HF 580 (LSB 1167HV (2) 85)

HOUSE FILE 580

BY  COMMITTEE ON ECONOMIC GROWTH

(SUCCESSOR TO HSB 61)

A BILL FOR

An Act providing for business entities qualifying for Iowa start-up businesses, including the payment of fees by persons forming or organizing such entities.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

IOWA START-UP BUSINESS INITIATIVE
    Section 1.  NEW SECTION.  9.11  Definitions.
   As used in this subchapter, unless the context otherwise requires:
   1.  “Business entity” means a business operating on a profit, nonprofit, or cooperative basis formed or organized under the laws of this state, as a partnership or limited liability partnership under chapter 486A; limited partnership under chapter 488; limited liability company including a professional limited liability company under chapter 489; corporation under chapter 490; cooperative association under chapter 499, 501, or 501A; or nonprofit corporation under chapter 504.
   2.  “Foreign business entity” means a business operating on a profit, nonprofit, or cooperative basis, that is formed or organized in another jurisdiction, including an entity that receives authority from the secretary of state to transact business in this state as a foreign limited liability partnership as provided in section 486A.1102; foreign limited partnership under section 488.902; foreign limited liability company or foreign professional limited liability company under section 489.802; foreign corporation under section 490.1503; foreign cooperative association under section 499.54 or 490.1503; foreign cooperative association under section 501A.221; or foreign nonprofit corporation under section 504.1503.
    Sec. 2.  NEW SECTION.  9.12  Business entities qualifying as Iowa start-up businesses.
   1.  In order to qualify as an Iowa start-up business, a business entity shall file an organic document with the secretary of state which includes the following:
   a.  For a partnership, a statement of partnership authority under section 486A.303. However, the statement must be filed within six months from the date that the partnership first acquired property as provided in section 486A.204.

   b.  For a limited partnership, a certificate of limited partnership under section 488.201.
   c.  For a limited liability company, a certificate of organization under section 489.201.
   d.  For a corporation, articles of incorporation under section 490.202. 
   e.  For a cooperative association, the following:
   (1)  Articles of incorporation under section 499.40.
   (2)  Articles of organization under section 501.202.
   (3)  Articles of organization under section 501A.503.
   f.  For a nonprofit corporation, articles of incorporation under section 504.202.
   2.  A business entity described in subsection 1 does not qualify as an Iowa start-up business if any of the following apply:
   a.  Another business entity or a foreign business entity holds an equity interest in the business entity.
   b.  The business entity does not employ at least one individual who works thirty-five hours per week or more.
   c.  The business entity is formed or organized by the same person who formed or organized a business entity in the prior twelve months.
   d.  Any other factor established by the secretary of state exists.
    Sec. 3.  NEW SECTION.  9.13  Iowa start-up businesses —— fees.
   A business entity qualifying as an Iowa start-up business shall not be charged a fee that is otherwise required to be paid to the secretary of state as a direct result of forming or organizing a business entity with the secretary of state, including fees associated with filing an organic document with the secretary of state pursuant to the following: 
   1.  For a partnership, a statement of partnership authority under section 486A.1202.
   2.  For a limited partnership, a certificate of limited partnership under section 488.1206.

   3.  For a limited liability company, a certificate of organization under section 489.117. 
   4.  For a corporation, articles of incorporation under section 490.122.
   5.  For a cooperative association, the following:
   a.  Articles of incorporation under section 499.45.
   b.  Articles of organization under section 501.105.
   c.  Articles of organization under section 501A.205.
   6.  For a nonprofit corporation, articles of incorporation under section 504.113.
    Sec. 4.  NEW SECTION.  9.14  Rulemaking.
   The secretary of state shall adopt rules as necessary in order to implement and administer this subchapter.
    Sec. 5.  CODE EDITOR DIRECTIVE.  The Code editor shall codify the provisions designated for codification in this division of this Act as new subchapter II of chapter 9.

DIVISION II

COORDINATING AMENDMENTS
    Sec. 6.  Section 486A.1202, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Notwithstanding subsection 1, a fee shall not be charged to an Iowa start-up business for filing a statement of partnership authority under section 486A.303, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13.
    Sec. 7.  Section 488.1206, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Notwithstanding subsection 1, a fee shall not be charged to an Iowa start-up business for filing a certificate of limited partnership under section 488.201, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13.
    Sec. 8.  Section 489.117, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Notwithstanding subsection 1, a fee shall not be charged to an Iowa start-up business for filing a certificate of organization under section 489.201, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13.
    Sec. 9.  Section 490.122, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Notwithstanding subsection 1, a fee shall not be charged to an Iowa start-up business for filing articles of incorporation under section 490.202, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13.
    Sec. 10.  Section 499.45, Code 2013, is amended to read as follows:
   499.45  Fees.
   1.  A fee of twenty dollars shall be paid to the secretary of state upon filing articles of incorporation, amendments, or renewals.
   1A.  Notwithstanding subsection 1, a fee shall not be charged to an Iowa start-up business for filing articles of incorporation under section 499.40, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13. 
   2.  Except as provided in this section, the association shall pay the fees prescribed by section 490.122 when the documents described in that section are delivered to the secretary of state for filing.
    Sec. 11.  Section 501.105, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  3A.  Notwithstanding subsection 3, a fee shall not be charged to an Iowa start-up business for filing articles of organization under section 501.202, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13.
    Sec. 12.  Section 501A.205, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Notwithstanding subsection 1, a fee shall not be charged to an Iowa start-up business for filing articles of organization under section 501A.503, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13.
    Sec. 13.  Section 504.113, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  Notwithstanding subsection 1, a fee shall not be charged to an Iowa start-up business for filing articles of organization under section 504.202, or any other document determined by the secretary of state to be an organic document, as provided in section 9.13.
EXPLANATION
   This bill provides that a qualifying start-up business is not required to pay a fee associated with filing an organic document with the secretary of state. The form of the organic document depends upon the type of business being formed or organized, and includes a partnership (Code chapter 486A), limited partnership (Code chapter 488), limited liability company (Code chapter 489), corporation (Code chapter 490), cooperative association (Code chapters 499, 501, and 501A), or a nonprofit corporation (Code chapter 504). An organic document differs based on the business entity being formed or organized, but includes a statement of partnership, a certificate of limited partnership, a certificate of organization, articles of incorporation, or articles of organization.
   The bill provides that a business entity does not qualify as an Iowa start-up business under certain circumstances, including if another business entity or a foreign business entity holds an equity interest in the entity (e.g., stock), the business entity fails to employ at least one individual who works a minimum of 35 hours per week, the business entity is formed or organized by the same person who formed or organized a business entity in the prior 12-month period, or any other factor established by the secretary of state. 
   The secretary of state is required to adopt rules necessary in order to implement and administer the bill’s provisions. The Code editor is required to codify the new provisions in the bill as a new subchapter in Code chapter 9. The bill also provides a number of coordinating provisions in each Code chapter which requires a business entity to pay the secretary of state fees for filing organic documents.