78R2330 MTB-F

By:  Gallego                                                      H.B. No. 908



A BILL TO BE ENTITLED

AN ACT

relating to prohibiting certain foreign corporations from 
participating in state contracts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subchapter B, Chapter 2155, Government Code, is 
amended by adding Section 2155.0775 to read as follows:
	Sec. 2155.0775.  CERTAIN FOREIGN CORPORATIONS BARRED FROM 
PARTICIPATION IN STATE CONTRACTS.  (a)  In this section:
		(1)  "Domestic" means created or organized in the 
United States or under the law of the United States or any state.
		(2)  "Expanded affiliated group" has the meaning 
assigned to "affiliated group" by Section 1504(a), Internal Revenue 
Code of 1986, as that section existed on January 1, 2003.
		(3)  "Foreign" means created or organized in a country 
other than the United States or under the law of a country other 
than the United States.
		(4)  "Transaction" includes a series of transactions.                  
	(b)  A foreign corporation may not participate in state 
contracts that are subject to this subtitle, including contracts 
for which purchasing authority is delegated to a state agency, if:
		(1)  the foreign corporation acquires directly or 
indirectly substantially all of the properties held directly or 
indirectly by a domestic corporation; and
		(2)  immediately after the acquisition, more than 80 
percent of the stock, by vote or value, of the foreign corporation 
is held by former shareholders of the domestic corporation by 
reason of holding stock in the domestic corporation.
	(c)  A foreign corporation may not participate in state 
contracts that are subject to this subtitle, including contracts 
for which purchasing authority is delegated to a state agency, if:
		(1)  the foreign corporation acquires directly or 
indirectly properties constituting a trade or business of a 
domestic partnership;
		(2)  immediately after the acquisition and without 
regard to stock of the foreign corporation which is sold in a public 
offering related to the acquisition, more than 80 percent of the 
stock, by vote or value, of the foreign corporation is held by 
former partners of the domestic partnership;
		(3)  the foreign corporation does not have substantial 
business activities in the foreign country in which or under the law 
of which the corporation is created or organized when compared to 
the total business activities of the expanded affiliated group; and
		(4)  the stock of the foreign corporation is publicly 
traded and the principal market for the public trading of the stock 
is in the United States.
	(d)  Subsection (b)(2) shall be applied by substituting "50 
percent" for "80 percent" with respect to a foreign corporation if:
		(1)  the corporation does not have substantial business 
activities in the foreign country in which or under the law of which 
the corporation is created or organized when compared to the total 
business activities of the expanded affiliated group; and
		(2)  the stock of the corporation is publicly traded 
and the principal market for the public trading of the stock is in 
the United States.
	(e)  For the purposes of this section, stock held by members 
of an expanded affiliated group that includes the foreign 
corporation shall not be taken into account in determining 
ownership.
	SECTION 2.  (a) The changes in law made by this Act to state 
contracting procedures apply only to a contract for which a state 
agency first advertises or otherwise solicits bids, proposals, 
offers, or qualifications, as applicable, on or after September 1, 
2003.
	(b)  A contract for which a state agency first advertised or 
otherwise solicited bids, proposals, offers, or qualifications, as 
applicable, before September 1, 2003, is governed by the law as it 
existed immediately before the effective date of this Act, and that 
law is continued in effect for that purpose.
	SECTION 3.  This Act takes effect September 1, 2003.