COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         4780-03

Bill No.:          SCS for HB 1983

Subject:           Secretary of State: Business and Commerce, Corporations

Type:              Original

Date:               April 25, 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 4 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 proposal would allow limited liability companies, partnerships, trusts, and foreign corporations to convert to a Missouri corporation after the entity approves the conversion in accordance with any procedures required in the governance of its internal affairs and executes a certificate of conversion and articles of incorporation. The conversion would not affect obligations or liabilities incurred prior to the conversion. All rights, powers, privileges, debts, property, and causes of action follow the entity after conversion to the corporation. Entities are not required to wind up its affairs, pay liabilities, and distribute its assets prior to conversion.

Similarly, a Missouri corporation may convert to an aforementioned entity upon adoption of a resolution approving such conversion and the execution of a certificate of conversion. Rights, obligations, and liabilities are similarly retained and vested in the resulting 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

                                                                                                April 25, 2008