ARC 5996C

ARC 5996C

SECRETARY OF STATE[721]

Notice of Intended Action

Proposing rule making related to model business corporation Act, document filing, and mechanics' notice and lien registry filing and providing an opportunity for public comment

The Secretary of State hereby proposes to amend Chapter 1, "Description of Organization," Chapter 30, "Uniform Commercial Code," Chapter 40, "Corporations," and Chapter 45, "Mechanics' Notice and Lien Registry," Iowa Administrative Code.

Legal Authority for Rule Making

This rule making is proposed under the authority provided in Iowa Code chapter 489; 2021 Iowa Acts, House File 844; 2021 Iowa Acts, Senate File 342; and 2021 Iowa Acts, House File 561.

State or Federal Law Implemented

This rule making implements, in whole or in part, Iowa Code sections 17A.1 and 17A.3.

Purpose and Summary

The proposed rule making does the following:

●Facilitates the January 1, 2022, enactment date of the new Model Business Corporation Act pursuant to 2021 Iowa Acts, House File 844, division I.

●Implements extra filing services authorized as part of 2021 Iowa Acts, House File 844, division III.

●Defines "information sufficient to establish the person's identity" for purposes of the definition of "trusted filer" in Iowa Code section 554.9513A(1) as enacted by 2021 Iowa Acts, Senate File 342, section 10.

●Ensures the ability of filers to file liens in multiple counties in the Mechanics' Notice and Lien Registry pursuant to 2021 Iowa Acts, House File 561.

●Refines the Office of the Secretary of State's internal computer search logic to accommodate Series LLCs pursuant to Iowa Code chapter 489.

Fiscal Impact

At this time, it is still uncertain whether this rule making will have a fiscal impact. The Legislative Services Agency's fiscal note for 2021 Iowa Acts, House File 844, estimated an annual revenue increase of between approximately $25,000 and $75,000 as a result of the added preclearance and expedited filing services. However, based on the average across the first quarter of FY 2022 for the new services, fee revenue to the General Fund is currently estimated to increase by approximately $100,000 annually. This estimate is based on the average for the first three months of the filing services being available and may change dependent on the volume of usage throughout the remainder of the year and in subsequent years. As more complicated filings are brought into Fast Track Filing, the usage of preclearance and expedited filing services may also decrease as a result of Fast Track's quicker processing times.

Jobs Impact

After analysis and review of this rule making, no impact on jobs has been found.

Waivers

Any person who believes that the application of the discretionary provisions of this rule making would result in hardship or injustice to that person may petition the Secretary of State for a waiver of the discretionary provisions, if any, pursuant to 721—Chapter 10.

Public Comment

Any interested person may submit written or oral comments concerning this proposed rule making. Written or oral comments in response to this rule making must be received by the Secretary of State no later than 4:30 p.m.on November 9, 2021. Comments should be directed to:

Public Hearing

No public hearing is scheduled at this time. As provided in Iowa Code section 17A.4(1)"b," an oral presentation regarding this rule making may be demanded by 25 interested persons, a governmental subdivision, the Administrative Rules Review Committee, an agency, or an association having 25 or more members.

Review by Administrative Rules Review Committee

The Administrative Rules Review Committee, a bipartisan legislative committee which oversees rule making by executive branch agencies, may, on its own motion or on written request by any individual or group, review this rule making at its regular monthly meeting or at a special meeting. The Committee's meetings are open to the public, and interested persons may be heard as provided in Iowa Code section 17A.8(6).

The following rule-making actions are proposed:

Item 1. Amend subrule 1.2(1) as follows:

1.2(1) All matters involving corporations, profit and nonprofit organized in Iowa or authorized to do business in Iowa, are handled by the corporation division under the supervision of a director. The office issues all certificates of incorporation for new domestic corporations and issues certificates for authority and certificates of registration to do business in Iowa for foreign corporations. Also, certificates of good standing, amendments, mergers, certified copies of articles and other corporate papers are issued by the office.

Item 2. Adopt the following new definitions of "Defraud" and "Harass" in subrule 30.1(2):

"Defraud" means illegally obtain money or other benefit from a person by deception.

"Harass" means engage in any activity purposefully, without legitimate purpose, and in a manner likely to cause another person annoyance or harm with the intent to intimidate, annoy, or alarm that other person.

Item 3. Adopt the following new rule 721—30.7(554):

721—30.7(554) UCC affidavit of wrongful filing. For purposes of the definition of "trusted filer" in Iowa Code section 554.9513A(1), "information sufficient to establish the person's identity" as required in Iowa Code section 554.9513A(1)"a" includes all of the following:

1.First name.

2.Last name.

3.Organization legal name, if any.

4.Street address, city, state, zip code, and country.

Item 4. Adopt the following new subrule 40.1(8):

40.1(8) Same-day preclearance delivery. Documents submitted for same-day preclearance service must be delivered by 12 noon on the day for which same-day preclearance service is requested. Documents delivered after 12 noon and processed by 4:30 p.m.the following business day constitute same-day service.

Item 5. Adopt the following new subrule 40.1(9):

40.1(9) Order of expedited filing. The secretary of state shall process expedited filings in the order in which they are received. In the event that processing an expedited filing within the period of service requested (two-day or five-day) is infeasible as a result of the number of requests for expedited service, the secretary of state shall assign a filing date to the delayed expedited filing that is within the requested period of service.

Item 6. Amend subrule 40.3(2) as follows:

40.3(2) The following words and abbreviations, when positioned as the last word or abbreviation in the corporate name, are not considered in determining whether a name is distinguishable upon the records of the secretary of state:

1.Corporation

2.Company

3.Incorporated

4.Limited

5.Corp.

6.Co.

7.Inc.

8.Ltd.

9.Benefit Corporation

10.BC

Item 7. Adopt the following new subrule 40.3(7):

40.3(7) The presence or absence of the words "protected series" or the abbreviation "PS" in the name of a protected series, when such words or abbreviation is meant to comply with Iowa Code section 489.14202(2)"b," is not considered in determining whether the name of a protected series is distinguishable upon the records of the secretary of state.

Item 8. Amend numbered paragraph 40.3(16)"4" as follows:

4.Names of corporations (profit or nonprofit) whose certificates of authority or certificates of registration have been revoked.

Item 9. Amend subrule 40.4(1) as follows:

40.4(1) The office of secretary of state requires a payment of all fees in full at the time of filing of any corporate document or request for copies. The office of secretary of state requires a payment of all surcharges in full at the time of request for preclearance of any corporate document.

Item 10. Adopt the following new subrule 40.4(6):

40.4(6) Refund of expedited filing service surcharge.

a. The secretary of state may refund payment of an expedited filing service surcharge required pursuant to the provisions of Iowa Code section 9.15(2)"a" and "b" if, within five business days from the time the document is received and date stamped, the document has not been filed in the records of the secretary of state.

b. To receive a refund under this subrule, the requester must make a written request with the business services division of the secretary of state's office. The written request must specify the reason(s) for the refund and provide evidence of entitlement to the refund.

c. The surcharge shall not be refunded if the document fails to satisfy all of the filing requirements of the applicable Iowa Code chapter.

d. The decision of the secretary of state not to issue a refund for an expedited filing service surcharge is final and not subject to review pursuant to the provisions of the Iowa administrative procedure Act.

Item 11. Amend paragraph 45.4(2)"g" as follows:

g. The county or counties in which the building, land, or improvement to be charged with the lien is situated.

Item 12. Amend paragraph 45.5(2)"j" as follows:

j. The county or counties in which the building, land, or improvement to be charged with the lien is situated.

Item 13. Amend subrule 45.6(4) as follows:

45.6(4) Identification of lien county or counties. A lien posted to the MNLR under this rule shall be limited to the county or counties in which the building, land, or improvement to be charged with the lien is situated. The county or counties identified on the MNLR Web site website at the time of posting the required notices in rules 721—45.4(572) and 721—45.5(572) shall be the only county or counties in which the building, land, or improvement may be charged with a mechanic's lien.

Item 14. Amend paragraph 45.6(6)"c" as follows:

c. The county or counties in which the building, land, or improvement to be charged with the lien is situated.

Item 15. Amend subrule 45.15(2) as follows:

45.15(2) Correction statement. A correction statement for a commencement of work or a preliminary notice is an electronic posting by a registered MNLR user. A correction statement does not allow for a change in the county or counties where the building, land or improvement to be charged with the lien is situated; in the date of the commencement of work; or in the date that material was first furnished or labor was first performed by the subcontractor.