BILL ANALYSIS H.B. 1605 By: Hunter, T. (Sibley) Economic Development 05-18-95 Senate Committee Report (Unamended) BACKGROUND The 73rd Legislature passed Article 1528n, V.T.C.S. (Texas Limited Liability Company Act) and created joint liability in a limited liability partnership under Section 3.08 of Article 6132b, V.T.C.S. (Texas Revised Partnership Act). However, current law does not establish licensing provisions for insurance agents in a limited liability partnership registered with the secretary of state and engaging in business in Texas. PURPOSE As proposed, H.B. 1605 establishes provisions for the licensing of insurance agents in a limited liability partnership. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 1A, Article 21.07, Insurance Code, as follows: Sec. 1A. New heading: DEFINITIONS. Redefines "person." Defines "partnership" and "agency partnership." SECTION 2. Amends Article 21.07, Insurance Code, by adding Section 1B, as follows: Sec. 1B. LICENSING OF LIMITED LIABILITY COMPANIES. Defines "corporation." Requires each officer, manager, and member of a limited liability company to be licensed under this article. Requires the licensing and regulation of a limited liability company to be subject to the same provisions and requirements of this article that are applicable to corporations licensed under this article. SECTION 3. Amends Section 1A, Article 21.07-1, V.T.I.C., to redefine "person." Defines "partnership" and "agency partnership." SECTION 4. Amends Article 21.07-1, V.T.I.C., by adding Section 1B, as follows: Sec. 1B. Defines "corporation." Requires each officer, manager, and member of a limited liability company to be licensed under this Act. Requires the licensing and regulation of a limited liability company to be subject to the same provisions and requirements of this Act that are applicable to corporations licensed under this Act. SECTION 5. Amends Section 4, Article 21.07-3, V.T.I.C., by amending Subsections (c) and (d) and by adding Subsection (j), as follows: (c) Requires the commissioner of insurance (commissioner) to issue a license to a general partnership, or to a limited liability partnership registered with the secretary of state under Section 3.08, Article 6132b-3.08, V.T.C.S. (Texas Revised Partnership Act), engaging in the insurance business if each of the partners is licensed as an agent under this Act. Defines "partnership" and "agency partnership." (d) Deletes language providing that a corporation organized or existing under the Texas Business Corporation Act be required to be licensed by the commissioner. (j) Defines "corporation." Requires each officer, manager, and member of a limited liability company to be licensed under this Act. Requires the licensing and regulation of a limited liability company to be subject to the same provisions and requirements of this Act that are applicable to corporations licensed under this Act. SECTION 6. Amends Section 3, Article 21.14, Insurance Code, as follows: Sec. 3. APPLICATION FOR LICENSE; TO WHOM LICENSE MAY BE ISSUED. (a) Requires any person, partnership, registered limited liability partnership, limited liability company, or corporation (entity) to make application for a license to the Texas Department of Insurance (department), rather than the State Board of Insurance, in such form as the department may require, when any entity desires to engage in business as a local recording agent for an insurance company or carrier. Requires the application to bear a signed endorsement by a general, state, or special agent of a qualified insurance company or carrier that each applicant or each member of the limited liability company, among others, is a resident of the state. Makes a conforming change. (b) Requires the department to issue a license to an individual or a general partnership or a limited liability partnership registered with the secretary of state under Section 3.08, Article 6132b-3.08, V.T.C.S., engaging in the insurance business. Makes a conforming and a nonsubstantive change. (c) Makes conforming changes. (d) Defines "partnership" and "agency partnership." (e) Defines "corporation" and "corporations." Requires each officer, manager, and member of a limited liability company to be licensed under this article. Requires the licensing and regulation of a limited liability company to be subject to the same provisions and requirements of this article that are applicable to corporations licensed under this article. SECTION 7. Amends Section 4(b), Article 1.14-2, Insurance Code, to authorize the department to issue a surplus lines license to an agent after the agent has met certain requirements, including remitting the application fee set by the department in an amount not to exceed $50; and requiring each agent, including an agent acting as a partner in a general partnership or a registered limited liability partnership, to pass a qualifying examination. Requires the examination requirement to be met by each natural person acting as an officer, manager, and member of that limited liability company if the agent is a limited liability company. SECTION 8. Emergency clause. Effective date: upon passage.