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2015 Legislative Session Update

The following bills, which were passed during the 84th Regular Legislative Session, impact procedures, filings, or other duties and responsibilities of the Business & Public Filings Division. The enrolled bills and statutes, which reflect the changes in law made by the 84th Legislature, are maintained at Texas Legislature Online.

Business Filings

HB 2358 - Effective: June 16, 2015

Adds Chapter 112 to the Business & Commerce Code and amends the Tax Code to exempt certain out-of-state business entities whose transaction of business is limited to the performance of disaster-or emergency-related work during a disaster response period from registration with the Secretary of State. Authorizes the Secretary to request an out-of-state business entity that comes to the state for the purpose of performing disaster-or emergency-related work to provide a notification statement that includes certain identifying and contact information. The Secretary of State may also request an in-state business entity (a domestic or a registered foreign entity) to provide similar information for any out-of-state affiliate of the in-state entity that comes into the state to perform disaster-or emergency-related work in Texas during the disaster response period.

HB 2891 - Effective: January 1, 2016

Eliminates certain reports filed by professional associations and limited partnerships. The Act repeals the provision that requires a professional association to file an annual statement concerning officers, directors and members. The bill also amends Section 153.301 to authorize the Secretary of State to request a limited partnership that is not required to file a public information report under Section 171.203 of the Tax Code to file a periodic report. HB 2891 also amends Section 171.203 to include professional associations and limited partnerships on which the franchise tax is imposed among the entities that must file a public information report. The repealed law remains in effect for those entities involuntarily terminated/revoked for a delinquent report required before the effective date.

SB 859 - Effective: September 1, 2015, except as otherwise noted

SB 859 amends the Business Organizations Code (BOC) to clarify that company agreements and partnership agreements can contain an irrevocable power of attorney and to clarify that Section 11.057(f), which defines "majority-in-interest" for purposes of winding up a general partnership, may be modified by the partnership agreement.

Additionally, effective January 1, 2016, the BOC is amended to change the domestic limited liability partnership registration from a non-perpetual registration with annual renewal requirement to a perpetual registration an annual reporting requirement. The fee for the annual report is $200 for each partner in the partnership as of the date of filing the report.

SB 859 requires the Secretary of State to send written notice of the annual report requirements to each registered limited liability partnership not later than March 31 of each year. A registered limited liability partnership is required to file an annual report not later than June 1 of each calendar year. A partnership that fails to file its annual report by May 31 of the calendar year following the year on which the report or fee is due is automatically terminated in the records of the Secretary of State.

A partnership may reinstate its limited liability partnership registration within three years of the effective date of the termination by filing an application for reinstatement accompanied by all past due annual reports and fees. SB 859 does not affect the annual registration of a foreign limited liability partnership, which still has a limited duration and must be renewed before expiration. (SOS Form 308)

SB 860 - Effective: September 1, 2015

SB 860 makes substantive and technical amendments to provisions in the Business Organizations Code (BOC) that relate to corporations and to provisions relating to fundamental business transactions (mergers, conversions, and interest exchanges). Amendments include: adding provisions that specify procedures for ratification of void or voidable corporate acts or the issuance of shares and creating a new filing called a certificate of validation; authorizing the adoption of restated certificates of formation (with or without amendments) in merger transactions and changing the execution requirements for a restated certificate of formation for a for-profit corporation; and authorizing organizers and initial directors of a corporation (for-profit and nonprofit) that has not commenced business to execute filing instruments relating to the winding up of the corporation.

Technical amendments clarify existing law or make explicit what is implicit in existing law and include: clarifying that a plan of merger, conversion, or exchange may use a formula for the exchange of ownership and membership interests; clarifying that a plan of merger may allow ownership interests in a merged entity to remain outstanding after a merger; and clarifying that a merger, conversion, or interest exchange cannot be effective without the consent of an owner or member if the transaction would subject that owner or member to "owner liability."

SB 1049 - Effective: January 1, 2016, except as otherwise noted

SB 1049 amends the Tax Code and the Business Organizations Code (BOC) to exempt a taxable entity that meets the definition of a veteran-owned business from franchise tax and the fees imposed under the Business Organizations Code for filings made with the Secretary of State. An entity qualifies as a veteran-owned business only if each owner is a natural person who served in and was honorably discharged from a branch of the United States armed forces and provides verification of the person’s service and discharge to the Comptroller of Public Accounts.

The exemption from franchise tax and waiver of filing fees continue until the earlier of: 1) the fifth anniversary of the date on which the business entity was formed, or 2) until the entity ceases to qualify as a new veteran-owned business. The changes to the Tax Code and BOC are repealed effective January 1, 2020. A business entity that first qualifies as a new veteran-owned business before January 1, 2020, is governed by the law in effect immediately before that date, and the repealed law is continued in effect for that purpose.

SB 1313Effective: June 19, 2015

Chapter 5 of the Business Organizations Code (BOC) requires the Secretary of State to reject a proposed business entity name if it is the same as, deceptively similar to, or similar to the name of any existing domestic or foreign filing entity, or any unexpired name reservation or registration. Use of a similar name is permitted only if the existing entity or registrant consents in writing to use of the similar name. SB 1313 amends Chapter 5 to require that the written statement of the entity’s or registrant’s consent be notarized.

Notary Public

HB 1683 - Effective: January 1, 2016

Amends Chapter 406 of the Government Code relating to notaries public and requires the Secretary of State to assign a unique identifying number to each individual commissioned as a notary public or reappointed as a notary on and after the effective date. In addition, HB 1683 requires the Secretary to maintain a record of the number assigned to each notary and to supply the notary with the assigned number on issuance of the commission. The bill also amends the elements of a Texas notary’s seal of office by requiring the seal to include the identification number assigned by the Secretary of State.

HB 2235 - Effective: September 1, 2015

HB 2235 amends Section 406.004 and Section 406.009 of the Government Code with respect to the eligibility requirements to be appointed and commissioned as a Texas notary public. The amendments codify the interpretation Tex. Att’y Gen. Op. No. GA-0733 (2009) and clarify that the Secretary of State has no discretion to commission an individual who has been convicted of a felony or a crime involving moral turpitude.

HB 2573 - Effective: September 1, 2015

Amends Chapter 17 of the Business & Commerce Code (Texas Deceptive Trade Practices Act) to include within the definition of “false, misleading, or deceptive acts or practices” the use of a translation into a foreign language of the terms “notary” and “notary public” in any written or electronic material to imply that a person who is not an attorney is licensed to practice law.

New Duties/Responsibilities

HB 2511 - Effective: June 19, 2015

HB 2511 requires the secretary of state, by rule, to establish and implement a human trafficking prevention business partnership. The purpose of the partnership is to recognize those corporations and other private entities that voluntarily meet certain criteria aimed at the prevention of human trafficking. The bill requires the secretary of state to develop procedures and requirements for those corporations and private entities that desire to participate.

The secretary of state, together with other state agencies, such as the Texas Human Trafficking Prevention Task Force run by the Attorney General's Office, is to develop standards and promote the partnership. Resources from private and philanthropic organizations may be used to support the work of the partnership.

SB 519 - Effective: September 1, 2015

Adds Chapter 73 to the Business & Commerce Code to require a dental support organization (DSO) to register annually with the Secretary of State. A DSO is defined as an entity that, under an agreement, provides two or more business support services to a dentist. The registration must be filed no later than January 31 of each year for which the registration is required and corrected quarterly as necessary. A DSO is not required to register under Chapter 73 before February 1, 2016.

SB 519 requires the Secretary of State to promulgate forms, set fees, adopt rules, and enter into an interagency memorandum with the State Board of Dental Examiners to share information collected under Chapter 73.