GEC H.B. 2632 75(R)BILL ANALYSIS BUSINESS & INDUSTRY H.B. 2632 By: Brimer 4-9-97 Committee Report (Unamended) BACKGROUND Currently, the fees established for maintenance by the secretary of state of a record of service of process authorized to be made upon the secretary of state and for forwarding such process to an individual or entity served are found in article 10.01 of the Business Corporation Act and article 9.01 of the Limited Liability Company Act. Article 10.01 of the Business Corporation Act authorizes a fee of $40 for effecting service of process on corporate entities, foreign associations, joint stock companies, partnerships, or nonresident individuals. Article 9.01 establishes a fee of $25 for service on a domestic or foreign limited liability company. As there is no distinction between the maintenance of a record of service of process and the forwarding of such process to a limited liability company as opposed to a corporate entity or partnership, the fee should be standardized to make administrative procedures for such service more efficient. The fee also is more appropriately codified in Chapter 405 of the Government Code. In addition, some of the fees established under Chapter 405, Government Code are not consistent with other fees established for the same or similar service, and in some instances, no longer reflect the cost for such services. PURPOSE As proposed, House Bill 2632 makes various amendments to Chapter 405 of the Texas Government Code. The amendments standardize the fee for an official certification by the secretary of state when the certificate is issued in connection with certified copies; increase the fee for a search of the records of the secretary of state when written evidence of the search is required; establish a separate fee for certificates of existence which reflect any and all filings effecting changes to the entity's organizational documents [long form certificate of existence]; and standardize the fee for effecting service of process through the secretary of state and codifies the fee in the Government Code. The Act also makes conforming amendments or deletions in various statutes dealing with service of process with the secretary of state. RULEMAKING AUTHORITY The bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS Section 1: This section establishes a separate fee for a certificate of existence of a business organization which reflects any and all filings effecting changes to the entity's organizational documents [long form certificate of existence]. In order to complete a request for such certification, the certifying technician must have the organization's charter file retrieved for the technician's use. The file is then manually examined to verify and identify each document in the file and its file date. Charging a higher fee for such a certificate recognizes that production of this type of certificate is at an higher cost in terms of employee time, effort and resources than a standard certificate of existence. The section proposes to standardize the fee set for a certification by the secretary of state. The act of certification does not differ whether the certificate produced is attached to a certified record, or consists of a certificate of fact or a certificate of record. The $1 per certified page fee assists in recovering the higher cost for the production of the certified record which requires greater effort, time and resources than a certificate of record or existence. The section also standardizes the fee for maintenance by the secretary of state of a record of service of any process authorized to be made upon the secretary and for forwarding such process to the individual or entity served and codifies the fee in the Government Code. The fee for effecting service of process is set at $40, the present fee under article 10.01 of the Business Corporation Act for service on corporate entities, foreign associations, joint stock companies, partnerships, or nonresident individuals. Finally, the section increases the fee established in 1983 for a search of the records maintained by this office when written evidence of the search is required from $2 to $5. In general, the records searched are maintained in computer record banks maintained by the secretary of state. At this time direct electronic access to the records is available to the public at a cost of $3 per search. The present search fee does not cover today's costs of employee time in processing a request and in generating the written evidence required, transmission of the evidence to the remitter by direct mail or electronic transmission, or in maintaining the system in which the records are stored. Section 2. This section deletes from the fee provisions of the Texas Business Corporation Act the fee established for a consolidation which is an obsolete corporate transaction and deletes the fee established for maintenance of a record of service of process made upon the secretary of state and for forwarding such process to a domestic or foreign corporation, foreign association, joint stock company, partnership, or nonresident individual. The service of process fee is more appropriately codified in Subchapter C, of Chapter 405 of the Government Code which deals with the general fees the secretary of state is authorized to set and collect for its services. Section 3. The section deletes from the fee provisions of the Texas Limited Liability Company Act, the fee established for maintenance of a record of service of process made upon the secretary of state and for forwarding such process to a domestic or foreign limited liability partnership. The fee is more appropriately codified in Subchapter C, of Chapter 405 of the Government Code which deals with the general fees the secretary of state is authorized to set and collect. Section 4. This section makes conforming changes to Section 5.20, Texas Real Estate Investment Trust Act, relating to the fee for maintaining a record of service of process on the secretary of state for any real estate investment trust served under the section. Section 5. This section makes conforming changes to Section 17.091(e), Texas Civil Practice & Remedies Code, relating to the fee for maintaining a record of service of process on the secretary of state for a nonresident in a delinquent tax case. Section 6. Effective date: September 1, 1997. Section 7: Emergency Clause.