FLOOR BOOK MEMO House Committee on the Judiciary

Com. Sub. for H.B. 2554

Prepared by: Brian Skinner

(3/6/2013) Phone: 304-340-3258

email: brian.skinner@wvhouse.gov

SPONSORS: Delegates Morgan, Stephens, Staggers, Hartman, Jones, Diserio, and Lynch.

TITLE: Providing a procedure for the Secretary of State to reinstate certificates of authority for foreign corporations.

DATE INTRODUCED: February 20, 2013

CODE SECTIONS AFFECTED: W.Va. Code § 31D-15-1532 (amend and reenact), § 31D-15-1533 (new), § 31E-14-1432 (amend & reenact), § 31E-14-1533 (new) and § 59-1-2 (amend & reenact).

IDENTICAL/SIMILAR BILLS: None.

CHAIRMAN’S SUMMARY:

A. EXISTING LAW: Under current law, a foreign corporation may appeal the Secretary of State's revocation of its certificate of authority to the circuit court within 30 days after service of the certificate of revocation. The foreign corporation appeals by petitioning the circuit court to set aside the revocation. The circuit court may summarily order the Secretary of State to reinstate the certificate of authority or may take any other action the circuit court considers appropriate. The Court's final decision may be appealed as in other civil proceedings.

B. THIS BILL: The bill changes the current law by creating an administrative process for a foreign corporation to seek reinstatement of an administratively revoked certificate of authority, prior to applying to the circuit court. Under this new process, provide that a corporation that has had its certificate of authority administratively revoked may apply to the Secretary of State for reinstatement within 2 years of the revocation. The Secretary may grant the application and cancel the certificate of revocation. The reinstatement relates back to and takes effect as of the effective date of the administrative revocation and the corporation resumes its business as if the administrative revocation had never occurred.

If the Secretary denies a corporation's application for reinstatement, the corporation may appeal the denial of reinstatement to the circuit court of Kanawha County within 30 days after service of the notice. The circuit court's final decision may be appealed to the West Virginia Supreme Court of Appeals.

C. COMMITTEE SUBSTITUTE: The Committee adopted a committee substitute that corrects an inconsistency in fees that may be charged by the Secretary of State.

FULL ANALYSIS:

I. SUBSTANTIVE ANALYSIS

B. THIS BILL: The bill significantly changes the current law by creating an administrative process for a foreign corporation to seek reinstatement of an administratively revoked certificate of authority, rather than first applying to the circuit court. Under this new process, provide that a corporation that has had its certificate of authority administratively revoked may apply to the Secretary of State for reinstatement within 2 years of the revocation. W.Va. Code §§ 31D-15-1532 & 31E-14-1532. The bill provides the contents of an application for reinstatement. If the Secretary determines that the application contains the required information and that the information is accurate, the Secretary shall cancel the certificate of revocation and prepare a certificate of reinstatement that recites the Secretary of State’s determination and the effective date of reinstatement. Id. The Secretary is required to send notice of the reinstatement to the corporation within 30 days of the determination.

When a reinstatement is granted, the reinstatement relates back to and takes effect as of the effective date of the administrative revocation and the corporation resumes its business as if the administrative revocation had never occurred. Id.

If the Secretary denies a corporation's application for reinstatement, the Secretary must notify the corporation within 30 days of application by written notice that explains the reason or reasons for denial. W.Va. Code §§ 31D-15-1533 & 31E-14-1433. The corporation may appeal the denial of reinstatement to the circuit court of Kanawha County within 30 days after service of the notice. The circuit court's final decision may be appealed to the West Virginia Supreme Court of Appeals. Id.

The bill also amends W.Va. Code § 59-1-2 (Fees to be charged by the Secretary of State) to reflect that fees for the reinstatement of foreign profit and nonprofit corporations is the same as for limited liability companies.

C. COMMITTEE ON GOVERNMENT ORGANIZATION’S AMENDMENT: At the request of the Secretary of State, the Committee on Government Organization adopted an amendment to the bill that amends W.Va. Code § 59-1-2(a)(1)(L), to reduce the current $15 fee for articles of merger of more than two in-state businesses or corporations to $5 – – the current fee for the article of merger for more than two out of state businesses W.Va. Code § 59-1-2(a)(2)(N).

D. STAFF SUGGESTED COMMITTEE SUBSTITUTE: The staff suggested committee substitute adopts the Committee on Government Organization’s amendment in whole without any other changes.

II. SECTION DIRECTORY:

CHAPTER 31D. WEST VIRGINIA BUSINESS CORPORATION ACT.

ARTICLE 15. FOREIGN CORPORATIONS.

§31D-15-1532. Reinstatement following administrative revocation.

This section contains the process for the reinstatement of a foreign corporation that has had its certificate of authority to do business in the state revoked by the Secretary of State. The section has been significantly amended.

§31D-15-1533. Appeal from denial of reinstatement.

This new section contains the authority to appeal a denial of an application to reinstate a certificate of authority administratively revoked by the Secretary of State.

CHAPTER 31E. WEST VIRGINIA NONPROFIT CORPORATION ACT.

ARTICLE 14. FOREIGN CORPORATIONS.

§31E-14-1432. Reinstatement following administrative revocation.

§31E-14-1533. Appeal from denial of reinstatement.

This new section contains the authority to appeal a denial of an application to reinstate a certificate of authority administratively revoked by the Secretary of State.

CHAPTER 59. FEES, ALLOWANCES AND COSTS;

NEWSPAPERS; LEGAL ADVERTISEMENTS.

ARTICLE 1. FEES AND ALLOWANCES.

§59-1-2. Fees to be charged by Secretary of State.

This section is amended to include references to the reinstatement of domestic or foreign corporations in light of the amendments to W.Va. Code § 31D-15-1532, § 31D-15-1533, § 31E-14-1432 and § 31E-14-1533.

III. FISCAL ANALYSIS: A fiscal note is unavailable for this bill. However, it does not appear that the bill will have more than a de minimis fiscal impact on the State.

IV. COMMENTS

A. CONSTITUTIONAL ISSUES: None identified.

B. GOVERNMENT AGENCIES AFFECTED: Secretary of State.

C. RULE MAKING AUTHORITY: None.

D. COMMITTEE REFERENCE: Government Organization then Judiciary.

E. TITLE ANALYSIS: The bill’s title has been amended to more accurately reflect the contents of the bill. The new title is included in the committee substitute.

F. DRAFTING ISSUES OR OTHER COMMENTS: None.

G. EFFECTIVE DATE: 90 days from passage.