provide the address of its principal office in its state of incorporation, or, if none, the corporation must provide the street address of its registered agent in the foreign jurisdiction.

In addition:
• Par value of shares is no longer required on the Application for Authority.
• Eliminates the Application for New Authority and replaces it with Articles of Amendment to Application for Authority.
• Clarifies that both certified copies from the foreign jurisdiction and articles of amendment will be required if the corporation changes its name, duration, or domicile, or if anything on the original Application was inaccurate when filed.

False Filings
Creates a right of action that the corporation or LLC, its creditors, and shareholders or members, may exercise against any person that authorizes or signs a document delivered for filing with the Arizona Corporation Commission that the person knows contains false or misleading information.

The full summary, and information regarding HB2614 and HB2447, can be found at: https://www.azcc.gov/Divisions/Corporations/Legislative-changes-update-May-2016.pdf.

Should you need assistance with Arizona filings or filing in any other state, feel free to contact us or call 800-346-4646.

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New AZ Senate Bill Makes Several Changes

New AZ Senate Bill Makes Several Changes

az-image

Kim Sharpe, Assistant Vice President based in North Carolina updates us on the changes to Arizona law as described below:

Arizona Senate Bill 1356 was signed into law on May 19, 2016 and is effective as of August 6, 2016. Highlights of the bill are as follows:

Certificate of Disclosure (all corporations)
The period of disclosure of felony convictions for fraud in the Certificate of Disclosure is changed to five years instead of seven.

Foreign Corporations
A foreign corporation is required to provide the address of its principal office in its state of incorporation, or, if none, the corporation must provide the street address of its registered agent in the foreign jurisdiction.

In addition:
• Par value of shares is no longer required on the Application for Authority.
• Eliminates the Application for New Authority and replaces it with Articles of Amendment to Application for Authority.
• Clarifies that both certified copies from the foreign jurisdiction and articles of amendment will be required if the corporation changes its name, duration, or domicile, or if anything on the original Application was inaccurate when filed.

False Filings
Creates a right of action that the corporation or LLC, its creditors, and shareholders or members, may exercise against any person that authorizes or signs a document delivered for filing with the Arizona Corporation Commission that the person knows contains false or misleading information.

The full summary, and information regarding HB2614 and HB2447, can be found at: https://www.azcc.gov/Divisions/Corporations/Legislative-changes-update-May-2016.pdf.

Should you need assistance with Arizona filings or filing in any other state, feel free to contact us or call 800-346-4646.