Maintaining a Business Entity
§ 4.1Maintenance of Registered Agent and Office
In fiscal year 2018, the secretary of state processed 105 allegations that filing entities had failed to maintain registered agents and registered office addresses as required by Texas Business Organizations Code (TBOC) chapter 5, notified 16,237 entities of the resignation of their registered agents, and filed 50 rejections of registered agent appointments.
§ 4.1:1Requirements for Registered Agent’s Office
Pursuant to TBOC section 5.201(c), the registered office address of a filing entity must be a street address where process may be personally served on the entity’s registered agent. See Tex. Bus. Orgs. Code § 5.201(c). This means that the address provided as a registered office address must be the physical address where the registered agent may be found. It may not be solely the address of a business that provides the entity (or designated agent) with mailbox or telephone answering services.
The registered office address does not need to be the business office address of the represented entity, but it is required to be the business office address of the designated registered agent. See Tex. Bus. Orgs. Code § 5.201(b)(3).
A registered agent that is an organization must have an employee available at the registered office address during normal business hours to receive service of process. Any employee of that organization may receive service at the registered office. Tex. Bus. Orgs. Code § 5.201(d).
§ 4.1:2Failure to Maintain Registered Office
If the secretary of state determines that the registered agent is not located at the street address provided as the registered office address or that the registered office address is merely the street address of a business providing mailbox services, the secretary will notify the entity of its failure to maintain a registered agent and office as required by law.
§ 4.1:3Updating Registered Office Address
The address of the registered office may be updated by a filing submitted by the entity itself or by the registered agent. An address correction or update made by the designated registered agent pursuant to TBOC section 5.203 should be made using SOS Form 408 (form 4-1 in this manual) rather than SOS Form 401 (form 4-2). A registered agent may file a statement under section 5.203 that applies to more than one filing entity. There are individual fees as well as maximum fees for each different type of entity represented. See Tex. Bus. Orgs. Code § 5.203.
PRACTICE TIP: When making a change to the legal name or registered office address of a filing entity, determine whether the entity itself is designated as the registered agent of another entity (e.g., an LLC general partner of a Texas LP is the designated registered agent of the LP). A filing effecting a change to the name or address of the designated agent (in this example, the LLC general partner) does not effect a change or update to the certificate of formation of the represented entity (the LP).
§ 4.2:1Franchise Tax Account Status
Effective May 5, 2013, the comptroller of public accounts changed the manner in which the account status of a taxable entity is determined and described and ceased to issue online certifications of account status indicating that an entity was in “good standing” through a date certain. An entity’s franchise tax account status can be found at the comptroller’s website, https://comptroller.texas.gov.
§ 4.2:2Account Status Is Determined by Entity’s Right to Transact Business
Before May 5, 2013, the public was able to obtain from the comptroller of public accounts’ website a certification that a taxable entity had met all franchise tax filing requirements with a certification that no tax was due through a date certain. After the revision of the franchise tax in 2008 and the resulting changes to filing requirements, however, the issuance of a “good standing” certification became more complicated. Because of this, the comptroller changed the terminology used to describe a taxable entity’s status to clarify that references made to status referred to an entity’s franchise tax account status.
As of May 5, 2013, the phrases good standing, temporary good standing, and not in good standing are no longer used by the comptroller to describe a business entity’s account status. Instead, the account status of an entity is based on whether the comptroller has forfeited the entity’s right to transact business in Texas pursuant to Texas Tax Code sections 171.251, 171.2515, and 171.256.
The comptroller is authorized to forfeit a taxable entity’s right to transact business when the entity does not file a franchise tax report or pay a tax or penalty required under chapter 171 of the Tax Code. Before the forfeiture actually occurs, the comptroller mails the entity a notice providing at least forty-five days within which to cure the franchise tax deficiencies.
§ 4.2:3Comptroller Account Terminology
Active: A person using the comptroller’s website to verify a taxable entity’s “status” must look to the entity’s “Right to Transact Business.” A status of “Active” means that the entity’s right to transact business in Texas has not been forfeited by the comptroller.
Active, Eligible for Termination/Withdrawal: A status of “Active, Eligible for Termination/Withdrawal” means that the entity has met those franchise tax requirements that would make the entity eligible to obtain a certification for purposes of filing a certificate of termination or withdrawal with the secretary of state. This status is displayed when the taxable entity has filed an annual franchise tax report, as well as a final tax report, for the current tax year. A printout from the comptroller’s website showing this status does not, however, satisfy the requirements of TBOC section 11.101(b) or 9.011(c) for purposes of filing the certificate of termination or withdrawal.
Forfeited: A status of “Forfeited” means that the comptroller has forfeited the entity’s right to transact business in accordance with subchapter F of chapter 171 of the Texas Tax Code. The records of the secretary of state may still reflect the status of a domestic taxable entity with this status as “in existence.”
Franchise Tax Ended: A status of “Franchise Tax Ended” with respect to a domestic taxable filing entity means that the entity terminated its existence with its right to transact business intact. With respect to a domestic filing entity, this status would apply if an entity terminated its existence by virtue of filing a voluntary termination or merger.
Franchise Tax Involuntarily Ended: A status of “Franchise Tax Involuntarily Ended” with respect to a domestic taxable entity means that the existence of the entity ended due to action taken by the secretary of state. The action taken may have been an administrative tax forfeiture or an involuntary termination. To verify the statutory basis for the entity’s inactive status, contact the secretary of state.
Right to Transact Business: A foreign taxable entity’s “right to transact business” for franchise tax liability purposes is not tied to the “transaction of business” for purposes of registration with the secretary of state under TBOC chapter 9. See Sharp v. House of Lloyd, Inc., 815 S.W.2d 245 (Tex. 1991). Consequently, in the case of a foreign entity, an active status does not necessarily indicate that the foreign entity has an active registration to transact business on file with the secretary of state. Similarly, an account status of “Franchise Tax Ended” is not tied to the status of a foreign entity’s registration with the secretary of state.
§ 4.3Reinstating Inactive Domestic Entity
§ 4.3:1Forfeited Existence—Texas Tax Code Chapter 171
The secretary of state has statutory authority to forfeit the charter, certificate, or registration of a domestic or foreign corporation, limited liability company, professional association, limited partnership, or foreign business trust that the comptroller of public accounts certifies has not revived its forfeited privileges.
The secretary of state is not required to notify a taxable entity of the forfeiture of its existence or registration. The taxable entity has already received statutory notification regarding the forfeiture of its corporate or business privileges from the comptroller under subchapter F of chapter 171 of the Texas Tax Code.
On forfeiture, the secretary of state changes the status of the taxable entity from “in existence” to “forfeited existence.” While the secretary of state can provide the effective date of the forfeiture of an entity’s certificate or registration, it is the comptroller who determines the effective date that a taxable entity forfeits its corporate or business privileges under Tax Code sections 171.251 and 17.2515.
The secretary of state has authority to revive the certificate or registration of a taxable entity after forfeiture by the secretary of state. An application for reinstatement and request to set aside a tax forfeiture is governed by sections 171.312 through 171.315 of the Tax Code rather than the TBOC or its source statutes. See Tex. Bus. Orgs. Code § 11.254. The revival and reinstatement of a taxable entity follows the same procedures used when reinstating a corporate entity.
Tax Code chapter 171 does not establish a time frame within which an entity must file an application for reinstatement with the secretary of state.
Section 171.313 requires the secretary of state to determine whether a taxable entity has filed each delinquent report and paid any delinquent tax before filing an application for reinstatement and setting aside the forfeiture. See Tex. Tax Code § 171.313(b). A tax clearance letter issued by the comptroller stating that the entity is in good standing for purposes of reinstatement fulfills this requirement, must accompany the application for reinstatement, and must be valid through the date of filing of the application for reinstatement.
An application for reinstatement and request to set aside forfeiture under Tax Code chapter 171 must be submitted on behalf of and executed by a person who was a managerial official or owner of the taxable entity at the time of forfeiture. In the case of a limited partnership, the application for reinstatement would be submitted and executed by a person who was a partner in the partnership at the time of forfeiture.
The specific SOS form for making an application for reinstatement and request to set aside forfeiture is SOS Form 801 (form 4-3 in this manual). The current filing fee for a taxable entity, other than a nonprofit corporation, is $75. There is no filing fee assessed for an application for reinstatement and request to set aside a tax forfeiture filed on behalf of a nonprofit corporation.
§ 4.3:2Involuntary Terminations—TBOC Chapter 11
Texas Business Organizations Code section 11.251 authorizes the secretary of state to involuntarily terminate the existence of a domestic entity if the secretary finds that—
(1)the entity has failed to, and, before the 91st day after the date notice was mailed has not corrected the entity’s failure to:
(A)file a report within the period required by law or pay a fee or penalty prescribed by law when due and payable; or
(B)maintain a registered agent or registered office in this state as required by law; or
(2)the entity has failed to, and, before the 16th day after the date notice was mailed has not corrected the entity’s failure to, pay a fee required in connection with the filing of its certificate of formation, or payment of the fee was dishonored when presented for payment by the state for payment.
Tex. Bus. Orgs. Code § 11.251(b).
Registered Agent and Office: The most frequent basis for involuntary termination of a domestic entity’s existence is an entity’s failure to maintain a registered agent or registered office address in Texas as required by law. Typically, notice of delinquency follows the receipt and filing of a resignation of registered agent or rejection of appointment. Notice of the need to designate a new registered agent or office is sent to the entity by certified mail. In fiscal year 2018, the secretary of state received 1,838 notices of nondelivery of the certified mailings sent to domestic entities. If an additional contact address is shown in the records of the secretary of state, additional notice may be sent by regular mail to the secondary address.
Dishonored Payment: Failure to satisfy the statutory fee for a certificate of formation will result in the involuntary termination of a domestic filing entity. An initial notice regarding nonpayment or dishonor of payment of the formation fee is sent to the submitting party-payor name and address. If substitute payment is not received within the time frame specified in the initial contact letter, notice of the entity’s failure to satisfy the formation fee and intent to involuntarily terminate the entity is sent to the registered agent at the registered office address of record by regular mail. The time frame for curing this deficiency-delinquency is fifteen days. The time given is shorter than the ninety days provided to cure other delinquencies because a person submitting payment also receives notice from the person’s financial institution or credit card issuer.
Reinstatement: An involuntarily terminated entity may reinstate its existence by filing a certificate of reinstatement under TBOC section 11.253 and by correcting the circumstances that gave rise to the involuntary termination and any other circumstances that may exist of the types described by section 11.251(b). See Tex. Bus. Orgs. Code § 11.253. Additional fees and filings may be required depending on the circumstances that led to the involuntary termination and any intervening events that may require an amendment to the domestic entity’s certificate of formation.
Pursuant to section 11.253(d), a certificate of reinstatement after involuntary termination may be filed at any time. However, the entity is considered to have continued in existence without interruption from the date of its involuntary termination only if the entity is reinstated before the third anniversary of the date of its involuntary termination. See Tex. Bus. Orgs. Code § 11.253(d).
A domestic entity that was involuntarily terminated for its failure to pay a fee required in connection with the filing of its certificate of formation is required to submit the certificate of reinstatement together with a fee sufficient to cover the filing fee for the reinstatement and the amount owed to the secretary of state.
A domestic entity that was involuntarily terminated for its failure to maintain a registered agent or registered office as required by law need not provide a separate statement of change of registered agent or office with its certificate of reinstatement. Each entity requesting reinstatement must provide a current registered agent and registered office in the certificate of reinstatement. A certificate of reinstatement that does not include current registered agent and registered office information cannot be filed and will be rejected.
SOS Forms 811 and 814 (forms 4-4 and 4-5, respectively, in this manual) have been promulgated for filing a certificate of reinstatement. SOS Form 811 is the generic certificate of reinstatement form. SOS Form 814 is designed specifically for use by professional associations that have been involuntarily terminated for failing to file an annual statement. If these forms are not used, the certificate of reinstatement must satisfy the requirements of section 11.253(b) and (c).
A certificate of reinstatement submitted on behalf of a domestic filing entity, other than a nonprofit corporation, requires a tax clearance letter issued by the comptroller stating that the entity is in good standing for purposes of reinstatement.
§ 4.3:3Reinstatement after Voluntary Termination
Texas Business Organizations Code sections 11.201 and 11.202 permit the reinstatement of a domestic entity that has been voluntarily terminated if the owners, members, governing persons, or other persons specified by the Code approve the reinstatement in the manner provided by the title governing the entity and—
1.the termination was by mistake or inadvertent;
2.the termination occurred without the approval of the entity’s governing persons when approval is required by the title governing the entity;
3.the process of winding up before termination had not been completed by the entity; or
4.the legal existence of the entity is necessary to convey or assign property, to settle or release a claim or liability, to take an action, or to sign an instrument or agreement.
Tex. Bus. Orgs. Code § 11.201(a).
The certificate of reinstatement of an entity that has been voluntarily terminated must be filed no later than the third anniversary of the effective date of the termination. Tex. Bus. Orgs. Code § 11.202(a).
An application for reinstatement following a voluntary termination submitted on behalf of a domestic filing entity, other than a nonprofit corporation, made pursuant to section 11.202 requires a tax clearance letter issued by the comptroller stating that the entity is in good standing for purposes of reinstatement. Tex. Bus. Orgs. Code § 11.202(e).
§ 4.3:4Events That Might Give Rise to Rejection of Reinstatement
Entity Name Issues: Before filing for reinstatement, the secretary of state must determine whether the name of the entity seeking reinstatement is still available for purposes of its reinstatement. If the entity’s name is no longer available for its use at the time of submission of the reinstatement filing, the instrument cannot be filed. In the case of a domestic entity, the reinstatement must be accompanied by a certificate of amendment to change the name of the domestic entity. In the case of a foreign entity, the reinstatement must be accompanied by an amendment to the registration for purposes of adopting an assumed name under which the entity may register to transact business.
No Registered Agent: Before submitting an application for reinstatement and request to set aside forfeiture, the practitioner should determine whether there is a need to update the entity’s registered agent or registered office address. If the entity’s registered agent submitted a resignation to the secretary of state during the period the entity was in a tax-forfeited status, the application for reinstatement and request to set aside forfeiture will be rejected. Acceptance of the application will be conditioned on the simultaneous submission of a statement of change of registered agent and registered office.
Entity Expired: While the vast majority of entities are formed with a perpetual duration, a domestic entity seeking reinstatement of its existence may be unable to do so if its certificate of formation provides for a limited duration. If the duration of an entity expires between termination-forfeiture and reinstatement, the entity ceases to exist due to the expiration of its duration and no longer has an existence that may be reactivated. Consequently, a reinstatement may be filed after a tax forfeiture or involuntary termination as long as the entity would otherwise have continued to exist.
§ 4.3:5Issues Faced by Involuntarily Terminated or Forfeited Entity
Pursuant to TBOC section 11.356(b), a terminated entity may not continue its existence for the purpose of continuing the business for which it was formed unless the entity is reinstated. Tex. Bus. Orgs. Code § 11.356(b).
Section 11.001 defines a “terminated entity” as a domestic entity the existence of which has been—
1.terminated in a manner authorized or required by the TBOC, unless the entity has been reinstated in the manner provided by the TBOC, or
2.forfeited pursuant to the Texas Tax Code, unless the forfeiture has been set aside.
Tex. Bus. Orgs. Code § 11.001(4).
A terminated domestic filing entity continues in existence until the third anniversary of the effective date of its termination only for the purposes set forth in section 11.356, which include—
1.prosecuting or defending in the entity’s name an action or proceeding brought by or against the terminated filing entity and
2.permitting the survival of an existing claim by or against the terminated filing entity.
Tex. Bus. Orgs. Code § 11.356(a)(1), (a)(2).
Pursuant to section 11.001, an “existing claim” means—
1.a claim against an entity that existed before the entity’s termination and that is not barred by limitations, or
2.a contractual obligation incurred after termination.
Tex. Bus. Orgs. Code § 11.001(3).
An existing claim by or against a terminated filing entity is extinguished unless an action or proceeding is brought on the claim no later than the third anniversary of the date of termination of the entity. See Tex. Bus. Orgs. Code § 11.359.
While the secretary of state may accept and file an application for reinstatement submitted on behalf of an entity that has been involuntarily terminated or forfeited, the secretary’s reinstatement of the entity may not cure the issues that may be faced by the forfeited or involuntarily terminated entity. See Tex. Bus. Orgs. Code § 11.253.
Pursuant to sections 171.251 through 171.252 of the Tax Code, the managerial officials of a taxable entity that has forfeited its right to do business are liable for the debts of an entity created or incurred in Texas after the date on which the report, tax, or penalty is due and before the corporate privileges are revived. These officials are liable as if the entity were a partnership and the managerial officials were partners in such partnership. Although the Tax Code provisions speak of “officers” and “directors,” the provisions also apply to noncorporate entities. See Bruce v. Freeman Decorating Services, Inc., No. 14-10-00611-CV, 2011 WL 3585619 (Tex. App.—Houston [14th Dist.] Aug. 15, 2011, pet. denied) (mem. op.). This liability is not affected by the restoration of the taxable entity’s corporate privileges.
While a taxable entity whose existence has been forfeited under the Tax Code or involuntarily terminated under the TBOC may submit an application for reinstatement at any time, the secretary of state’s filing of the application and reactivation of the existence of an entity does not revive any claims that may have been extinguished under subchapter H of chapter 11 of the TBOC. See Emmett Properties, Inc. v. Halliburton Energy Services, Inc., 167 S.W.3d 365 (Tex. App.—Houston [14th Dist.] 2005, pet. denied) (corporation bringing suit and reinstating its existence more than three years after its forfeiture by secretary of state cannot sue on preforfeiture claims).
§ 4.4Certificates of Correction
§ 4.4:1Procedure to Correct Filing Instrument
A domestic or foreign filing entity may correct a filing instrument that was filed with the secretary of state when the instrument is an inaccurate record of the action referred to in the instrument, contains an inaccurate or erroneous statement, or was defectively executed. See Tex. Bus. Orgs. Code §§ 4.101–.105.
A certificate of correction must be executed by a person authorized by the TBOC to execute the instrument being corrected. See Tex. Bus. Orgs. Code § 4.101(b). This means that an entity’s organizer must sign a certificate of correction to a certificate of formation. If the organizer is identified as John Doe, and Mary Smith, an initial member of the limited liability company, signs the certificate of correction, it will be rejected. However, if the organizer is identified as a corporation, limited liability company, or partnership (e.g., ABC Servco, Inc.), the certificate of correction need not be signed by the same person who signed the certificate of formation on behalf of the legal entity but may be signed by an authorized managerial official of the organizer.
A certificate of correction is not to be used as a less expensive alternative to a certificate of amendment. The secretary of state may subject a certificate of correction to greater scrutiny and may reject the submission of a certificate of correction if—
1.it appears that an amendment rather than a correction is being made to a formation instrument,
2.multiple corrections have been filed to correct the same filing instrument,
3.the filing instrument to be corrected has been on file for more than one year, or
4.the certificate of correction attempts to change a domestic nonprofit corporation to a special purpose nonprofit corporation governed by a law other than the TBOC.
Documents may be corrected to contain only those statements that lawfully could have been included in the original instrument. The certificate of correction may not be used to alter, include, or delete a statement that by its alteration, inclusion, or deletion would have caused the secretary of state to determine that the document did not conform to law. This means that a certificate of correction cannot be used to change the type of document filed. For example, a certificate of correction cannot be used to change a certificate of formation of a domestic entity to an application for registration of a foreign entity (or vice versa) or an application for registration as a limited liability partnership to a certificate of formation for a limited partnership (or vice versa).
The filing of the certificate of correction relates back to the original date of the filing, except for those persons who are adversely affected by the correction, for whom the filing instrument is considered to have been corrected on the date the certificate of correction is filed. See Tex. Bus. Orgs. Code § 4.105(a), (b).
Corrections do not void or revoke the original filing; TBOC section 4.105(c) provides that any acknowledgment of filing issued by the secretary of state with respect to the effect of the filing is considered to apply to the instrument as corrected. See Tex. Bus. Orgs. Code § 4.105(c).
An assumed name certificate is not a filing instrument governed by the TBOC. Consequently, an assumed name certificate is not an instrument that can be corrected by filing a certificate of correction under TBOC chapter 4. If the information is materially misleading or inaccurate, the practitioner should consider filing a new assumed name certificate. See Tex. Bus. & Com. Code § 71.152.
§ 4.4:2Corrections to Mergers or Conversions
Generally, the filing instrument to be corrected relates to a single entity. In the case of a filing instrument that involves multiple entities as parties to the transaction evidenced by the instrument, certain procedures should be taken to facilitate processing.
Only one correction filing is required to correct errors in the merger, conversion, or exchange filing instrument. If the practitioner is using SOS Form 403 (form 4-6 in this manual) to submit the certificate of correction, the best practice is to show the name and file number of any surviving entity to a merger, the converted entity in a conversion, and the acquiring entity in an interest exchange in the field that asks for the name of the entity submitting the correction instrument.
The certificate of correction should also include the name and file number of any merging filing entities, the name and file number of the converting entity, or the name of each acquired domestic filing entity, as applicable. The additional names and file numbers may be included on the form itself or provided as an attachment to the form. Failure to include the names and file numbers of the other filing entities will not be grounds for refusal of the correction instrument; however, providing the additional information saves the secretary of state time and ensures that the correction instrument is properly indexed.
Even though the correction instrument may apply to multiple entities, the certificate of correction need not be signed by all parties that were required to sign the instrument being corrected. It is sufficient if the correction instrument is signed on behalf of a surviving party to the merger, the converted entity in a conversion, or an acquiring entity in the interest exchange.
The current fee for filing the certificate of correction is $15 regardless of the number of entities that may be affected by the correction instrument.
§ 4.5:1Effectiveness Delayed to Specific Date and Time
In general, a filing instrument takes effect on filing by the secretary of state. However, TBOC section 4.052 allows an instrument to take effect after the time the filing instrument would otherwise take effect. See Tex. Bus. Orgs. Code § 4.052.
PRACTICE TIP: The review and processing of a filing instrument that will have its effectiveness delayed is facilitated if the filing instrument clearly and expressly provides a separate section or paragraph relating to the delayed effectiveness of the filing.
If the effectiveness of a filing instrument is to be delayed to a specific date and time, the future date may not be later than ninety days from the date of signing, and the time cannot be stated as “12:00 a.m.” or “12:00 p.m.” See Tex. Bus. Orgs. Code § 4.052(b). In addition, the time must be stated as a specific time. For example, it is not sufficient to state that the instrument will be effective on a certain date “immediately after” or “immediately before” a stated time.
PRACTICE TIP: When drafting filing instruments for multijurisdictional transactions, note that all delayed effective dates and times will be recorded as the date and time in the time zone of the filing office—central standard time. For example, a delayed effective date and time stated in the filing instrument as June 1, 2020, at 12:01 a.m. eastern standard time will be evidenced in the certificate of filing and in the records of the secretary of state as May 31, 2020, at 11:01 p.m.
Delayed effectiveness is not permitted for name reservations, name registrations, statements of event or fact, or abandonment of filings before effectiveness. See Tex. Bus. Orgs. Code § 4.058. Due to the effect and nature of a certificate of correction, the effectiveness of a correction may not be delayed.
§ 4.5:2Effectiveness Conditioned on Event or Fact
A filing instrument the effectiveness of which is conditioned on the occurrence of a future event or fact (“delayed condition”) must clearly and expressly state—
1.the manner in which the event or fact will cause the instrument to take effect and
2.the date of the ninetieth day after the date the instrument is signed.
Tex. Bus. Orgs. Code § 4.053(a)(2).
TBOC section 4.055 requires the entity to file a statement confirming (1) that each event or fact on which the effect of the instrument is conditioned has been satisfied or waived and (2) the date and time on which the condition was satisfied or waived. See SOS Form 805 (form 4-7 in this manual). The statement must be filed not later than the ninetieth day after the instrument is filed.
If the statement of event or fact is not filed, the filing instrument is not effective. In this case, the parties must either—
1.file a subsequent filing instrument to make the action or transaction evidenced by the original filing effective or
2.file a statement of abandonment of filing under section 4.057.
See Tex. Bus. Orgs. Code § 4.056.
§ 4.5:3Actions Taken at Time of Filing
When delaying the effectiveness of a filing instrument, it is important to note that the secretary of state updates its computer records and takes action to reflect the changes effected by the filing instrument as of the date of filing. See 1 Tex. Admin. Code § 79.73. This means that the filing history of the entity will be changed to show the filing of the filing instrument, the date of its filing, and the future date of its effectiveness or a notation (“condition”) to denote that the effectiveness is conditioned on the occurrence of a future event or fact.
The secretary of state also takes action to effect the actions referenced in the filing instrument at the time of filing. For example, a certificate of formation that has its effectiveness delayed to a future date and time will be reflected in the records of the secretary of state and will have an active status of “in existence.” In the case of a merger with a delayed effectiveness provision the secretary of state will change the status of any nonsurviving domestic party to the merger from an active status (“in existence”) to an inactive status (“merged”) on the date of filing.
Certificates of fact reflect what is evidenced in the computer records of the secretary of state. Consequently, a practitioner will not be able to obtain a certificate of status for the nonsurviving party to the merger that indicates that the status of the entity is “in existence” once the secretary of state accepts and files a certificate of merger even if the effectiveness of the merger was delayed to a later date and time.
§ 4.6:1Documents Subject to Public Access and Disclosure
Unless otherwise exempted by constitutional provision, statutory provision, or judicial decision, all documents on file with the secretary of state’s corporations section, including correspondence, and information contained therein are subject to public access and disclosure under chapter 552 of the Texas Government Code.
§ 4.6:2Social Security Numbers
The TBOC does not require an individual to include a Social Security number in any filing instrument required or permitted to be filed with the secretary of state. While individual Social Security number information is not a statutory filing requirement, sometimes persons voluntarily provide such information in documents that are accepted, indexed, and recorded by the corporations section.
The secretary of state will redact entire Social Security numbers on documents displayed on the secretary of state’s online access system, displayed on SOSDirect, and used for the production of copies in response to public information requests. Unredacted copies of the documents will be retained for access by secretary of state staff in response to requests from law enforcement or other authorized requestors.
§ 4.6:3Public Information Report
Many people remain unaware of the extent of access to public information reports.
Much of the information provided to the comptroller of public accounts under the Texas Tax Code is confidential under state law; however, the Tax Code specifically provides that the information contained in a public information report (PIR) is not confidential. See Tex. Tax Code §§ 171.203, 171.207(2).
The purpose of the PIR is to provide a “snapshot” of the entity as of the date the report is filed. It is required to be filed only annually, in May. An entity is not required to file (nor is the comptroller required to accept) an “updated PIR” whenever an event occurs that changes the information provided in the report. Consequently, the information contained in the PIR may no longer be current when the information is accessed by a third party.
Once a corporation, limited liability company, limited partnership, or professional association files its PIR with the comptroller, the comptroller forwards the report to the secretary of state. The secretary of state indexes the PIR against the entity’s record. The corporations section maintains the PIR management information in its database. When changes to management information are reflected in a PIR, the information is updated by the secretary of state. Management information is accessible electronically through SOSDirect.
An individual whose name was included on a PIR but who was not an officer or director on the date the report was filed may file a sworn statement to that effect with the comptroller. The comptroller will then forward the sworn statement to the secretary of state to update the management information accordingly.
§ 4.6:4Home Addresses and Other Expectations of Privacy
The secretary of state provides any information deemed to be public information to both the public and private sectors and cannot limit or restrict the purposes for which the information may be used by a requesting party.
If a client has an expectation of privacy regarding home address information, the practitioner should not use that address as the registered office address. Of course, if the registered agent has no address other than a home address, there can be no expectation of privacy.
When required to provide management address information in a filing instrument or public information report, the better practice is to provide a business office address rather than a home address.
§ 4.7Restated Certificates of Formation—Issues
§ 4.7:1Names and Addresses of Governing Authority
TBOC section 3.059 requires a restated certificate of formation to restate the text of the certificate of formation, as amended, corrected, or restated, in its entirety. See Tex. Bus. Orgs. Code § 3.059. While organizer information may be omitted, the secretary of state requires a restated certificate to include the number, names, and addresses of the entity’s governing authority. Sections 3.060(a), 3.061(a), and 3.0611 permit the entity to update the certificate of formation provision relating to the governing authority by providing the names and addresses of the current governing authority. These sections provide supplemental filing requirements for restated certificates of formation that are filed by professional corporations, nonprofit corporations, and limited liability companies. The use of the term may within the cited sections does not mean that the requirement is optional or discretionary. The term may permits the entity to provide updated information in lieu of the information initially provided in its certificate of formation. Updating the information would not be seen as a “further amendment.” Also note that an update to the governing authority is not deemed to be a “further amendment” made to the certificate of formation.
§ 4.7:2Entities Created by Merger or Conversion
As noted in section 4.7:1 above, a restated certificate of formation restates the text of its certificate of formation, as amended, corrected, or restated, in its entirety. If the domestic filing entity was formed pursuant to a plan of merger or conversion, the additional statements required under TBOC section 3.005(a)(7) must be included. See Tex. Bus. Orgs. Code § 3.005(a)(7).
TBOC section 3.059 was amended by the Eighty-third Legislature, Senate Bill 847, effective September 1, 2013, to eliminate the requirement that a restated certificate of formation that makes further amendments must “identify by reference or description each added, altered, or deleted provision.” See Tex. Bus. Orgs. Code § 3.059. Now a restated certificate of formation that makes further amendments may simply state language to the effect that “the Certificate of Formation is amended and restated in its entirety as shown in the attachment.”