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House Insurance and Commerce Committee
February 1, 2023
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- HB 1265 Allows real estate brokers to form LLCs (passed)
- HB 1209 Allows dissolved business names to be available again (pulled down)
Rep Maddox: The Chair sees a quorum. Let’s go ahead and get the meeting started. The first thing I want to address is obviously, we all received an email, but the picture was canceled for this morning. So let’s shoot for next Wednesday at 9:45 to do the picture right out here in front of our office. So let’s do that. We just have a– I think we’re just going to hear a couple of bills today. Representative Dalby is going to run a bill, and Representative Haak is going to run a bill. And Representative Dalby’s asked to go first. If you would, introduce yourself, and you’re recognized to present your bill.
HB 1265 Allows real estate brokers to form LLCs
Rep Dalby: Thank you, Mr. Chair, members of the Committee. I’m Carol Dalby, State Representative for District 100. Today, House Bill 1265 is really very simple. All this bill is doing is allowing an individual who is a broker or a salesman in the real estate field to be able to incorporate as a professional limited liability company. That’s all this bill does is give them that option to do that.
Rep Maddox: Thank you, Representative. Any questions by the Committee? Representative Allen, you’re recognized. Oh, I’m sorry, we’ll hold that motion just for a moment. Question, Representative Eaves?
Rep Eaves: Why is it needed?
Rep Dalby: Because they can’t do it now and it gives them another opportunity to have another avenue to do business.
Rep Maddox: Thank you. Yes, sir, Representative Ladyman, you’re recognized for a question.
Rep Ladyman: Representative Dalby, I’m just curious. I mean, why haven’t they already been able to do this? I don’t understand.
Rep Dalby: We discussed that earlier, Representative Ladyman. It’s interesting, I think the real reason is because under the real estate law, their corporations are set up just not differently but there’s just a section of the law dealing with real estate. And I think under the general business sections of the code it’s over there and they just wanted to make sure they could be able to do the thing since they have a whole section of code regarding real estate. I know no other reason.
Rep Maddox: Thank you. Any further questions by the Committee? Okay, seeing none, we’ll have a motion, or actually, someone’s beat you to that but we’ll do that at the proper time. Thank you. There’s no one signed up, but is there anyone in the audience who would like to speak for or against this bill? Okay, seeing no one, Representative Dalby, would you like to close for your bill?
Rep Dalby: Yeah, I’m closed for the bill and I would appreciate a good vote.
Rep Maddox: Okay, Representative Dalby has closed for her bill. Representative Allen, you are recognized for a motion. Representative Allen has made a motion do pass. That is a proper motion. Is there any discussion on the motion? Okay, all in favor of motion do pass, say aye. Any opposed nay. Congratulations Representative Dalby, your bill has passed.
Rep Dalby: Thank you, Mr. Chair. Thank you, members of the Committee.
Rep Maddox: Representative Haak, if you’d come to the table and introduce yourself and you can proceed with presenting your bill.
HB 1209 Allows dissolved business names to be available again
Rep Haak: Thank you, Mr. Chairman. Good morning, members. I’m here to present a bill that was brought to me by a constituent that wanted to open a business and pick a name for their business and register it with the Secretary of State and found out that that business name was already taken, though it was now a dissolved company. But it was still on the Secretary of State’s roll, so they weren’t able to take that business name. So this bill just helps clean up the law and allow– the Secretary of State has also looked at this, and two chambers of commerce from my district and a city attorney has said they had also run into this issue before. So they really appreciated us trying to clean this up, that the Secretary of State’s office would clear any dissolved corporation’s corporate names from their rolls within 3 years if that corporation was in fact now dissolved.
And the same thing goes for a limited liability company that is no longer active using that name. That this would be an action taken so that within 3 years after the corporation is dissolved and no longer doing business it would be expunged from the Secretary of State’s rolls and could be used again as a business name.
Rep Maddox: Thank you, Representative. Representative Eaves, you’re recognized for a question.
Rep Eaves: Thank you. The Secretary of State’s office you said is okay with this, they’ve looked at it?
Rep Haak: Yes, sir.
Rep Eaves And how long do they leave them on there now?
Rep Haak: I don’t think there is really any– there’s no expiration limit on that. A business can be defunct and it doesn’t have to necessarily be expunged from the rolls.
Rep Eaves: So your bill would have them available after 3 years?
Rep Haak: After 3 years.
Rep Eaves: Thank you.
Rep Haak: Yes, sir. And they would verify that.
Rep Maddox: Thank you. Representative Ladyman, you’re recognized.
Rep Ladyman: Representative, I mean I like your bill. I understand the reason for it because there’s names out there that people want to use and they’ve held up for years but my sons and I have two LLCs that are inactive and we want them to be inactive for a while. So my question or concern is what is the definition when you say a fictitious name, what does fictitious mean?
Rep Haak: So it sounds like while there may not be activity going through your LLC, you’re still operating as an LLC. So if an opportunity came through you would be able to do business contracts under that name. This would be for an entity that no longer exists. So in fact, it now becomes a legally fictitious name because there’s no entity behind that actual name, it’s just in name only.
Rep Ladyman: Well, here’s the problem that I see, I mean, the way we work, the way the Secretary of State, we fill out monthly reports even though there’s no income, it’s not active and doing business but we maintain the name, we pay the franchise fee, we do the monthly reports, and we’re keeping that name because those names have value.
Rep Haak: Absolutely.
Rep Ladyman: So the way that I understand that it works now, we keep that until we tell the Secretary of State we’re closing our business.
Rep Haak: Correct.
Rep Ladyman: We have to notify them in writing, there’s a form to fill out. So I mean, we may keep this for more than 3 years. So I guess I have a concern if the Secretary of State is just going to automatically close these things because these names are very valuable in some cases.
Rep Haak: Absolutely. And to your question, I think just to make sure I’m understanding it correctly, you are still operating as a legitimate LLC. You’re filing, you’re paying your fees. You are in many ways active even if you don’t have any transactions that might be occurring under that name. You still own that name.
Rep Ladyman: Yes but again, it gets back to definitions. What’s the definition of operate? What’s the definition of dissolve? I mean, if the Secretary of State is going to take an action without input from the company or the person who owns that name, then it needs to be very well defined.
Rep Haak: Absolutely. So I’ll get clarification for you on that if that’s a question you have.
Rep Ladyman: Yeah, I really have a concern about that.
Rep Haak: Their thought was this resolves that, so.
Rep Maddox: Representative Perry, you’re recognized for a question.
Rep Perry: Thank you, Mr. Chairman. So Representative Ladyman, I think I can explain how when you dissolve a corporation you actually have to pay a fee to dissolve that. It’s like $300 to dissolve a corporation. That’s what you’re talking about. You’re an active corporation, if you pay your franchise fee every year, that’s active so that you don’t have to worry about that. I’m looking at on Section 2 where it says, “within 3 years.” Is it after 3 years or within 3 years? So a corporation with some fictitious names and if I dissolve that corporation and I fail to transfer my fictitious names to one of my other corporations, then within that 3 years, is it after the 3 years or within 3 years?
Rep Haak: My understanding was at the end of 3 years that name would be available for the next person wanting to use that name for their corporation or their LLC.
Rep Perry: Yeah, okay. It’s on page 1 on line 26 because within is within 3 years, after 3 years is after 3 years. So it could happen on year one. And if things get busy and you forget to move your fictitious names one to the other, if you take that name, I’m wondering does the fictitious name move with it? Anyway, thank you, Mr. Chairman.
Rep Maddox: Representative Richardson, you’re recognized for a question.
Rep J Richardson Thank you, Mr. Chair. Is it possible, Representative that you could take that and get that one piece clarified because that’s the only sticking point I have is within or after that 3-year period because the bill makes sense, I understand why we’re doing it but that may be the one– that’s the only thing that I have a little rub with.
Rep Haak: I’ll be happy to do that. And I think my understanding of it was when they were making this and approving this was to say the Secretary of State’s office has up to 3 years to remove that name off of their rolls after a corporation has become dissolved. So this is after the corporation is dissolved the Secretary of State’s office has up to 3 years to make sure that name can be reused again, open again. So if they could do it sooner that would make it more available but I think they’re wanting to have enough time to make sure they can clear it all out. But I would ask that if we could return and have someone come and speak to that, that’ll be just fine. I’ll be happy to do that.
Rep Maddox: Okay, I think that’s a good idea. We could use some, I think some assistance from the Secretary of State’s office to answer these questions. So at this time, you’d like to pull your bill and do further work on it, is that correct, Representative?
Rep Haak: Yes.
Rep Maddox: Representative, would you entertain one more question before you leave?
Rep Haak: Yes, sir.
Rep Maddox: Okay. Representative Eaves, you’re recognized.
Rep Eaves: Thank you, Mr. Chairman. I think what you’re doing is a good thing. I think you just kind of need to clarify some things. And to Representative Perry’s point within the 3-year period is a little confusing, I understand why you’re doing that but I need to understand if a company is formally dissolved and the Secretary of State’s obviously going to know that they’re wanting to relinquish their name, so they can do that within 3 years based on the way the language in your bill is now but what if it’s a company that has failed to pay their franchise fees for a period of 1 or 2 years or 3 years, then do they have to wait 3 more years or can it be?
Rep Haak: They will have to come and answer that question.
Rep Eaves: Okay, do you see the distinction I’m trying to make?
Rep Haak: I see the distinction. I’ll be happy to have them clarify that.
Rep Eaves: Yeah. I mean, I’m in favor of what you’re trying to do. I just kind of need to get that cleared up a little bit. Thank you for bringing the bill.
Rep Maddox: Would you like to continue answering questions, Representative?
Rep Haak: I think it’d be easier if we would have someone from the Secretary of State’s office answer questions that you’re asking of them.
Rep Maddox: Thank you. I appreciate you and appreciate you willing to work with the Secretary of State’s office and just bring this back and we’ll entertain it as soon as we’re able to. Thank you.
Okay, members, unfortunately, that is all the bills that we have at this time. I will give you– so what I am trying to do, I am trying to reach out to all the members about running their bills. At this point, Representative Wardlaw has asked to remain on active. He’s going to do some amendments. Representative Hudson is the same, she’s working on an amendment. I spoke with her this morning. I don’t know what Representative Maddox is doing.
The rest of them we will just – and I’ve tried there’s just a couple of other people who I do not – I want you to get my cell phone so you can ask me questions about what we’re going to hear and I’ll try to do better about keeping you apprised of what we’re actually going to hear.
So one other thing is once the bill is on the regular agenda for 3 times it will automatically move to deferred. So I just want you to know that. So just let us know so we can get it back on the active. So just wanted to clear that up and anything, any further business from the committee? Seeing none, we’re adjourned.