Senate Insurance and Commerce Committee

February 14, 2023

Sen Murdock: I see a quorum. We’re going to call this meeting to order. I think the only bill– well, Senator Irvin is not here. SB142, SB151, and 183, Senator Penzo has sent those to the deferred list. Senator Penzo, you’re recognized to run Senate Bill 205.

Sen Penzo: Thank you, Mr. Chair. Senate Bill 205 changes the way the Secretary of State evaluates LLC names. Pretty simple bill, attorneys were having some issues with long delays, getting rejections back or confirmations. So I got a lot of calls from attorneys thanking me for filing this piece of legislation. And ran it by the Secretary of State and they’re neutral on it. So I put up an offer to do an amendment and they said they were okay with the way the language currently was. No known opposition, and just like to ask everybody for a good vote.

Sen Murdock: Are there any questions from the Committee? Senator Hickey?

Sen Hickey: Yeah, I just want to get a little bit more information on Section 3.

Sen Penzo: On Section 3?

Sen Hickey: Yeah, I’m sorry, page 2, just starting on say, line 15 to 26. So what are we saying here with like a suffix? So if you’ve got a current corporate name that’s ABC Inc., then do you know, so would that be if you did A, B, C, D, I mean, then that’s okay for them to register that one or not sure?

Sen Penzo: Yeah, I mean, give me a second.

Sen Dismang: I can answer. And if you don’t mind I think I can step in and help answer that a little bit. I’m familiar with the process.

Sen Penzo: Go ahead.

Sen Dismang: The way that works right now, it’s subjective that someone over at the Secretary of State’s office can decide if something’s too similar or not. And oftentimes it’s pretty odd the way that they see things and it doesn’t make a lot of sense. I think all this is doing is trying to put in the parameters to when you can deny someone because it’s too similar to someone else.

So for instance, saying and, A-N-D, versus an ampersand, that’s still similar. ABC Inc. and ABC LLC are too similar. ABCD LLC and ABC LLC would be different. So again you’re just trying to set some basic parameters. I think it should be beneficial to the Secretary of State’s office. I am sure they are tired of having to answer why something is too similar but again I’ve been through the process numerous times and it’s quite something when you get them kicked back.

The other issue that does occur when they get kicked back is oftentimes an EIN has already been sought by the payer because there’s a delay or they’ve already started some other registration. Again having some clarification and guidelines should be beneficial to SoS and also the person, the entrepreneur that’s creating the entity.

Sen Penzo: Yeah, they pretty much cut out confusingly similar and made it distinguishable, like you said, added parameters.

Sen Hickey: And I agree with what we’re trying to do, I just want to make sure that we fully thought this through. So it says, “in determining whether or not a corporate name is distinguishable under subdivision this section, a corporate name that is different from the name of another entity or filing is distinguishable unless the only difference is this.” 

So I agree with what Senator Dismang says, I’m just wanting to make sure that by the way that we have it written that we’re not saying that this is the absolute only way that they cannot determine that it’s distinguishable. It just reads a little odd to me, a corporate name that is different from the name of another entity or filing is distinguishable. So, in other words, it’s always distinguishable unless it has a suffix, a definite or indefinite article, the and that we’ve talked about, or these other couple of things. So that’s what we’re saying? So really then they’re not going to have any discretion?

Sen Penzo: Well, they still can determine if it’s distinguishable.

Sen Hickey: That’s why if we’re for sure of that then I’m fine with it. I just don’t read it that way or I don’t think I do.

Sen Murdock: Are you reading it, Senator, as these are the only conditions?

Sen Hickey: Yes, sir.

Sen Murdock: That’s what you’re reading it as?

Sen Hickey: Yes.

Sen Murdock: And what you’re saying, Senator Penzo, your intent is that this is not the only, this is some additional is that correct? What is your intent?

Sen Penzo: That’s my understanding. I mean, if I thought this was going to be a problem I would have brought the attorney that drafted it.

Sen Hickey: Yeah, I apologize. And I failed by not looking at this. The mistake’s mine.

Sen Penzo: I’m fine with waiting on it until we can get some clarification if you’d feel more comfortable.

Sen Hickey: Again, I just want to– if you think that they can still say it’s distinguishable even if there’s something different than this, I don’t think it reads that way. I think that they cannot do it, that they’re going to have to allow it to go unless it’s one of these five issues.

Sen Penzo: Well, it’s saying it’s distinguishable unless the only difference is.

Sen Murdock: Yeah, I think the word only Senator Penzo is what’s kind of confusing, the only difference.

Sen Hickey: Only difference.

Sen Murdock: It kind of limits it when you say it’s only difference. Go ahead, Senator Dismang.

Sen Dismang: I mean, that’s exactly how I think it’s intended to read. Again there was a lot of latitude utilized by the SoS on–

Sen Hickey: Being completely subjective.

Sen Dismang: –kicking back names in the last few years. I mean, I wish I had some of the emails in front of me of entities that we tried to establish that then we were told conflicted with someone else. I mean, it was– I mean they were purely distinguishable. And so I mean I think the question is do you see any other – Members, do you see any other things that should be included in this list? But I do believe there should be parameters put in place. And again, it’s going to be better for the – here’s the reality, so any business that operates in the State of Arkansas, you can go to the business search function on the SoS website, that’s what the attorneys do – you search for whatever, Boyd Enterprises, okay. And you’re going to be able to see or you could search the word Boyd and it’s going to show you every business in the State of Arkansas that’s registered, even those that don’t pay their franchise taxes, that’s ever used the word, Boyd, okay. You can’t have one of those names, all right.

You could call it – the problem is SoS started making determinations that Boyd Enterprises was too much like Boyd Business or Boyd Rentals or whatever. And the next thing you know you can’t ever do anything again that uses the word Boyd. And so that’s what you’re trying to get away from is allowing the SoS to have the latitude to determine what’s what. To me, I would argue that there’s a big difference between Boyd Enterprises and Boyd Corporation or whatever you want to say. SoS felt very different about that.

Again I think this is just clarification. If there’s other items and if we want to pull it down that’s fine that should be added to the list and I think we just need to raise those as issues. I am guessing the Secretary of State’s office is in the room, y’all have went through this and these are what you’ve identified to be the primary issues, and then hopefully, not anymore in excess of that.

Sen Murdock: You want to bring the Secretary of State to the end of the table, are you available to talk about this? You’re welcome to come if you’re available. If you can bring some clarity that’d really help us. Please identify yourself.

Pitsch SoS: Matt Pitsch with Secretary of State’s office. Senator Dismang is correct, we’ve talked with Senator Penzo about this bill. We realize the need for the bill, we are not in support or against this bill. We’re anxious to see where it goes. It’s one of those deals, Senator Dismang is absolutely correct, it’s been tough without a written specification of what is distinguishable and what isn’t. So we don’t have an official position on this but we’re not against this bill.

Sen Murdock: You don’t have no clarity for us either?

Pitsch SoS: And I think that’s enough said.

Sen Murdock: Okay, anyone else? Senator Boyd?

Sen Boyd: I don’t really have a question but if there is some capacity for amending the bill, I’m fine if it stays the way it is, I’m just telling you that right now but if they’re going to consider it rather than see it says the word and, and the symbol ampersand or whatever. I mean, I’d just almost be open to saying conjunction, adding a conjunction in there like Boyd or Pitsch versus Boyd and Pitsch if that would be the only thing that I can think of. I don’t think it would change the way I voted or not but if you want input.

Sen Hickey: Just so if I understand this right, if it – and we’ll keep using Boyd here since you’re fortunate enough to get this, so if somebody had Boyd A Incorporated, according to this then we would not allow – if we have Boyd Incorporated, according to this then we wouldn’t allow Boyd A Incorporated because it’s just one more item. I guess I’m a little confused at maybe what could and what couldn’t have. I think that maybe I wouldn’t mind just having a list of us trying to sit down and figure out what could and what could not because I’ve actually had this personally with me with a company where I did contracting or whatever and there was another company that did a name that was almost identical. Well, whenever you’re going out to suppliers and things, all suppliers may understand that my creditworthiness and stuff was good and there was a little confusion to that and that’s why I’m bringing this up. And it may all be fine I just, I think I want to study this just a little bit longer just to make sure that I fully understand it.

Sen Penzo: And I’m perfectly fine with that.

Sen Hickey: And I apologize because I should have approached you first on this. Yes, sir.

Sen Murdock: So if I’m understanding correctly, you’re just going, just pull it down for today?

Sen Penzo: Let’s pull this down, we’ll talk about it, make sure we have it right. Then I’ll bring it back next week.

Sen Hickey: Thank you, Senator.

Sen Penzo: Thank you.

Sen Murdock: Okay that being said, I think that is– is there any other business that the Committee have that we may not know of? If not, I think that’s all we have for the day. We’re adjourned. Thank you.