HBA-MPM C.S.H.B. 2187 77(R)    BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2187
By: Davis, Yvonne
Business & Industry
4/30/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Out-of-state corporations that conduct business in Texas must register with
the secretary of state and secure a registered agent.  The registered agent
serves as the corporation's representative in the event that a customer
files a complaint or needs product liability information.  Problems arise
when out-of-state corporations cease to conduct business in Texas or change
registered agents without notifying the secretary of state.  Customers may
have difficulty locating the corporation and, under current law, the
secretary of state can only penalize a corporation by canceling the
corporation's charter, which is an impractical penalty for a corporation
that no longer conducts business in Texas.  C.S.H.B. 2187 imposes a civil
penalty on corporations that cease business activities or change registered
agents without notifying the secretary of state.   

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

C.S.H.B. 2187 amends the Texas Business Corporation Act to provide that a
person who is required to file with the secretary of state (secretary) a
change of registered office or agent, an application or a certificate of
withdrawal or termination, or articles of dissolution commits an offense if
the person does not file the documents before the 30th day after the date
of the change, withdrawal, or termination or the date the filing is
otherwise required by law, whichever is earlier.  C.S.H.B. 2187 provides
that a person who does not file the documents in a timely manner is liable
to the state for a civil penalty not to exceed $2,500 for each violation.
The bill requires the court to consider all circumstances giving rise to
the offense in determining the penalty amount.  The attorney general or the
prosecuting attorney in the county in which the violation occurs may bring
suit to recover the civil penalty.  The bill also authorizes the attorney
general to bring an action in the name of the state to restrain or enjoin a
person from violating this provision.  The bill authorizes the plaintiff or
party bringing the suit or proceeding related to noncompliance with filing
deadlines to recover expenses incurred, including attorneys fees, in
locating and effecting service of process on the person.  A person bringing
an action or proceeding against the person for damages incurred as a result
of noncompliance with filing deadlines is authorized to request from the
attorney general nonconfidential information on the other person to
effectuate service of process.  The bill requires the attorney general to
comply with such a request. 

EFFECTIVE DATE

September 1, 2001.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2187 differs from the original bill by amending the Texas Business
Corporation Act rather than the Government Code, thereby making the
provisions of the substitute applicable only to corporations,  whereas the
original bill applied to any type of collective business organization. 

The substitute differs from the original by extending the filing deadline
from 11 days to 30 days after the date of the change, withdrawal, or
termination for a person who is required to file the documentation and
decreasing the civil penalty from an amount not to exceed $10,000 to an
amount not to exceed $2,500 for which a person who does not file the
requisite documentation in a timely manner is liable. 

The substitute requires the court to consider circumstances that gave rise
to the person's failure to file the documentation in a timely manner when
considering a penalty amount.  The substitute authorizes a person who
brings an action or proceeding against a person who commits this offense to
recover certain expenses and to request from the attorney general
nonconfidential information on the other person from the attorney. The
substitute requires the attorney general to comply with this request.