House Study Bill 604 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED SECRETARY OF STATE BILL) A BILL FOR An Act relating to the regulation of persons who file certain 1 documents with the secretary of state, including the duties 2 and obligations of business entities, restrictions regarding 3 the acquisition of agricultural land, the liability of 4 corporate directors, and commercial transactions involving 5 creditors, providing for fees, and providing penalties. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 5324XD (9) 87 da/rn

S.F. _____ H.F. _____ DIVISION I 1 NONPROFIT CORPORATIONS ACQUIRING AGRICULTURAL LAND 2 Section 1. Section 9H.1, subsection 20, Code 2018, is 3 amended to read as follows: 4 20. “Nonprofit corporation” means any of the following : 5 a. Corporations organized under the provisions of chapter 6 504 , Code 1989, or current chapter 504 ; or A corporation as 7 defined in section 504.141 that is not a foreign corporation 8 as described in paragraph “b” . 9 b. Corporations which qualify under 26 U.S.C. §501(c)(3) A 10 foreign corporation as defined in section 504.141 . 11 Sec. 2. Section 9H.4, subsection 1, paragraph b, 12 subparagraph (3), subparagraph division (a), subparagraph 13 subdivisions (i) and (iv), Code 2018, are amended to read as 14 follows: 15 (i) The corporation or limited liability company must not 16 hold the agricultural land other than as a lessee. The term 17 of the lease must be for not more than twelve years. The 18 corporation or limited liability company shall not renew a 19 lease. The corporation or limited liability company shall not 20 enter into a lease under this subparagraph subdivision, if the 21 corporation or limited liability company has ever entered into 22 another lease under this subparagraph (3), whether or not the 23 lease is in effect. However, this subparagraph subdivision 24 does not apply to a domestic nonprofit corporation organized 25 under chapter 504, Code 1989 , or current chapter 504 as defined 26 in section 9H.1, subsection 20, paragraph “a” . 27 (iv) The corporation or limited liability company must 28 deliver a copy of the lease to the secretary of state. The 29 secretary of state shall notify the lessee of receipt of the 30 copy of the lease. However, this subparagraph division does 31 not apply to a domestic nonprofit corporation organized under 32 chapter 504, Code 1989 , or current chapter 504 as defined in 33 section 9H.1, subsection 20, paragraph “a” . 34 Sec. 3. Section 9H.4, subsection 1, paragraph c, Code 2018, 35 -1- LSB 5324XD (9) 87 da/rn 1/ 15

S.F. _____ H.F. _____ is amended to read as follows: 1 c. Agricultural land, including a leasehold interests 2 interest , acquired by a nonprofit corporation organized 3 under the provisions of chapter 504, Code 1989 , and current 4 chapter 504 as defined in section 9H.1, subsection 20, 5 paragraph “a” , including land acquired and operated by or for 6 a state university for research, experimental, demonstration, 7 foundation seed increase or test purposes and land acquired 8 and operated by or for nonprofit corporations organized 9 specifically for research, experimental, demonstration, 10 foundation seed increase or test purposes in support of or in 11 conjunction with a state university. 12 Sec. 4. Section 10B.1, subsection 9, Code 2018, is amended 13 by striking the subsection and inserting in lieu thereof the 14 following: 15 9. “Nonprofit corporation” means the same as defined in 16 section 9H.1. 17 DIVISION II 18 UNIFORM LIMITED PARTNERSHIP ACT 19 Sec. 5. Section 488.102, subsection 19, Code 2018, is 20 amended to read as follows: 21 19. “Registered office” means: 22 a. With respect to a limited partnership, means the office 23 that the a limited partnership or foreign limited partnership 24 is required to designate and maintain under section 488.114 . 25 b. With respect to a foreign limited partnership, its 26 principal office. 27 Sec. 6. Section 488.114, Code 2018, is amended to read as 28 follows: 29 488.114 Registered office and registered agent for service 30 of process. 31 1. A limited partnership or foreign limited partnership 32 shall designate and continuously maintain in this state both 33 all of the following: 34 a. A registered office, which need not be a place of its 35 -2- LSB 5324XD (9) 87 da/rn 2/ 15

S.F. _____ H.F. _____ activity in this state. 1 b. A registered agent for service of process. 2 2. A foreign limited partnership shall designate and 3 continuously maintain in this state a registered agent for 4 service of process. 5 3. 2. A registered agent for service of process of a 6 limited partnership or foreign limited partnership must be an 7 one of the following: 8 a. An individual who is a resident of Iowa or other and 9 whose business office is identical with the registered office. 10 b. A person other than an individual authorized to do 11 business in this state whose business office is identical with 12 the registered office . 13 Sec. 7. Section 488.116, subsections 2 and 3, Code 2018, are 14 amended to read as follows: 15 2. After receiving a statement of resignation, the 16 secretary of state shall file it and mail a copy to the 17 registered office of the limited partnership or foreign limited 18 partnership and another copy to the principal office if the 19 address of the office appears in the records of the secretary 20 of state and is different from the address of the registered 21 office . 22 3. A registered agency agent for service of process is 23 terminated on the date on which the statement of resignation 24 was filed with the secretary of state. 25 Sec. 8. Section 488.809, subsection 1, Code 2018, is amended 26 to read as follows: 27 1. The secretary of state may dissolve a limited partnership 28 administratively if the limited partnership does not , within 29 sixty days after the due date, do any of the following: 30 a. Pay , within sixty days after the due date, any fee, tax, 31 or penalty under this chapter or other law due the secretary of 32 state. 33 b. Deliver , within sixty days after the due date, its 34 biennial report to the secretary of state required under 35 -3- LSB 5324XD (9) 87 da/rn 3/ 15

S.F. _____ H.F. _____ section 488.210 . 1 c. Designate and continuously maintain a registered office 2 and appoint and maintain a registered agent for service of 3 process as required by section 488.114. 4 d. Deliver for filing a statement of a change under section 5 488.115 within sixty days after the change has occurred. 6 Sec. 9. Section 488.902, subsection 2, Code 2018, is amended 7 to read as follows: 8 2. A foreign limited partnership shall deliver with the 9 completed application a certificate of existence or a record 10 of similar import signed by the secretary of state or other 11 official having custody of the foreign limited partnership’s 12 publicly filed records in the state or other jurisdiction under 13 whose law the foreign limited partnership is organized. The 14 certificate of existence or other record described in this 15 subsection must be dated not earlier than ninety days prior to 16 the date the application is filed with the secretary of state. 17 Sec. 10. Section 488.906, subsections 1 and 2, Code 2018, 18 are amended to read as follows: 19 1. A certificate of authority of a foreign limited 20 partnership to transact business in this state may be revoked 21 by the secretary of state in the manner provided in subsections 22 2 and 3 if the foreign limited partnership does not do any of 23 the following: 24 a. Pay, within sixty days after the due date, any fee, tax 25 or penalty under this chapter or other law due the secretary of 26 state. 27 b. Deliver, within sixty days after the due date, its 28 biennial report required under section 488.210 . 29 c. Appoint Designate and continuously maintain a registered 30 office and appoint and maintain a registered agent for service 31 of process as required by section 488.114 , subsection 2 . 32 d. Deliver for filing a statement of a change under section 33 488.115 within thirty sixty days after a the change has 34 occurred in the name or address of the registered agent for 35 -4- LSB 5324XD (9) 87 da/rn 4/ 15

S.F. _____ H.F. _____ service of process . 1 2. In order to revoke a certificate of authority, the 2 secretary of state must prepare, sign, and file a notice of 3 revocation and send a copy to the foreign limited partnership’s 4 registered agent for service of process in this state, or 5 if the foreign limited partnership does not appoint and 6 maintain a proper agent in this state, to the foreign limited 7 partnership’s registered principal office. The notice must 8 state all of the following: 9 a. The revocation’s effective date, which must be at least 10 sixty days after the date the secretary of state sends the 11 copy. 12 b. The foreign limited partnership’s failures failure 13 to comply with subsection 1 which are is the reason for the 14 revocation. 15 Sec. 11. Section 488.1206, subsection 1, Code 2018, is 16 amended by adding the following new paragraph: 17 NEW PARAGRAPH . 0p. Articles of merger . . . . . . . . $50 18 DIVISION III 19 IOWA BUSINESS CORPORATION ACT 20 Sec. 12. Section 490.122, subsection 1, paragraph b, Code 21 2018, is amended by striking the paragraph. 22 DIVISION IV 23 CORPORATIONS FOR PECUNIARY PROFIT 24 Sec. 13. Section 491.16A, Code 2018, is amended to read as 25 follows: 26 491.16A Directors and officers —— duties and liabilities. 27 Sections 490.830 , 490.831, and 490.833, sections 490.840 28 through 490.842 , sections 490.860 through 490.863, and section 29 490.870 apply to corporations organized under or subject to 30 this chapter . 31 DIVISION V 32 REVISED IOWA NONPROFIT CORPORATION ACT 33 Sec. 14. Section 504.832, subsection 1, paragraph a, Code 34 2018, is amended to read as follows: 35 -5- LSB 5324XD (9) 87 da/rn 5/ 15

S.F. _____ H.F. _____ a. That section 504.202, subsection 2 , paragraph “d” , or 1 section 504.901 or the protection afforded by section 504.833 2 or 504.836 , if interposed as a bar to the proceeding by the 3 director, does not preclude liability. 4 DIVISION VI 5 IOWA BANKING ACT 6 Sec. 15. Section 524.1404, Code 2018, is amended to read as 7 follows: 8 524.1404 Procedure after approval by the superintendent —— 9 issuance of certificate of merger. 10 If applicable state or federal laws require the approval of 11 the merger by a federal or state agency, the superintendent may 12 withhold delivery of the approved articles of merger until the 13 superintendent receives notice of the decision of such agency. 14 If the final approval of the agency is not given within six 15 months of the superintendent’s approval, the superintendent 16 shall notify the parties to the plan that the approval of the 17 superintendent has been rescinded for that reason. If such 18 agency gives its approval, the superintendent shall deliver 19 the articles of merger, with the superintendent’s approval 20 indicated on the articles, to the secretary of state, and shall 21 notify the parties to the plan. The receipt of the approved 22 articles of merger by the secretary of state constitutes filing 23 of the articles of merger with that office. The secretary of 24 state shall record the articles of merger, and forward a copy 25 of the articles shall be filed and recorded in to the office of 26 the county recorder in each county in which the parties to the 27 plan had previously maintained a principal place of business 28 for filing . On the date upon which the merger is effective 29 the secretary of state shall issue a certificate of merger and 30 send the same to the resulting state bank and a copy of the 31 certificate of merger to the superintendent. 32 Sec. 16. Section 524.1506, subsection 1, Code 2018, is 33 amended to read as follows: 34 1. The secretary of state shall record the articles of 35 -6- LSB 5324XD (9) 87 da/rn 6/ 15

S.F. _____ H.F. _____ amendment, and forward a copy of the articles of amendment 1 shall be filed in to the office of the county recorder in the 2 county in which the state bank has its principal place of 3 business for filing . The secretary of state upon the filing 4 of the articles of amendment shall issue a certificate of 5 amendment and send the same to the state bank. 6 DIVISION VII 7 PROHIBITED UCC RECORD FILINGS 8 Sec. 17. Section 554.9516, subsection 2, Code 2018, is 9 amended by adding the following new paragraph: 10 NEW PARAGRAPH . 0f. in the case of an initial financing 11 statement or an amendment, a secured party and a debtor appear 12 to be the same party. The secretary of state may require the 13 person filing the financing statement to furnish reasonable 14 proof that the parties are not the same. 15 Sec. 18. NEW SECTION . 708.7A Persons unauthorized to file 16 records. 17 1. A person shall not cause to be communicated to the filing 18 office, as defined in section 554.9102, for filing a record, 19 also defined in that section, if all of the following apply: 20 a. The person is not authorized or otherwise entitled to 21 file the record under section 554.9509. 22 b. The record is not related to an existing or anticipated 23 transaction that is or will be governed by chapter 554, article 24 9. 25 c. The record is presented for filing or filed with the 26 intent to harass or defraud the person identified as a debtor 27 in the record. 28 2. A person who commits a violation of this section is 29 guilty of the following: 30 a. A simple misdemeanor for a first offense. 31 b. A serious misdemeanor for a second or subsequent offense. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -7- LSB 5324XD (9) 87 da/rn 7/ 15

S.F. _____ H.F. _____ GENERAL. This bill makes a number of changes to statutes 1 administered by the secretary of state which relate to business 2 entities such as corporations operating on a for-profit basis 3 (Code chapter 490, the “Iowa Business Corporation Act”, or 4 Code chapter 491) or on a nonprofit basis (Code chapter 504, 5 the “Revised Iowa Nonprofit Corporation Act”), or a limited 6 partnership (Code chapter 488, the “Uniform Limited Partnership 7 Act”). The statutory changes also provide for the filing 8 of certain documents (referred to as records) to secure a 9 creditor’s interest in a debtor’s property (Code chapter 554, 10 the “Uniform Commercial Code”) and related provisions. 11 GENERAL —— BACKGROUND. A business entity is classified as 12 “domestic” when it is organized or formed in Iowa (e.g., for 13 a corporation, including a nonprofit corporation, by filing 14 articles of incorporation and receiving a certificate of 15 existence). A business entity may remain organized or formed 16 under a repealed Iowa law and become subject to a succeeding 17 state law. Alternatively, a business entity is classified as 18 “foreign” when it is organized or formed outside of Iowa and 19 upon application to the secretary of state is recognized to 20 do business in this state (e.g., obtaining a certificate of 21 authorization) (Code section 490.128). 22 NONPROFIT CORPORATIONS —— RESTRICTIONS ON ACQUIRING 23 AGRICULTURAL LAND AND REPORTING REQUIREMENTS. The bill 24 amends Code chapter 9H which restricts certain business 25 entities, including corporations, from acquiring agricultural 26 land suitable for use in farming (Code sections 9H.1(2) and 27 9H.1(14)). The bill also amends related provisions in Code 28 chapter 10B that require such entities file landholding reports 29 with the secretary of state. Specifically, the bill replaces 30 language in the definition of “nonprofit corporation” that 31 describes such an entity as “organized under” former Code 32 chapter 504 as published in the 1989 edition of the Code 33 (prior to its repeal) or “current” Code chapter 504 with 34 replacement language describing a nonprofit corporation as a 35 -8- LSB 5324XD (9) 87 da/rn 8/ 15

S.F. _____ H.F. _____ corporation defined in Code chapter 504.141, which includes 1 both a domestic and foreign corporation. It eliminates a 2 part of the definition that recognizes entities qualifying 3 as nonprofit corporations under the Internal Revenue Code. 4 It also makes corresponding changes to another statute that 5 allows a nonprofit corporation to acquire agricultural land for 6 research or experimental purposes under two exceptions: (1) 7 when agricultural land is acquired for research or experimental 8 purposes by a domestic corporation (Code section 9H.4(1)(b)) 9 and (2) when agricultural land is acquired by a domestic 10 or foreign nonprofit corporation associated with a state 11 university (Code section 9H.4(1)(c)). 12 NONPROFIT CORPORATIONS —— RESTRICTIONS ON ACQUIRING 13 AGRICULTURAL LAND AND REPORTING REQUIREMENTS —— BACKGROUND. 14 Prior to July 1, 1990, a nonprofit domestic corporation 15 could have been organized under two now former Code chapters: 16 former Code chapter 504 or former Code chapter 504A, the “Iowa 17 Nonprofit Corporation Act” enacted in 1965 (1965 Iowa Acts, ch. 18 338 and 1990 Iowa Acts, ch. 1164). On July 1, 1990, existing 19 corporations organized under former Code chapter 504 became 20 subject to now former Code chapter 504A, the “Iowa Nonprofit 21 Corporation Act” (1990 Iowa Acts, ch. 1164). On and after July 22 1, 2004, the “Iowa Nonprofit Corporation Act” was replaced by 23 new Code chapter 504, the “Revised Iowa Nonprofit Corporation 24 Act”, so that on and after July 1, 2004, all new domestic and 25 foreign nonprofit corporations were required to be organized 26 under current Code chapter 504 and on and after July 1, 2005, 27 existing domestic corporations organized under former Code 28 chapter 504A became subject to new Code chapter 504 and former 29 Code chapter 504A was repealed (2004 Iowa Acts, ch. 1049). 30 UNIFORM LIMITED PARTNERSHIP ACT —— REGISTERED OFFICE AND 31 REGISTERED AGENT. The bill provides that a foreign limited 32 partnership’s registered office is no longer its principal 33 office but rather the registered office required to be 34 maintained in this state in the same manner as a domestic 35 -9- LSB 5324XD (9) 87 da/rn 9/ 15

S.F. _____ H.F. _____ limited partnership (Code section 488.102(19)). The bill also 1 requires that for a domestic or foreign limited partnership, 2 the street and mailing address of the registered office and 3 the business address of its registered agent must be the same 4 (Code section 488.114). Under the bill, the secretary of 5 state may take administrative action to dissolve a domestic 6 limited partnership or revoke the certificate of authority of 7 a foreign limited partnership that does not (1) maintain a 8 registered office or registered agent, or (2) timely notify 9 the secretary of state that the address of the registered 10 office or registered agent has changed (Code sections 488.809 11 and 488.906). The bill provides that a foreign limited 12 partnership’s certificate of existence issued in the limited 13 partnership’s home jurisdiction or similar record accompanying 14 an application for an Iowa certificate of authorization 15 must be dated not earlier than 90 days prior to the date the 16 application is filed (Code section 488.902). The bill provides 17 that in case a foreign limited partnership fails to maintain a 18 proper registered office, the secretary of state must deliver 19 a notice revoking its certificate of authority to the foreign 20 limited partnership’s principal office (Code section 488.906). 21 UNIFORM LIMITED PARTNERSHIP ACT —— FILING FEE FOR ARTICLES 22 OF MERGER. The bill establishes a fee for persons filing 23 articles of merger with the secretary of state (Code section 24 488.1206). 25 UNIFORM LIMITED PARTNERSHIP ACT —— PRINCIPAL OFFICE, 26 REGISTERED OFFICE, AND REGISTERED AGENT —— BACKGROUND. A 27 “principal office” is the office where the principal executive 28 office of a limited partnership or foreign limited partnership 29 is located (Code section 488.102(17)). A registered office is 30 the place where the limited partnership is required to keep 31 a number of its business records (Code section 488.111) and 32 where it receives formal communications, including where its 33 registered agent may accept service of process (Code sections 34 488.102, 488.114, and 488.115). 35 -10- LSB 5324XD (9) 87 da/rn 10/ 15

S.F. _____ H.F. _____ IOWA BUSINESS CORPORATION ACT —— ELIMINATION OF FEE. The 1 bill strikes a provision that requires a person to submit 2 a fee to the secretary of state with an application to use 3 an indistinguishable name which is not further described by 4 statute (Code section 490.122). 5 CORPORATIONS FOR PECUNIARY PROFIT —— DIRECTOR CONFLICT 6 OF INTEREST TRANSACTIONS AND BUSINESS OPPORTUNITY —— IOWA 7 BUSINESS CORPORATION ACT. One exception to the requirement 8 that a for-profit corporation is subject to the “Iowa Business 9 Corporation Act” is a corporation organized under Code chapter 10 491 prior to July 1, 1971, (Code section 491.1) and which has 11 elected to remain subject to that Code chapter (Code section 12 490.1701). This includes certain corporations offering 13 insurance (Code section 515.1). The bill provides that in 14 the case of a corporation organized under Code chapter 491, a 15 director’s “conflict of interest transaction” is subject to 16 the same requirements as provided for a corporation organized 17 under and therefore subject to the “Iowa Business Corporation 18 Act” (Code sections 490.860 through 490.863), including the 19 so-called “safe harbor” exception. The bill also allows a 20 director of a corporation organized under and subject to Code 21 chapter 491 to take advantage of a “business opportunity” 22 according to the same requirements that apply to a director 23 of a corporation organized and subject to the “Iowa Business 24 Corporation Act” (Code section 490.870). 25 CORPORATIONS FOR PECUNIARY PROFIT AND CORPORATIONS SUBJECT 26 TO THE IOWA BUSINESS CORPORATION ACT —— BACKGROUND. Under 27 the “Iowa Business Corporation Act”, a director’s conflicting 28 interest transaction involves a director who is a party to a 29 transaction that affects the corporation, had knowledge of a 30 material financial interest in such transaction, or knew that 31 a related person was a party to or had a material financial 32 interest in the transaction (Code section 490.862). The safe 33 harbor exception applies to exempt a director’s conduct, and 34 consequently validates a conflicting interest transaction when 35 -11- LSB 5324XD (9) 87 da/rn 11/ 15

S.F. _____ H.F. _____ qualified directors approve the transaction (Code sections 1 490.143 and 490.862), the shareholders later ratify the 2 transaction (Code section 490.863) after disclosure, or it 3 is found that the transaction is “fair to the corporation” 4 (Code sections 490.860 through 490.862). The business 5 opportunity rule recognizes that a director owes a duty to 6 the corporation but allows the director to take advantage of 7 a situation that may result in a gain to a party other than to 8 the corporation (e.g., the director or another corporation to 9 which the director owes a duty) if qualified (disinterested 10 and independent) directors disclaim the corporation’s 11 interest, the issue is treated in the same manner as director’s 12 conflicting interest transaction, or the shareholders disclaim 13 the corporation’s interest in the transaction (Code section 14 490.870). 15 NONPROFIT CORPORATIONS SUBJECT TO REVISED IOWA NONPROFIT 16 CORPORATION ACT —— STANDARD OF LIABILITY FOR DIRECTORS —— 17 BUSINESS OPPORTUNITY RULE. The bill provides that for a 18 plaintiff to move forward in a legal or equitable action 19 alleging a director is liable for violating the general duty 20 of care owed to the nonprofit corporation, the plaintiff must 21 establish that the director’s liability is not precluded by 22 the director having acted under the business opportunity 23 rule if such a defense is raised (interposed as a bar to the 24 proceeding) (Code section 504.832). 25 NONPROFIT CORPORATIONS SUBJECT TO REVISED IOWA NONPROFIT 26 CORPORATION ACT —— STANDARD OF LIABILITY FOR DIRECTORS —— 27 BUSINESS OPPORTUNITY RULE —— BACKGROUND. Generally, a director 28 must act in good faith and in a manner that the director 29 reasonably believes is in the best interest of the corporation 30 (Code section 504.831). Under Code section 504.832, in order 31 to bring an action against a director for a breach of this 32 duty, a plaintiff or plaintiffs (e.g., members of the nonprofit 33 corporation who are parties in a derivate suit) must establish 34 a number of facts relating to the alleged breach of the 35 -12- LSB 5324XD (9) 87 da/rn 12/ 15

S.F. _____ H.F. _____ director’s duty to act in good faith and in the best interest 1 of the nonprofit corporation or without having received an 2 unentitled benefit (Code section 504.832). As part of the 3 proceeding, the director may raise a recognized protection that 4 includes: (1) a provision limiting the director’s liability 5 as set forth in the articles of incorporation (Code section 6 504.202(2)(d)), (2) a general statutory provision prohibiting 7 a director from having to assume the debts or obligations of 8 the corporation (Code section 504.901), or (3) a statutory 9 provision that excuses a director’s conflict of interest 10 transaction (Code section 504.833). The business opportunity 11 rule applies when a director has brought an opportunity that 12 could allow the director to receive some personal benefit, 13 but brings the opportunity to the attention of the nonprofit 14 corporation and some action was taken by its directors or its 15 members disclaiming the nonprofit corporation’s interest in the 16 opportunity (Code section 504.836). 17 BANK MERGERS AND AMENDMENTS TO ARTICLES OF INCORPORATION —— 18 FILING OF CERTAIN DOCUMENTS. The bill provides that in the 19 case of a bank merger, when the secretary of state receives 20 approved articles of merger from the superintendent of banking 21 (superintendent), the secretary no longer files the document 22 with the county recorder in each county in which the parties 23 maintained a principal place of business but instead records 24 the document and files copies with the respective county 25 recorders (Code section 524.1404). The secretary of state 26 must also record articles of amendment and file a copy with 27 the county recorder in the county in which the bank has its 28 principal place of business (Code section 524.1506). 29 UNENTITLED OR UNAUTHORIZED UCC CREDITOR-DEBTOR RECORD 30 FILINGS —— DEMAND OF PROOF. The bill prohibits the wrongful 31 filing of a financing statement under Iowa’s version of the 32 UCC governing secured transactions (Code chapter 554, article 33 9). The bill allows the secretary of state to demand a person 34 who files a financing statement or amendment to produce proof 35 -13- LSB 5324XD (9) 87 da/rn 13/ 15

S.F. _____ H.F. _____ that the secured party and debtor are not the same party (Code 1 section 554.9516). 2 UNENTITLED OR UNAUTHORIZED UCC CREDITOR-DEBTOR RECORD 3 FILINGS —— PROHIBITION AND PENALTIES. The bill also makes 4 it a criminal offense for a person to communicate for filing 5 (delivering) a record if three elements are satisfied: (1) 6 the person is not authorized or otherwise entitled to file 7 the record, (2) the record does not relate to an existing or 8 anticipated creditor-debtor transaction, and (3) the record 9 is presented or actually filed with an intent to defraud the 10 person identified in the record as a debtor. 11 A person who violates the prohibition commits a simple 12 misdemeanor for a first offense and a serious misdemeanor 13 for a second or subsequent offense. A simple misdemeanor is 14 punishable by confinement for no more than 30 days or a fine 15 of at least $65 but not more than $625 or by both. A serious 16 misdemeanor is punishable by confinement for no more than one 17 year and a fine of at least $315 but not more than $1,875. 18 UNENTITLED OR UNAUTHORIZED UCC CREDITOR-DEBTOR RECORD 19 FILINGS —— BACKGROUND. A person alleging that they are 20 a creditor acting under contract (secured party) may file 21 a number of different types of records in order to ensure 22 priority over other secured parties who file later when 23 claiming proceeds from the sale of the collateral in the event 24 that the debtor defaults upon a debt obligation subject to the 25 security agreement. The records include a financing statement 26 used in order to “perfect” a security interest in collateral 27 usually possessed by the debtor (Code sections 554.9501, 28 554.9502, and 554.9510), an amendment to the financing 29 statement (Code section 554.9512), a statement correcting an 30 incorrect statement on record, or a termination statement (Code 31 section 554.9513). A secured party almost always files a 32 record in the office of the secretary of state. The financing 33 statement or an amendment to the financing statement that 34 adds collateral covered by the financing statement must be 35 -14- LSB 5324XD (9) 87 da/rn 14/ 15