Bill > SF479

Introduced Session

GENERAL. This bill amends current and enacts new provisions relating to a number of different types of business organizations (entities) existing on a for-profit, cooperative, or nonprofit basis. An entity may be formed in this state as a domestic entity or formed in another jurisdiction and doing business in this state as a foreign entity. Generally, an entity is recognized as a person operating in this state with each type of entity governed under its own Code chapter. The relevant chapters, other than for cooperative associations, are based on model legislation prepared by the American bar association. BACKGROUND —— ORGANIZATION. The bill is comprised of a number of divisions, including a division amending a chapter establishing the office of secretary of state (SOS) and vesting the SOS with powers and duties (Code chapter 9). The other divisions address specific types of entities. A profit entity includes either a partnership, including a limited liability partnership, or a foreign limited liability partnership (Code chapter 486A); either a limited partnership, including a limited liability limited partnership, or a foreign limited partnership, including a foreign limited liability limited partnership (Code chapter 488); either a limited liability company, including a professional limited liability company, or a registered foreign limited liability company (Code chapter 489); either a corporation or foreign corporation (Code chapter 490), including a professional corporation or foreign professional corporation (Code chapter (496C). An entity formed on a cooperative basis includes either an association, foreign association (Code chapter 499), or a cooperative association (Code chapter 501); and either a cooperative or foreign cooperative (Code chapter 501A). An entity organized on a nonprofit basis includes either a corporation or a foreign corporation (Code chapter 504). BACKGROUND —— OPERATIONS. Each type of entity recognizes one or more executives making managerial decisions and equity holders, many of whom are voters making fundamental decisions affecting the entity. Depending upon an entity’s type, an executive may be referred to as a partner (Code chapter 486A), general partner (Code chapter 486A or 488), manager (Code chapter 489), or director (Code chapter 490, 499, 501, 501A, or 504). An equity holder may be referred to as a partner (Code chapter 486A), limited partner (Code chapter 486A or 488), shareholder (Code chapter 490), or member (Code chapter 489, 499, 501, 501A, or 504). Generally, an entity’s executives and equity holders are shielded from personal liability for actions attributable to the entity. The entity and its equity holders may also be subject to special tax treatment. BACKGROUND —— DOCUMENTS. Each entity is placed under the general authority of the SOS and in order to be recognized or authorized to carry out certain functions in this state, an entity must file a number of designated documents (referred to as records in Code chapters 488 and 489). The SOS’s function is to file a document as a ministerial act (Code sections 486A.1205, 488.206, 489.210, 490.125, 501A.202, and 504.116). Two Code chapters do not so prescribe the SOS’s authority when filing a document (Code chapters 499 and 501). A number of Code chapters do provide that the SOS may refuse to file a document submitted by an entity (Code sections 486A.1205, 488.206, 489.210, 490.125, 501A.202, and 504.116). Two Code chapters do not provide the SOS with that authority (Code chapters 499 and 501). Other Code chapters that provide the SOS authority to refuse a filing provide that an entity may appeal the SOS decision with the district court (Code sections 486A.1206, 489.210, 490.126, 501A.207, and 504.117). One chapter provides for the right by the SOS to refuse a filing but not a right of appeal (Code chapter 488). Two Code chapters provide for neither a right by the SOS to refuse a filing nor consequently the right of appeal by the entity (Code chapters 499 and 501). BACKGROUND —— REGISTERED FILINGS. Each entity must file with the SOS certain documents referred to in the bill as a registered filing that includes the name and address of a registered agent and registered office for acceptance of legal notices including service of process (Code sections 486A.1211, 488.114, 489.115, 490.501, 499.72, 501.106, 501A.401, and 504.501) in addition to a registered agent and registered office, the registered filing must include the entity’s principal (or executive) office. The failure to keep current registered filing is grounds for administrative dissolution (Code sections 488.809, 489.708, 490.1420, 499.76, 501.811, and 504.1421). Generally, a filer who has included an incorrect statement in a filed document may correct the statement (Code sections 486A.1204, 488.207, 489.209, 490.124, 501.105, 501A.204, and 504.115). BILL’S PROVISIONS —— SECRETARY OF STATE’S AUTHORITY TO FILE DOCUMENTS. The bill makes changes to each of the Code chapters beginning with Code chapter 9 by amending provisions by correcting citations or enhancing readability. BILL’S PROVISIONS —— REFUSAL TO FILE A DOCUMENT. The bill provides that when filing a document by an association or foreign association under Code chapter 499 or a cooperative under Code chapter 501, the entity and SOS are subject to the same filing requirements as other entities. Under the bill, the SOS’s filing of a document is also ministerial (Code sections 499.44 and 501.105). The bill provides that the SOS may refuse to file such a document (Code sections 499.44 and 501.105). The bill provides an appeal process from a decision by the SOS not to file a document submitted by a limited partnership or foreign limited partnership (Code section 488.206B), an association (Code section 499.44B), or a cooperative (Code section 501.105B). The bill includes a number of new provisions applicable to all entities, including a requirement that the SOS must refuse to file a document, if the SOS determines that the document is materially false or fraudulent or the document may be used to accomplish a fraudulent, criminal, or otherwise unlawful purpose (Code sections 486A.1205, 488.206, 489.210, 490.125, 499.44, 501.105, 501A.202, and 504.116). BILL’S PROVISIONS —— NOTARIZED AFFIDAVIT TO REMOVE UNAUTHORIZED USE INFORMATION FROM A REGISTERED FILING. The bill provides for unauthorized use information that misidentifies a registered agent, registered office, or principle office in a registered filing (Code sections 486A.1206B, 488.206C, 489.210B, 490.126B, 499.44D, 501.105D, 501A.202B, and 504.117B). A person whose information has been misidentified in a registered filing may submit to the SOS a notarized affidavit to remove such information from a registered filing (affidavit). The SOS must conduct an administrative review of the affidavit to determine the whether an asserted allegation is true. The SOS may reject an affidavit after determining that it is illegible, incomplete, misleading, or includes factual errors; or its purpose is to defraud or harass a person, including the filer. BILL’S PROVISIONS —— STATEMENT TO REMOVE UNAUTHORIZED USE INFORMATION FROM A REGISTERED FILING. If the SOS determines that an allegation of an affidavit is true, the SOS must file a statement to remove unauthorized use information (statement) and must then remove the unauthorized use information from the registered filings (Code sections 486A.1206C, 488.206D, 489.210C, 490.126C, 499.44E, 501.105E, 501A.202C, and 504.117C). The SOS must also deliver a notice of the statement to the entity explaining what information was removed and why it was removed. The SOS may allow the entity to correct the registered filing. The SOS is prohibited from charging a fee for accepting or reviewing an affidavit, filing a statement, or removing unauthorized use information from any registered filing. The SOS cannot return a fee paid for a registered filing. The SOS may act as an agent of the entity and the office of the SOS may act as the registered office of the entity. BILL’S PROVISIONS —— STATEMENT TO REMOVE UNAUTHORIZED USE INFORMATION FROM A REGISTERED FILING —— REGISTERED AGENT AND OFFICE. If the SOS’s removal of unauthorized use information from a registered filing would prohibit a person from serving any process, notice, or demand required or permitted by law, the SOS acts as the registered agent, and the SOS’s office acts as the registered office for the entity until the registered agent or registered office is changed (Code sections 486A.1214A, 488.117B, 489.119A, 490.504A, 499.75A, 501.106A, 501A.403A, and 504.504A). BILL’S PROVISIONS —— APPEAL OF STATEMENT TO REMOVE UNAUTHORIZED USE INFORMATION FROM A REGISTERED FILING. An entity is entitled to appeal a decision by the SOS to file a statement removing unauthorized use information from a registered filing in a similar manner as an entity may appeal a decision by the SOS refusing to file a document (Code sections 486A.1206D, 488.206E, 489.210D, 490.126D, 499.44F, 501.105F, 501A.202D, and 504.117D).

AI Summary

Committee Categories

Sarah Trone Garriott (D)*, 

Subcommittee: Rozenboom, Blake, and Schultz. S.J. 465. (on 03/10/2025)

Official Document