1997 SUMMARY OF LEGISLATION

BUSINESS, BANKING & INSURANCE

BUSINESS, BANKING & INSURANCE LEGISLATION

SENATE FILE 21 - Nonperpetual Care Cemeteries (full text of act)

BY MCKEAN. This Act eliminates a requirement that a nonperpetual care cemetery post a legible sign in a conspicuous place indicating the cemetery is not a perpetual care cemetery. However, a nonperpetual care cemetery is still required to have a notice printed or stamped at the head of all of its contracts, deeds, statements, letterheads, and advertising material stating that the cemetery is a nonperpetual care cemetery.

SENATE FILE 116 - Registered Agents of Corporations, Partnerships, and Limited Liability Companies (full text of act)

BY COMMITTEE ON COMMERCE. This Act amends provisions relating to the appointment and resignation of registered agents and the change of registered offices associated with certain business entities. The Act affects foreign limited partnerships, limited liability companies, corporations, and nonprofit corporations. The Act provides that such changes must be filed with the Secretary of State and places the burden of forwarding copies of the document making the change to the appropriate persons on the agent or business entity making the change. Currently, such copies are to be forwarded to the appropriate person by the Secretary of State. Certain requirements related to the content of the documentation making such changes have also been amended.

SENATE FILE 160 - Funds Held in Accounts by Life Insurance Companies (full text of act)

BY COMMITTEE ON COMMERCE. This Act authorizes a life insurance company to hold funds in a separate or custodial account for the purpose of a medical savings account or similar account, as authorized under federal or state law. The Act provides that funds held in such an account are not chargeable with liabilities arising out of any other business of the company.
The Act takes effect March 13, 1997.

SENATE FILE 238 - Safe Deposit Boxes — Procedure on Death (full text of act)

BY COMMITTEE ON COMMERCE. This Act repeals Code Section 450.86, which prohibits a safe deposit company, trust company, bank, or other institution or person holding securities or certain other assets that are located in a safe deposit box or other security enclosure of the decedent, from delivering or transferring the assets, after receiving knowledge of the death, to the transferee, joint owner or beneficiary of the decedent unless the tax for which the securities or assets are liable under the inheritance tax chapter is first paid, or the payment is secured by bond as provided in Code Chapter 450. The repealed section also provides for an inventory of the contents of the safe deposit box or other security enclosure to be reported to the Department of Revenue and Finance prior to delivery to the personal representative.
The Act also repeals Code Sections 524.810 and 533.49A, which establish search procedures for a state bank and a credit union with respect to the safe deposit box of a decedent. Those sections provide that the bank or credit union must permit a person named in a court order or, if no order has been served upon the bank or credit union, the spouse, a parent, an adult descendant, or a person named as executor in a copy of a purported will produced by the person, to open and examine the contents of a safe deposit box leased by the decedent, or to examine any property delivered by the decedent to the bank or credit union for safekeeping, in the presence of an officer of the bank or credit union. The sections repealed also require the bank or credit union, upon the request of the person examining the safe deposit box, to deliver certain items set forth in the sections.
The Act takes effect July 1, 1998.

SENATE FILE 292 - Cooperative Corporations — Miscellaneous Provisions (full text of act)

BY COMMITTEE ON AGRICULTURE. This Act amends several provisions governing the organization of cooperative corporations under Iowa Code Chapter 501, which was enacted in 1996.
The Act prohibits a member from transferring voting stock to any person. It provides that a member may be restricted from transferring any other class of stock as provided by the cooperative corporation's articles of incorporation or bylaws or an agreement between the cooperative and the member. The Act amends a provision that applies to cases in which a terminated member's equity is less than 2 percent of the cooperative's total members' equity. The Act provides that a cooperative is not required to redeem all of the terminated member's allocated patronage refunds and preferred stock originally issued as allocated patronage refunds for the issue price within one year after the termination, if the cooperative elects to redeem the equity in annual amounts of not less than 20 percent of the total amount within five years after the termination.
The Act provides that dissolution provisions in Code Chapter 490, Business Corporations, which generally apply to Code Chapter 501, Cooperative Corporations, do not apply to distribution of assets. The cooperative's assets must first be used to pay expenses necessary to carry out the dissolution and liquidation of assets, then to pay the cooperative's obligations other than the payment of patronage dividends or stock issued as patronage dividends, and finally, the remainder must be paid as provided in the cooperative's articles of incorporation.

SENATE FILE 299 - Cooperative Associations — Qualified Mergers and Other Matters (full text of act)

BY COMMITTEE ON AGRICULTURE. Iowa Code Chapter 499, Cooperative Corporations, governs the organization and regulation of corporations formed under that chapter and referred to generally as associations, and Code Chapter 490, Business Corporations, governs the organization and regulation of corporations organized under that chapter. This Act amends a number of provisions applicable to associations and creates a process allowing cooperative associations organized under Code Chapter 499 to merge with qualified corporations organized under Code Chapter 490.
The Act provides that that a cooperative association may be a member of an association, and that an association may be formed which restricts its membership to cooperative associations. The Act provides requirements for subscribers purchasing an interest in an association. It provides that the subscriber must satisfy any requirement set forth in the association's articles of incorporation in order to be eligible to make the purchase. The Act provides for an association's capital stock requirements by providing that voting stock or nonvoting stock may be issued to a cooperative association as provided in the cooperative association's articles of incorporation. The Act authorizes a board of directors to increase or decrease the number of directors sitting on the board by not more than 30 percent of the number last approved by the membership. The Act provides that the articles of incorporation may establish a variable range for the size of the board, with membership changing within limits set in the articles. The Act provides that, after shares are issued, only the membership may change the range for the size of the board, change from a fixed-size to a variable-range-size board, or change from a variable-range-size to a fixed-size board. The Act provides that a vacancy may be filled by the shareholders, the board, or the unanimous vote of board members constituting less than a quorum. The Act provides that information required to be included in an association's articles of incorporation must indicate whether there is a fixed number or a variable range of board members and the minimum and maximum numbers that the board may have. The Act provides that notice of a meeting to vote for a plan of merger or consolidation must be delivered to voting members and shareholders rather than to all members and shareholders.
The Act also provides that a cooperative association may merge with a certain type of corporation referred to in the Act as a "qualified corporation." A qualified corporation must be structured and operated on a cooperative basis pursuant to federal law. The merger must involve the merger of two or more entities into one cooperative association or qualified corporation, in such manner that one entity involved in the merger retains its existence and absorbs the others. The Act provides that each cooperative association and qualified corporation must approve a written plan of qualified merger setting forth information regarding the entities and the merger. The entities must approve the plan as required for other mergers under their respective chapters. After the plan for the qualified merger is approved, a cooperative association or qualified corporation may abandon the merger in the manner provided in the plan, prior to the filing of the articles of merger. After the plan is approved, the surviving entity must deliver articles of merger to the Secretary of State for filing. The articles of merger must include information regarding the entities, the plan, the name of the survivor, and how the plan was approved. The effect of a qualified merger is as provided for the surviving entity in the chapter of its organization. These include provisions governing the right of a shareholder or member to object to or dissent from a merger and obtain payment of the fair value of the shareholder's shares or member's interest in the same manner as a merger between cooperative associations or corporations under an ordinary merger. The Act provides that a cooperative association or corporation may be a foreign cooperative association or corporation that complies with sections applicable to those entities under their respective chapters.
The Act takes effect April 3, 1997.

HOUSE FILE 133 - Health Benefit Plans — Point of Service Options (full text of act)

BY METCALF, JACOBS, GIPP, GRIES, CARROLL, TEIG, LAMBERTI, BRUNKHORST, BRADLEY, SUKUP, DINKLA, CHIODO, BARRY, LARSON, WISE, CHURCHILL, MILLAGE, LORD, WELTER, VAN FOSSEN, BLODGETT, ARNOLD, CHAPMAN, GRUNDBERG, VEENSTRA, GREIG, DRAKE, CATALDO, VANDE HOEF, MYERS, JENKINS, RANTS, BRAUNS, RAYHONS, HUSER, MORELAND, AND JOCHUM. This Act provides that a health insurance carrier or organized delivery system which offers a limited provider network plan for provision of health care services or benefits to the employees of a small or large employer must also offer certain other options to the employer. A small employer must also be offered a point of service option to the limited provider network plan. A large employer must also be offered one or more of the following: a point of service option to the limited provider network plan, a managed care health plan that is not a limited provider network plan, or an indemnity plan.
The Act also provides that a large employer which offers a limited provider network to its employees must also offer one or more of the following: a point of service option to the limited provider network plan, a managed care health plan that is not a limited provider network plan, or an indemnity plan.
The Act defines "point of service plan option" as a provision in a managed care health plan that permits insureds, enrollees or subscribers access to health care from health care providers who have not contracted with the managed care health plan to provide health care services under the plan.

HOUSE FILE 275 - Registration of Trademarks and Service Marks (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act amends several provisions in Code Chapter 548 regulating the registration and protection of marks such as trademarks and service marks by the Secretary of State. The Act amends requirements regarding the application for registration, by providing that the application must be accompanied by one rather than three specimens showing the mark. The Act also provides that the certificate of registration, issued by the Secretary of State, must show a description rather than a reproduction of the registered mark.

HOUSE FILE 307 - Recovery of Merchandise or Damages (full text of act)

BY COMMITTEE ON JUDICIARY. This Act amends the definition of a mercantile establishment "owner" to include a representative of the owner, and therefore allows a designated representative of the owner to maintain an action for recovery of merchandise or damages under Code Chapter 645.

HOUSE FILE 475 - Bank Regulation (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act provides that a bank chartered solely for the purpose of acquiring the assets of one or more branches located in this state and owned by a savings association is deemed to have been in existence and in operation as a bank for the combined periods of existence and operation of the bank and of the association from which the branch or branches are acquired. The Act applies to united community bank offices established pursuant to Code Section 524.1213, and to an out-of-state bank or out-of-state bank holding company. Currently, acquisition may only occur if the acquiring institution has been in continuous existence and operation for at least five years.
The Act takes effect April 18, 1997.

HOUSE FILE 514 - Financial Liability Coverage for Motor Vehicles (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act prohibits a person from driving a motor vehicle registered in this state on the highways of this state unless financial liability coverage is in effect for the motor vehicle. The driver of the motor vehicle is also subject to a conviction for a violation if the driver does not have in the motor vehicle a proof of financial liability coverage card issued for the motor vehicle. However, a person charged with not having in the motor vehicle a proof of financial liability coverage card will not be convicted if the person produces in court, within 30 days after being charged, proof that the motor vehicle was covered by financial liability coverage at the time of the driver's arrest. Under the Act, financial liability coverage includes either liability insurance, the filing of a bond, the deposit of money or securities, or a certificate of self-insurance. A violation is subject to a $100 fine.
The Act provides that if a peace officer stops a motor vehicle and the driver is unable to provide proof of financial liability coverage, the peace officer shall issue a warning citation to the driver, or issue a citation and remove the license plates and registration from the motor vehicle that has been operated on the highways of this state without financial liability coverage being in effect for the motor vehicle, or issue a citation and impound the motor vehicle. The Act provides for the return of the license plates and registration or the vehicle, upon the payment of certain costs, including a $15 administrative fee to the county treasurer. A vehicle impounded and unclaimed is deemed abandoned.
The Act generally takes effect January 1, 1998, but certain administrative actions are required prior to that date to allow for the Act's implementation.
The Act provides that effective July 1, 1999, a violation of the proof of coverage requirements is subject to a $500 fine if the violation is in connection with a motor vehicle accident. The scheduled fine is $250 for all other violations.

HOUSE FILE 550 - Regulation of Multiple Employer Welfare Arrangements (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act repeals the exclusion from regulation provided to third-party payors of health care benefits that are multiple employer welfare arrangements as defined under federal law, and establishes criteria for such arrangements for purposes of exempting them from provisions relating to unauthorized insurers.
In 1994, multiple employer welfare arrangements were exempted from regulation by the Division of Insurance of the Department of Commerce and also from Code provisions relating to unauthorized insurers. The 1994 legislation established certain conditions that a multiple employer welfare arrangement must meet to continue to be exempt from the provisions relating to unauthorized insurers. The conditions include that the arrangement is administered by an authorized insurer or an authorized third-party administrator; has been in existence and provided health insurance for at least 15 years prior to July 1, 1994; and was established by a trade, industry or professional association of employers that has a constitution or bylaws, and has been organized and maintained in good faith for at least 20 continuous years prior to July 1, 1994. A multiple employer welfare arrangement that fails to meet the criteria could be prohibited from engaging in acts defined as insurance business.
The Act amends the criteria by providing that the arrangement must have been in existence and providing health insurance for at least five years prior to July 1, 1997, and that the arrangement was established by an appropriate entity which has been organized and maintained in good faith for least 10 continuous years prior to July 1, 1997. The Act also establishes new criteria, including that the arrangement must register with and obtain a certificate of registration issued by the Commissioner of Insurance, and provides that the arrangement is subject to the jurisdiction of the Commissioner of Insurance. The Act repeals the exemption from regulation by the Division of Insurance provided to such arrangements and extends the repeal date of the exemption from regulation by the Division of Insurance with respect to unauthorized insurers.
This Act takes effect April 22, 1997.

HOUSE FILE 553 - Securities Regulation (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act amends a number of provisions included in Iowa Code Chapter 502, regulating securities.
The Act adds provisions relating to federal covered securities regulated under the federal Securities Act of 1933 or rules or regulations promulgated by the U. S. Securities and Exchange Commission. Under the federal law, these securities are exempted from registration requirements. The Act revises the definition of "agent" regulated under the chapter to exclude a person who deals in federal covered securities. It also excludes transactions between an issuer and the issuer's employees, members, managers, partners, or directors, if a commission is not paid. The Act provides that the Insurance Commissioner, serving as the Administrator of the Securities Bureau, may require the filing of documents relating to federal covered securities, including a current federal registration statement, amendments to a current federal registration statement, reports concerning the value of federal covered securities, and any other documents required to be filed with the Securities and Exchange Commission. The Act provides that the administrator may issue a stop order suspending the offer and sale of certain federal covered securities. The Act provides that the administrator may also waive the filing requirements of the Act for federal covered securities.
The Act adds limited liability partnerships to the types of entities dealing in securities regulated under the chapter. The Act eliminates a reference to the U. S. Interstate Commerce Commission, which was abolished by Congress. The Act eliminates a provision excusing an issuer and agent from posting a bond for agents when an offering is made.
The Act provides for minimum capital requirements for brokers, which may be set by order of the administrator as well as by rule. The Act provides that the capital requirements are subject to limitations of the federal Securities Exchange Act of 1934 and eliminates provisions basing capital requirements on rules and regulations adopted by the National Association of Securities Dealers, Inc., or the U.S. Securities and Exchange Commission.
The Act provides that the administrator may bar an applicant, registrant or any officer, director, partner, or person occupying a similar status or performing similar functions for a broker-dealer from engaging in any activity for which registration is required, if the person is the subject of an order of the administrator denying, suspending or revoking registration as an insurance agent. The Act provides that in some cases a notice filing may be substituted for the filing of a registration statement.
The Act takes effect May 2, 1997.

HOUSE FILE 557 - Insurance Regulation — Miscellaneous Provisions (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATIONS. This Act amends provisions relating to the regulatory authority of the Division of Insurance of the Department of Commerce, the operation of insurers, and other miscellaneous provisions.
The Act provides for rejection of workers' compensation coverage for certain officers of a corporation by attachment of a written rejection to the policy. Currently, such rejection must be attached initially and upon each renewal of the policy.
The Act strikes the requirement that the Commissioner of Insurance issue an examination warrant when appointing an examiner.
The Act, with regard to the priority of distribution of claims from an insurer's estate, establishes a separate class of claims related to the federal government, which is third in priority. Currently, these claims are fifth in priority and are included with a class of claims including those of state and local governments. The Act also redesignates current claims, which include reasonable compensation to employees involved in the liquidation of the insurer, from second to fourth in priority.
The Act prohibits a foreign life or foreign nonlife insurance company from reinsuring a block of business that includes Iowa policyholders to a company not authorized to transact business in Iowa without the prior written approval of the commissioner.
The Act increases from $300 to $500 an administrative penalty that may be levied against an insurance company for failing to make a required deposit, with respect to legal reserves, or for failure to timely file certain statements. The Act also provides for an additional penalty of $100 per day if such failure continues after notice of the failure has been given by the commissioner to the insurer. The Act strikes the requirement that the commissioner determine the published monthly average which is the interest rate that may be charged on life insurance policy loans associated with policies issued after July 1, 1984.
The Act authorizes the commissioner to establish a process for the certification of limited service organizations. "Limited service organization" is defined as an organization providing dental care services, vision care services, mental health services, substance abuse services, pharmaceutical services, podiatric care services, or such other services as may be determined by the commissioner.
The Act requires that a group motor vehicle or group homeowners policy or contract of insurance written or delivered in Iowa must be an individual policy or contract form.
The Act expands the exemptions for types of insurers not subject to the insurance guaranty association to include vendor's single interest insurance, collateral protection insurance, or similar coverage arising out of a creditor-debtor transaction; insurance warranties or service contracts; annuity insurance; and insurance provided by or guaranteed by the government.
The Act limits the obligation of the guaranty fund to a claimant for the return of unearned premium to an amount in excess of $100 but not exceeding $10,000 per policy. The Act provides that the association has a right to pursue for its own account, salvage and subrogation recoverable on paid claims. The Act provides that an action against the guaranty association can only be brought against the association in Polk County District Court.
The Act prohibits a person from simultaneously holding the offices of president and secretary of a county mutual insurance association or a mutual casualty assessment insurance association.
The Act provides that the commissioner is to approve a merger or other acquisition of control of a domestic insurer if, after public hearing, the applicant has made an affirmative showing of certain facts. Currently, the commissioner is to approve the merger unless, after public hearing, the commissioner finds that any one of the existing list of factors has not been met.
The Act repeals language pertaining to the early access to assets of an insolvent insurer by the receiver for distribution and makes other miscellaneous changes related to the Insurance Guaranty Association.

HOUSE FILE 611 - Consumer Credit (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act strikes the limitations on certain charges associated with a consumer credit sale or loan pursuant to open-end credit, and provides that a creditor may contract for and receive a finance charge without limitation as to amount or rate.

HOUSE FILE 613 - Linked Deposit Investment Programs (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act makes changes to the Linked Investment Programs in the Office of the Treasurer of State. The Act provides that a person who is delinquent in making child support payments or any other payment due to the state is not considered an eligible borrower for the programs. The Act requires the Treasurer of State to determine and make available the current market rate that shall be used each month for the programs. The Act limits the amount the Treasurer of State may invest in certificates of deposit for these programs to the lesser of $68 million or 10 percent of the balance of the State Pooled Money Fund.
The Act changes the Rural Small Business Transfer Linked Investment Loan Program by doing all of the following:

• Limiting the net worth of an eligible borrower to $500,000.
• Providing criteria regarding which types of rural small businesses may qualify for the program.
• Limiting the maximum amount an eligible borrower or business may receive during the lifetime of the program to $50,000.

The Act changes the name of the Targeted Small Business Linked Investments Program to the Focused Small Business Linked Investments Program. The Act also changes the program by doing all of the following:

• Removing the requirement that a small business must be certified as a targeted small business by the Department of Inspections and Appeals.
• Limiting the maximum amount an eligible borrower or business may receive during the lifetime of the program to $100,000.
• Limiting an eligible borrower to one loan from one financial institution.
• Limiting the net worth an eligible borrower may have to $500,000.
• Providing criteria regarding the type of business a small business must conduct in order to qualify for the program.
• Requiring that loan proceeds may not be used to refinance existing debt with the exception that proceeds may be used to refinance a short-term bridge loan.
• Requiring eligible lending institutions to verify the borrower is eligible to participate in the program.

The Act also requires the Department of Economic Development to develop a proposal for "instant buy down" assistance to targeted small businesses.

HOUSE FILE 628 - Corporations — Miscellaneous Provisions (full text of act)

BY COMMITTEE ON JUDICIARY. This Act relates to special shareholders' meetings, merger and share acquisitions, and the combination of a corporation with certain shareholders. The Act provides that a corporation with a class of voting stock listed on a national market or held by more than 2,000 shareholders of record is required to conduct a special meeting on the call of the board of directors or upon the written request of holders of 50 percent of all votes entitled to be cast on an issue proposed at a special meeting.
The Act authorizes the merger of a business corporation incorporated under Iowa Code Chapter 490 with or into another business entity established or organized under another chapter, and the merger of such other business entity with or into a Code Chapter 490 corporation. The Act authorizes the acquisition of all outstanding shares of a Code Chapter 490 corporation by another business entity established or organized under another chapter, and the acquisition of all outstanding shares of such other business entity by a Code Chapter 490 organization.
The Act also provides for the business combination of a corporation organized under Code Chapter 490 that has a class of voting stock listed on a national securities exchange or the National Association of Securities Dealers Automated Quotations-National Market System (NASDAQ), or that is held by more than 2,000 shareholders, with certain shareholders defined as "interested shareholders." The Act defines an interested shareholder as one who owns 15 percent or more of the outstanding voting stock of the corporation. The Act prohibits such combination for three years after the shareholder becomes an interested shareholder, unless one of the following applies: The board of directors, prior to the shareholder becoming an interested shareholder, approved the transaction that resulted in the shareholder becoming an interested shareholder, or approved the business transaction prior to the shareholder becoming an interested shareholder; after completion of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owns at least 85 percent of the corporation's outstanding voting stock; or at or after the time the shareholder becomes an interested shareholder, the combination is approved by the board of directors and authorized by 66 2/3 percent of the outstanding voting stock not owned by the interested shareholder.

HOUSE FILE 637 - Corporations, Partnerships, and Associations (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act amends provisions relating to the general operation of business entities including corporations, partnerships and associations. The Act provides that certain corporations and associations are to file biennial reports rather than annual reports.
The Act provides that a limited liability partnership may correct a document filed with the Secretary of State by preparing and filing articles of correction which describe the document, specify the incorrect statement or defective execution, and correct the incorrect statement or defective execution. The Act strikes the requirement that a limited partnership include the date of filing of the certificate of limited partnership in a certificate of amendment which amends the certificate of limited partnership or in a certificate of cancellation which cancels the certificate of limited partnership. The Act provides that the Secretary of State may accept for filing certain documents of a limited partnership which contain a copy of a signature, however made.
The Act strikes the $30 filing fee for annual reports filed by a domestic or foreign corporation. The Act permits a corporation to merge with one or more limited liability companies if the members of the limited liability company approve.
The Act strikes the requirement that a notice of delinquency with respect to the filing of a biennial report be sent by registered mail to each of the nonprofit cooperative association's officers and provides that the notice may be sent to the association by mail, without specifying type of delivery.
The Act amends several provisions relating to cooperative associations organized under Code Chapter 499. The Act applies an existing fee of $20 to the filing of an application for reinstatement. The biennial report filed by a cooperative association is filed in the same manner as for a domestic or foreign corporation. The failure of a cooperative association to pay any franchise tax or penalty within 60 days after it is due is struck from the list of items that may result in a proceeding for administrative dissolution of the association.
The Act provides that a person is permitted to own stock, including voting stock, in a cooperative corporation, subject to certain statutory limits and subject to the cooperative's articles and bylaws.
The Act amends several provisions affecting nonprofit corporations organized under Code Chapter 504A. The Act strikes the requirement that the articles of incorporation include the effective date of incorporation and its original name, if different from the present name. The Act strikes the requirement that the restated articles of incorporation include a statement that they supersede the original articles of incorporation and all amendments to the original articles.
The Act strikes the requirement that a domestic or foreign nonprofit corporation include a brief statement in its biennial report of the character of the affairs the corporation is actually conducting.
The Act provides that a domestic or foreign nonprofit corporation's first biennial report is to be filed with the Secretary of State between January 1 and April 1 of the first odd-numbered year following the calendar year in which the domestic corporation was incorporated or the foreign corporation was authorized to transact business. Subsequent biennial reports are to be filed between January 1 and April 1 of the following odd-numbered years. The Act authorizes the Secretary of State to establish a filing fee for the biennial report.
The Act establishes a fee of $20 for the filing of an application for reinstatement by a nonprofit corporation.
The Act repeals the requirement that the Secretary of State send a notice of delinquency by certified mail to a cooperative association failing to file a report or pay the appropriate fee. The Act also repeals the directive that the Secretary of State inform the Attorney General of all nonprofit corporations that failed to timely file their annual report.

HOUSE FILE 642 - Limited Partnerships and Limited Liability Companies (full text of act)

BY COMMITTEE ON JUDICIARY. This Act rewrites provisions of the Uniform Limited Partnership Law, and provisions relating to limited liability companies and the members and managers of such companies.
Generally, the Act allows a limited partner to contribute services to the limited partnership in lieu of property or other valuable obligations, allows limited partners to be granted voting rights in the partnership agreement, grants limited partners access to partnership records, authorizes a derivative action by limited partners against the partnership, and provides for the registration of foreign limited partnerships.
The Act refocuses Code Chapter 487, Uniform Limited Partnership Law, on the limited partnership agreement as the primary governing document, as opposed to the certificate of limited partnership. The Act provides that unless contained in a written limited partnership agreement, the partnership must keep at its office a writing containing amounts contributed by each partner, times or events triggering additional contributions by partners, the right of a partner to receive a distribution of assets, and events triggering dissolution of the limited partnership.
The Act rewrites provisions relating to filing requirements, fees to be charged by the Secretary of State related to such filings, the effective time and date of documents filed, procedures and duties of the Secretary of State with respect to such filings, the evidentiary effect of a copy of a filed document, the creation of a certificate of existence, penalties for signing false documents, and the powers of the Secretary of State.
The Act provides for the administrative dissolution of a limited partnership, as well as the effect of such dissolution and the manner for application for reinstatement following dissolution.
The Act strikes information items currently required to be contained in the certificate of limited partnership and provides for the inclusion of those items in the partnership agreement or other writing.
The Act amends the definition of "limited liability company" to provide that such company is an unincorporated association having one or more members, whereas currently such company must have two or more members. The Act amends the definition of "operating agreement" to clearly indicate that such agreement may be written or oral.
The Act rewrites a provision relating to the indemnification of certain individuals to provide that the articles of organization may include a provision to indemnify and hold harmless a member, manager or other person against a claim, liability or other demand, as provided in the operating agreement.
The Act creates several new sections related to limited liability companies. Those sections relate to the requirements for another entity to convert to a limited liability company; the establishment of designated series of members, managers or membership interests; the admission of new members of the limited liability company; the establishment of classes or groups of members and the relative rights, powers and duties of such members; the liability of members with respect to the limited liability company; the manner in which the limited liability company's power to act may be challenged; the resignation of members; the establishment of classes or groups of managers and the relative rights, powers and duties of such managers; the ability of a member or manager to delegate such person's rights and powers with respect to the management of a limited liability company; the method for appraising a membership interest; the occurrences resulting in the cessation of a membership; the penalty or consequence for a member who fails to make a required contribution; and the rights of a member regarding distribution of the assets of a limited liability company.

HOUSE FILE 644 - Disclosures by Real Estate Licensees (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act amends current requirements relating to when and how a disclosure must be made by a real estate broker or salesperson to parties involved in a real estate transaction concerning the party the broker or salesperson represents. The Act requires that a disclosure of representation to all parties must be made at the time the broker or salesperson provides specific assistance to the client. The Act also requires that a written disclosure of representation, acknowledged by separate signatures of all parties, be made prior to an offer being made or accepted by a party to a transaction. The Act does not prohibit a single disclosure from satisfying the requirements of the section. Currently, the real estate broker is required to make an affirmative written disclosure to all parties involved in a real estate transaction concerning whom the broker or salesperson represents at the time the broker or salesperson provides specific assistance to the client.
The Act also includes in the definition of "specific assistance" the eliciting or accepting of information involving a proposed or preliminary offer associated with specific real estate.
The Act takes effect April 23, 1997.

HOUSE FILE 701 - Health Care Coverage — Portability and Continuity (full text of act)

BY COMMITTEE ON COMMERCE AND REGULATION. This Act enacts changes required as a result of passage of the federal Health Insurance Portability and Accountability Act, which was enacted in 1996 and provides for continuity of coverage between self-funded plans and insured health care plans.
The Act directs the Insurance Commissioner to adopt rules for the implementation of the federal Health Insurance Portability and Accountability Act.
The Act amends definitions and establishes new definitions related to small group coverage and the Iowa Comprehensive Health Association (high risk pool) consistent with the federal legislation.
The Act amends renewal requirements under group and individual coverages to provide for guaranteed renewal with certain exceptions for nonpayment of premium, fraud, noncompliance with plan requirements, or discontinuance of the plan by the insurer.
The Act extends, from 30 to 63 days, the time period during which a person may go without coverage and still be eligible for coverage under other subsequent coverage. The time period is also changed for purposes of any preexisting condition exclusion.
The Act also provides for application of these provisions to organized delivery systems.
The Act authorizes the Iowa Comprehensive Health Association to set deductibles for association health coverage plans required under federal law, authorizes the association to issue a policy comparable to the standard health benefit plan in the individual market, and adds organized delivery systems to those entities that are subject to the chapter and which must be members of the association.

RELATED LEGISLATION

SENATE FILE 542 -- Supplemental and Other Appropriations and Miscellaneous Provisions

(Complete summary under APPROPRIATIONS)

This Act makes supplemental appropriations for FY 1996-1997 and appropriations for other fiscal years. The Act includes an appropriation and intent language for purposes of the Community Health Management Information System (CHMIS), language authorizing the appointment of the Commissioner of Insurance for an additional year as Director of the Department of Commerce, funding for implementation of the Land Recycling Program known as "brownfields," and language for value-added agricultural production assistance negotiations.

SENATE FILE 553 -- Tax Treatment of Subchapter S Financial Institutions and Their Shareholders

(Complete summary under TAXATION)

This Act disallows shareholders of subchapter S financial institutions from having the financial institution's income taxed directly to the shareholders for state tax purposes. Instead, the financial institution would be subject to the state franchise tax. To prevent the income from being taxed twice, a franchise tax credit, not to exceed a shareholder's pro rata share of the franchise tax paid, would be applied to the shareholder's individual income tax. The Act applies retroactively to tax years beginning on or after January 1, 1997.

HOUSE FILE 132 -- Liability for Domesticated Animal Activities

(Complete summary under COURTS, CIVIL LAW & PROCEDURE, & PROBATE.)

This Act limits the liability of persons involved with animals classified as domesticated animals, including livestock.

HOUSE FILE 233 -- Cooperative Associations — Effective Date of Filings and Mergers

(Complete summary under STATE GOVERNMENT)

This Act amends Iowa Code Chapter 499, which applies to cooperative associations, by allowing the effective date of mergers and consolidations and the effective date of documents filed with the Secretary of State to be determined by the cooperative association rather than the date on which the Secretary of State takes formal action.

HOUSE FILE 266 -- Tax Administration and Related Matters

(Complete summary under TAXATION)

This Act amends a Code provision that allows a resident shareholder of a "value-added" S corporation to elect to reduce state income tax by apportioning income, by providing that if the taxpayer then elects not to apportion income in a later tax year, the taxpayer cannot reelect to apportion income for four tax years without the approval of the Director of Revenue and Finance. The amendment is made retroactively applicable to tax years beginning on or after January 1, 1997. The same provision, as enacted in H.F. 306 (see Taxation), does not apply until January 1, 1998. The Act also provides that any partnership taxed as a corporation for federal purposes will be treated as a corporation for Iowa tax purposes. This provision is made retroactively applicable to tax years beginning on or after January 1, 1997. Finally, the Act alters the sales tax exemption for sales made to persons engaged in the business of leasing by changing the required term of the leases from more than one year to more than five months. This provision takes effect May 19, 1997.

HOUSE FILE 306 -- Taxation of Shareholders of Subchapter S Corporations

(Complete summary under TAXATION)

This Act expands the opportunity for a reduction in tax to shareholders of all S corporations whether or not they are value-added corporations. This expansion is effective January 1, 1998, for tax years beginning on or after that date. The Act also eliminates the limitation of $5 million on the aggregate amount of claims for refunds and the need to file claims for refunds. This provision applies retroactively to January 1, 1997, for tax years beginning on or after that date.

HOUSE FILE 308 -- Debt Collection Practices

(Complete summary under COURTS, CIVIL LAW & PROCEDURE, & PROBATE)

This Act relates to the required disclosure a debt collector must give to a debtor when attempting to collect a debt.

HOUSE FILE 354 -- Corporate Income Tax — Foreign Corporations

(Complete summary under TAXATION)

This Act lists activities that a foreign corporation may engage in which are not considered doing business in Iowa for Iowa corporate tax purposes.

HOUSE FILE 540 -- Deferred Compensation and Phased Retirement — Investments and Other Provisions

(Complete summary under STATE GOVERNMENT)

This Act establishes investment guidelines and procedures for state deferred compensation and phased retirement plans.

HOUSE FILE 577 -- Continuing Education of Real Estate Appraisers

(Complete summary under STATE GOVERNMENT)

This Act establishes June 30 of the year in which a real estate appraiser's certificate expires as the date by which continuing education requirements shall be completed for purposes of renewing the appraiser's certificate and restricts the number of instructional hours of correspondence and home study courses that may be claimed by an appraiser to meet these education requirements to no more than 50 percent of the required hours necessary for renewal of the certificate.

HOUSE FILE 647 -- Theft by Financial Instrument

(Complete summary under CORRECTIONS, CRIMINAL LAW & PROCEDURE)

This Act provides that a person commits theft when the person makes, utters, draws, delivers, or gives any check, share draft or written order on a bank, credit union, person, or corporation, and obtains the use of any property, including rental property, knowing that the financial instrument will not be paid when presented. The penalty applicable depends on the amount of the financial instrument.

HOUSE FILE 685 -- Motorcycle Dealer Business Hours

(Complete summary under TRANSPORTATION)

This Act provides that a motorcycle dealer is not required to be open for business a minimum number of hours per week. Current administrative rules require motorcycle dealers to be open to the public a minimum of 32 hours per week.

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Last update: Tues July 22, 1997
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