COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         4780-01

Bill No.:          Perfected HB 1983

Subject:           Secretary of State: Business and Commerce, Corporations

Type:              Original

Date:               March 11, 2008

Bill Summary:            Allows for the conversion of other entities to domestic corporations and the conversion of domestic corporations to other entities.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 5 pages.

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☐ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Officials of the Office of the Secretary of State - Business Services Division stated that since there are no new fees indicated in the proposed legislation, it is assumed that the filing fees for a conversion will be the same as a filing fee for a new entity filing. While it is unknown how many entities would file a conversion, it is anticipated that the number of mergers and consolidations would decrease as a result of the ability to convert, and that there would be no substantial increase or decrease in revenue. It is anticipated that existing staff would be used to process conversion filings. Officials stated they would need to modify existing system to accept and process a conversion. Officials estimate a one-time programming cost of $35,000 in FY 09.

Officials assume the income generated from the conversion fee in FY 09, would be in amount sufficient to defray the programming costs of $35,000.

Officials of the Department of Insurance and Financial Institutions and Professional Registration assume no fiscal impact to their department.

Oversight assumes no local government fiscal impact.

FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal; however, this proposal allows for business continuity by allowing a business to convert from one entity type to another entity type.

FISCAL DESCRIPTION

This bill allows Missouri corporations to convert to an other entity by adoption of a resolution by its board of directors approving the conversion and by approval of all shareholders supporting the adoption of the resolution. The bill specifies that "other entity" is a limited liability company, statutory trust, business trust or association, real estate investment trust, common-law trust, or any other unincorporated business including a partnership or a foreign corporation. The corporation must file with the Office of the Secretary of State a certificate of conversion certifying:

 (1) The name of the corporation;

(2) The date of the filing of its original articles of incorporation;

(3) The name and jurisdiction of the entity to which the corporation is being converted;

(4) The approval of the conversion; and

(5) The corporation's assent to service of process in Missouri and the address at which the company may be served.

Any other entity is allowed to convert to a corporation by approval of the conversion in accordance with its internal procedure and policy and by filing with the Office of the Secretary of State articles of incorporation and a certificate of conversion stating:

(1) The date which the other entity was first created;

(2) The jurisdiction where the other entity was first created;

(3) The name of the other entity immediately preceding the conversion; and

(4) The name of the corporation as specified in its articles of incorporation.

DESCRIPTION (continued)

Any conversion will not be deemed a dissolution of the prior entity, but rather will constitute a continuation of the existence of the converting business entity.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Office of the Secretary of State

         Business Services Division

Department of Insurance and Financial Institutions

                  and Professional Registration

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                March 11, 2008