We previously discussed the Business Entity Harmonization Bill (Senate Enrolled Act 443 or P.L. 118-2017) passed last year by the General Assembly in the following posts:
- Part I — an introduction.
- Part II — a discussion of IC 23‑0.5, the Uniform Business Organizations Code.
- Part III — a discussion of IC 23‑0.6, the Uniform Business Organizations Transactions Code.
- Part IV — a list of some minor issues that we believed the General Assembly should resolve.
On March 1, 2018 the General Assembly passed Senate Enrolled Act 180 amending IC 23‑0.5 and IC 23‑0.6, and we assume the governor will sign it within a few days. [Update: Governor Holcomb signed SEA 180 on March 13, 2018.] The amendments are retroactively effective as of January 1, 2018, which is when the original Business Entity Harmonization Bill took effect. This post discusses some of the more substantive changes.
IC 23‑0.5‑1.5‑1.6, Definition of “interest”
“Interest” was previously defined as:
(1) a share in a business corporation;
(2) a membership in a nonprofit corporation;
(3) a governance interest or distributional interest in any other type of entity.
SEA 180 replaces “distributional interest” with the broader term “economic interest.” For example, for the purposes of IC 23‑0.5 and IC 23‑0.6, interest in a limited liability company now appears to include not only the right to receive distributions but also more remote economic rights such as a security interest in LLC interest or an option to purchase LLC interest. The significance of the change is not immediately obvious to us, except that it makes the definition of interest for the purpose of Articles 0.5 and 0.6 more consistent with the definition of LLC interest set forth in the Indiana Business Flexibility Act, which includes “economic rights in a limited liability company.” The two definitions are still not identical (and are clearly not intended to be) because LLC interest as defined by the Indiana Business Flexibility Act does not include governance rights.
IC 23‑0.5‑2‑13, Business entity reports; IC 23‑0.5‑4‑3 Designation of Registered Agent
Filing requirements are amended to clarify what information is required for commercial registered agents (see Part III) and what information is required for noncommercial registered agents.
IC 23‑0.5‑3‑1, Permitted Names
IC 23‑0.5‑3‑1(b) previously provided a means for an entity to consent to the use by another entity of a name indistinguishable from that of the consenting entity, but only if the consenting entity changed its name to a distinguishable name. Subsection (d) set out certain conditions in which an entity could grant consent without the need to change its own name. Subsection (b) has been amended to eliminate the need for the consenting entity to change its name, and the provision in subsection (d), which was rendered superfluous by the change to subsection (b), has been deleted.
IC 23‑0.5‑3‑1(b) now also provides that consent may not be given for the use of a reserved business name; however, IC 23‑0.5‑3‑3 already provided a mechanism for the transfer of a reserved business name to another entity.
IC 23‑0.5‑3‑2, Required words or phrases
SEA 180 corrects the omission of requirements for the names of nonprofit organizations that was discussed in Part IV. Names of nonprofit corporations have the same requirements as names of business corporations, just as it was before the Business Entity Harmonization Bill took effect.
IC 23‑0.5‑5‑12, Reinstatement of registration of a foreign entity
An application to have a revoked registration of a foreign entity reinstated must be filed within five years of revocation.
IC 23‑0.5‑6‑3, Reinstatement of administratively dissolved entity
An application for the reinstatement of a dissolved entity must be filed within five years (as opposed to the previous two years) of dissolution.
IC 23‑0.5‑9‑41, Filing fee for cancellation of assumed business name
The filing fee to cancel an assumed business name is eliminated.
The incorrect citations to provisions of the Indiana Nonprofit Corporation Act noted in Part IV are corrected.