HSB 600 (LSB 5770YC (6) 85)

HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON BALTIMORE)

A BILL FOR

An Act relating to certain corporations organized prior to July 1, 1971, by eliminating requirements relating to publication. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 491.19, Code 2014, is amended to read as follows:
   491.19  Commencement of business.

   The corporation may commence business as soon as the certificate is issued by articles of incorporation are filed with the secretary of state, and its acts shall be valid if the publication in a newspaper is made within three months from the date of such certificate; providing that when the notice is not published within the time herein prescribed, but is subsequently published for the required time, and proof of the publication thereof filed with the secretary of state, the acts of such corporation after such publication shall be valid.
    Sec. 2.  Section 491.20, unnumbered paragraph 1, Code 2014, is amended to read as follows:

   Amendments to articles of incorporation making changes in any of the provisions of the articles may be made at any annual meeting of the stockholders or special meeting called for that purpose, and they shall be valid only when recorded, approved and published as the original articles are required to be, except where the amendment provides for changing the principal place of business from one county to another, in which event said amendment shall be published in both the counties of the former and new place of business by the shareholders and filed with the secretary of state. Publication shall be by notice setting out the substance of the amendment and, in the case of amended and substituted articles, said notice shall contain the matters and things required to be published by section 491.17, relating to original incorporations. If no increase is made in the amount of capital stock, a certificate fee of one dollar and a recording fee of fifty cents per page must be paid. Where capital stock is increased the certificate fee shall be omitted but there shall be paid a recording fee of fifty cents per page and in addition a filing fee which in case of corporations existing for a period of years shall be one dollar per thousand of such increase and in case of corporations empowered to exist perpetually shall be one dollar and ten cents per thousand of such increase. Corporations providing for perpetual existence by amendment to its articles shall, at the time of filing such amendment, pay to the secretary of state a fee of one hundred dollars together with a recording fee of fifty cents per page, and, for all authorized capital stock in excess of ten thousand dollars, an additional fee of one dollar ten cents per thousand.
    Sec. 3.  Section 491.23, Code 2014, is amended to read as follows:
   491.23  Dissolution —— notice —— filing a statement with secretary of state.

   A corporation may be dissolved prior to the period fixed in the articles of incorporation, by unanimous consent, or in accordance with the provisions of its articles, and notice thereof must be given in the same manner and for the same time as is required for its organization; provided, however, that the notice of such dissolution shall be deemed sufficient if a statement swearing to the dissolution, signed by the officers of such corporation and published as required by law, is filed with the secretary of state. Notice thereof shall also be given by the filing in the office of the secretary of state the proof of publication of notice of dissolution and said proof shall be recorded by the secretary of state in the same manner as the recording of amendments, and a A recording fee of one dollar shall apply thereto to the filing of the statement.
    Sec. 4.  REPEAL.  Sections 491.17, 491.18, 491.32, and 491.109, Code 2014, are repealed.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   BACKGROUND. Iowa’s modern for-profit corporation law is contained in Code chapter 490 (1989 Iowa Acts, chapter 288), the “Iowa Business Corporation Act” (Code section 490.101). All domestic for-profit corporations must be organized under that chapter, unless an express exception is provided. One exception involves a corporation organized under Code chapter 491 which governs corporations incorporated prior to July 1, 1971. That Code chapter expressly provides that all domestic corporations are to be organized under Code chapter 490, unless expressly allowed in that Code chapter. The transitional provision in Code chapter 490 allows a corporation organized under Code chapter 491 to remain governed under that Code chapter, if organized on the mutual plan or operating as a telephone company qualifying as a nonprofit corporation pursuant to an internal revenue service letter ruling and if it distributes profits in a manner similar to a cooperative association under Code chapter 499. For example, certain corporations formed for purposes of insurance may be governed under Code chapter 490 (Code section 515.1).
   CURRENT LAW —— PUBLICATION REQUIREMENTS. A corporation organized under Code chapter 491 is governed by its articles of incorporation filed with the secretary of state who issues a certificate of incorporation to the corporation (Code section 491.19). The corporation must publish a detailed notice of the incorporation in a newspaper (Code sections 491.17 through 491.19). In addition, when the corporation amends its articles of incorporation, the amendments are valid only when filed with the secretary of state and published in a newspaper in the same manner required for the original corporation (Code section 491.20). A corporation organized under the Code chapter may also have a limited duration (Code section 491.24) but can be renewed (Code section 491.25). Upon satisfying certain conditions, the secretary of state issues the corporation a certificate of renewal (Code section 491.28). The corporation must publish a notice of renewal in the same manner as it published the notice of incorporation (Code section 491.32). Two or more corporations organized under Code chapter 491 may merge so that the surviving corporation absorbs another corporation or alternatively, two corporations may consolidate to form a new corporation (Code chapter 491, division II). The merged or consolidated corporation must file articles of merger or consolidation with the secretary of state (Code section 491.107). In that case, notice of the merger or consolidation is again published in the same manner as the original articles (Code section 491.109). A corporation organized under Code chapter 491 that dissolves must publish a notice of the dissolution and file a proof of publication with the secretary of state (Code section 491.23). 
   BILL’S PROVISIONS. The bill provides that a corporation organized under Code chapter 491 prior to July 1, 1971, and which is allowed to continue its existence, may amend its articles of incorporation, merge with another corporation, or dissolve without having to publish a notice of its action in a newspaper.