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F I S C A L I M P A C T R E P O R T

SPONSOR SCORC

ORIGINAL DATE

LAST UPDATED

2/10/07

3/5/07 HB

SHORT TITLE Corporate Reporting Penalties

SB 402/SCORCS

ANALYST Wilson

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Public Regulation Department (PRC)

SUMMARY

Synopsis of Bill

The Senate Corporations & Transportation Committee substitute for Senate Bill 402 amends the

Corporate Reports Act and the Nonprofit Corporation Act by adjusting downward

The bill also allows the PRC to extend a filing period for not more than 30 days as opposed to

the12 days in the current law.

The bill requires a domestic or foreign corporation to file a biennial report instead of the current

annual report required by current law. The penalty for late filing of biennial corporate reports

from is lowered from $200 to $50.

In addition a domestic or foreign corporation required to file a supplemental report that fails to

submit the required report within the time prescribed for a reporting period shall also incur a civil

penalty of $50 instead of the current $200.

This bill provides for a fee for filing of a biennial report of $10. For failing to submit a biennial

report within the time required, there is a civil penalty of $10.00 in addition to the fee for filing

the report.

Senate Bill 402/SCORCS – Page

2

The bill sets out the procedures for filing a first and biennial report. There is also a procedure in

this bill for revoking a limited liability company.

FISCAL IMPLICATIONS

The PRC claims there will be no significant fiscal impact to the general fund since the decreases

in late filing fees will offset the increase in the additional filing fee for biennial reports and civil

penalty for failure to timely file such report

SIGNIFICANT ISSUES

The PRC provided the following:

•

Current statutes impose a civil penalty of $200 for late filing of biennial or supplemental

reports. Entities can pay this amount or re-incorporate under a different name for a lower

cost. The bill will assess a smaller business friendly late fee that is lower than the total

cost to re-incorporate under another name given all costs associated with the transaction

from the corporation to the PRC. The net effect of the bill will be to encourage business

to maintain their corporate status within the State of New Mexico.

•

The reason for requiring limited liability companies to file biennial reports is keep track

of their existence. Keeping track of their existence has many implications. Currently,

there is no method of knowing whether these entities are still in existence. Without

information provided directly to the PRC that a limited liability company is no longer in

existence, the name of the limited liability company cannot be used by another entity.

More generally, the public has an interest in knowing that the database of a state agency

is updated regularly and therefore reasonably accurate.

ADMINISTRATIVE IMPLICATIONS

The PRC will continue to assess and collect fees and applications. The current staff level is

sufficient to perform these transactions.

DW/mt