GEC H.B. 2570 75(R)BILL ANALYSIS BUSINESS & INDUSTRY H.B. 2570 By: Woolley 4-9-97 Committee Report (Unamended) BACKGROUND The provisions of the Texas Business Corporation Act, the Texas Non-Profit Corporation Act, the Texas Limited Liability Company Act, the Texas Miscellaneous Corporation Laws Act, the Texas Limited Partnership Act, and the Texas Revised Partnership Act do not require that documents filed under the respective acts with the secretary of state on behalf of a corporation, limited liability company, limited partnership, or a registered limited liability partnership be verified or acknowledged by the person executing the document on behalf of the entity. In addition, the Texas Miscellaneous Corporation Laws Act, article 1302-7.07; the Texas Revised Limited Partnership Act, article 6132a-1, section 13.04; and the Texas Revised Partnership Act, section 3.08(b)(12), permit the filing of a photographic, facsimile, or similar reproduction of an originally signed document and eliminate the requirement for original signatures on corporate, limited partnership, limited liability company, and registered limited liability partnership documents filed under respective acts for each entity by authorizing the use of facsimile signatures. Currently, Chapter 36, Business & Commerce Code, more commonly referred to as the Assumed Business or Professional Name Act, requires an original assumed name document filed with the secretary of state on behalf of these entities to be acknowledged by the person executing the document. The differences in execution and filing requirements increase the risk of rejection of the assumed name filing and oftentimes requires the entity to make two separate submissions to complete a transaction. Elimination of the notarization requirement will facilitate the review and processing of such instruments and bring the execution requirements for such documents in line with the execution requirements for other documents filed with the secretary of state by such entities. PURPOSE The Act makes various amendments to Chapter 36 of the Texas Business & Commerce Code relating to the execution and filing of assumed name certificates with the office of the secretary of state. The various amendments eliminate the notarization requirement for assumed name certificates; provide a penalty for submission of a false assumed name document and clarify the penalty for an intentional violation of Chapter 36; and permit the filing of reproductions with the office of the secretary of state. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS Section 1: Amends the execution requirements for assumed name certificates filed by incorporated entities, limited partnerships, limited liability companies, and registered limited liability partnerships by eliminating the requirement that the instrument be acknowledged by the registrant. Elimination of the notarization requirement will facilitate the review and processing of such instruments and bring the execution requirements for such documents in line with the execution requirements for other documents filed with the secretary of state by such entities. Assumed name certificates filed with the office of the county clerk must meet the execution requirements established in Section 36.10 of the Act; that is, such certificates must be signed and acknowledged by the assumed name registrant. Section 2: Amends 36.13 by deleting subsections (d) and (e) which were transitional provisions regarding the termination of certificates filed under prior law and are now obsolete. Conforming changes made to the heading of the section. Section 3: Amends Chapter 36 to add Section 36.18 which would permit the filing of reproductions of originally signed assumed name documents with the office of the secretary of state. Reproductions of originally signed corporate, limited partnership, limited liability company and limited liability partnership documents may be filed by the secretary of state. As assumed name documents are often filed in conjunction with other documents relating to a corporation, limited partnership, limited liability company, or limited liability partnership, allowing for the filing of a reproduction of a signed assumed name certificate would ease filing procedures, and reduce the rejection of such documents by the secretary of state. Section 4: Amends Section 36.26 to clarify the consequences of an intentional violation of Chapter 36. The maximum fine for intentional violation of a provision of Chapter 36 is presently $2,000--the maximum fine established for a Class A misdemeanor at the time of the Act's enactment in 1977. The amendment clarifies the nature of the offense as a Class A misdemeanor and, in effect, increases the maximum fine. Section 5: Amends Chapter 36, Business & Commerce Code by adding Section 36.27 to provide a criminal penalty for submission of an false or fraudulent assumed name document. The provision is similar to the provision found Section 9.412(c), Business & Commerce Code which relates to the fraudulent filing of a financing statement. Section 6. Effective date: September 1, 1997. Section 7. Emergency clause.