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By: Shapleigh S.B. No. 311
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 executed on or
after the effective date of this Act.
(b) A contract executed before the effective date of this
Act 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 immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.