LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
Revision 1
March 27, 1999
TO: Honorable Kim Brimer, Chair, House Committee on Business
& Industry
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2168 by Naishtat (Relating to the appointment of a
registered agent to accept service of process in this
state on behalf of a business entity.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2168, As Introduced: negative impact of $(147,362) through the *
* biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(81,806) *
* 2001 (65,556) *
* 2002 (65,556) *
* 2003 (65,556) *
* 2004 (65,556) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Change in Number of State *
* Year General Revenue Fund Employees from FY 1999 *
* 0001 *
* 2000 $(81,806) 3.0 *
* 2001 (65,556) 3.0 *
* 2002 (65,556) 3.0 *
* 2003 (65,556) 3.0 *
* 2004 (65,556) 3.0 *
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Technology Impact
The new computer system currently being developed may be designed to
more efficiently accommodate filings.
Fiscal Analysis
The bill would provide that the designation of a registered agent to
accept service of process on behalf of a foreign or domestic business
entity would not take effect until the registered agent signs a document
evidencing the appointment or files written acceptance of the appointment
with the Secretary of State. The bill would apply to registered agents
appointed on or after the September 1, 1999 effective date of the bill.
The Secretary of State projects a cost resulting from the bill.
According to the agency, the cost arises from the necessity of the agency
to verify that registered agents have accepted the appointment. The
agency indicates that many documents filed may designate a registered
agent, which, under the bill, would not be a valid registered agent until
the registered agent's statement is filed. The agency indicates that is
authorized to involuntarily dissolve a domestic corporation,
professional corporation, professional association, and limited liability
company or revoke the certificate of authority of a foreign corporation
or a foreign limited liability company, if the business entity does not
maintain a valid registered agent in the state. The agency observes that
in order to dissolve a noncompliant business entity, it would have to
search its files to ascertain whether the statement accepting appointment
has been filed. The agency also observes that in order to certify that
service of process is effective, it would have to search its files to
ascertain whether the registered agent filed a statement accepting
service of process.
According to the Secretary of State, its current computer system is not
capable of "flagging" those entities which have designated a registered
agent who has filed a statement accepting that designation. Therefore,
the agency states that the bill would require manual retrieval of the
hard copy of documents. However, the agency is currently implementing a
system that could be designed to accommodate the filings. The agency
states that the new system is scheduled to be implemented January 1,
2000, after the bill's effective date of September 1, 1999.
Methodology
It is anticipated by the agency that 31,611 written acceptances of
appointment will be filed plus an additional 218 as registered agents or
offices are changes. The agency estimates it would need five new staff
for the registration and certification activity, including one for the
increased volume of filings, a second to address the anticipated increase
of delinquency notices due to business entities' failure to file the
required statements and a third new employee to answer increased phone
calls for information regarding the new requirement. In addition the
agency estimated the bill creates a need for two additional employees to
certify for litigants that the registered agent who accepts service of
process has filed a statement accepting the appointment as a registered
agent.
The agency projects a need for a total of five additional employees and
does not anticipate any reduction in cost after the new computer system
is implemented. However, this fiscal note assumes that the new
computer system for corporations would provide adequate support for the
additional workload related to certification and that the bill would
result in a need for only three of the five additional employees
indicated by the agency.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
LBB Staff: JK, TH, PH, SG