HOUSE BILL REPORT

ESSB 6389

BYSenate Committee on Law & Justice (originally sponsored by Senators Nelson, Talmadge and Newhouse)

Revising the Washington business corporations act.

House Committe on Judiciary

Majority Report:  Do pass.  (17)

      Signed by Representatives Appelwick, Chair; Crane, Vice Chair; Padden, Ranking Republican Member; Belcher, Brough, Dellwo, Forner, Hargrove, Inslee, P. King, Moyer, H. Myers, Schmidt, Scott, D. Sommers, Tate and Wineberry.

House Staff:Rob Lopez (786-7591)

                  Bill Perry (786-7123)

AS PASSED HOUSE MARCH 2, 1990

BACKGROUND:

The Legislature adopted the Revised Model Business Corporations Act in 1989.  The act, Chapter 23B RCW, goes into effect on July 1, 1990, when it will replace the current law in Chapter 23A RCW.  The act tracks national developments in corporate law and keeps Washington in line with other major commercial states.

SUMMARY:

Several technical amendments resolve inconsistencies with current law and simplify administration of the act.

Where fee structures differ from those currently effective, they are changed and made consistent with fees now applicable.  An allowance is made for a corporation to change its registered agent without paying a fee by doing so on its annual report form.

Written notice under the act is effective when dispatched, if expressly authorized by the articles of incorporation or bylaws, and if notice is sent to the person's address, telephone number, or other number appearing on the records of the corporation.

The Secretary of State's notice to a foreign corporation qualified to do business in Washington that the corporation's annual report must be filed and its annual license fee is due must be mailed to the corporation's registered office within this state.

The procedure is simplified by which the Secretary of State may waive penalties due from a corporation previously in good standing because of a missed filing or other lapse.  The requirement is eliminated that the Secretary of State keep records of requests for relief from penalties and the disposition of the requests.  The requirement is also eliminated that the Secretary of State make an annual report to the Legislature on those records.

Whenever an amendment to a corporation's articles of incorporation is proposed that would reduce to less than two-thirds the number of votes necessary to approve a merger, share exchange, extraordinary sale of assets, or dissolution of the corporation, it must be approved by two-thirds of each voting group entitled to vote.

The 60 day grace period following an omission by a native or foreign corporation that would otherwise entitle the Secretary of State to dissolve the corporation, or, in the case of a foreign corporation, to revoke its certificate of authority to do business in Washington, is eliminated.

The provision is eliminated that the dissolution of a corporation does not take away or impair any remedy available to it, its directors, officers, or shareholders, for any right or claim existing prior to dissolution.  Also eliminated is the provision that directors of any dissolved corporation shall hold title to the corporation's property as trustees for the benefit of the dissolved corporation's creditors and shareholders.

Unless it is authorized to do so pursuant to a state or federal statute, a foreign corporation may not conduct business in Washington, nor may it maintain a proceeding in any court in Washington, until it obtains a certificate of authority from the Secretary of State.

Fiscal Note:      Not Requested.

Effective Date:The bill takes effect July 1, 1990.

House Committee ‑ Testified For:    Don Whiting, office of the Secretary of the State; and Kent Carlson, Washington State Bar Association.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    The legislation resolves ambiguities as well as inconsistencies with current law.  Fee changes will make fees more accurately reflect the costs of administrative actions by the Secretary of State, but they will not result in a significant accrual of new monies to the office of the Secretary of State.

House Committee - Testimony Against:      None.