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.