HLS 20RS-570 REENGROSSED
2020 Regular Session
HOUSE BILL NO. 313
BY REPRESENTATIVE PRESSLY
COMMERCIAL REGULATIONS: Provides for the recognition of separate legal
personalities among affiliated corporations and other business entities
1 AN ACT
2To enact R.S. 12:1705, relative to commercial regulations; to provide relative to separate
3 juridical personalities of a business organization; to provide for definitions; to
4 provide for an exception; to provide for applicability; and to provide for related
5 matters.
6Be it enacted by the Legislature of Louisiana:
7 Section 1. R.S. 12:1705 is hereby enacted to read as follows:
8 ยง1705. Business organizations; juridical personalities
9 A. The separate juridical personality of a business organization shall not be
10 disregarded as between one business organization and another except on grounds that
11 would justify disregarding the separate personality of a business organization as
12 between the business organization and a natural person.
13 B. Notwithstanding Subsection A of this Section, the separate juridical
14 personality of a business organization may not be disregarded merely because one
15 or more of the following circumstances exist:
16 (1) They control one another or are under the common control of the same
17 person or business organization.
18 (2) They have common directors, officers, shareholders, members, managers,
19 partners, or employees.
20 (3) They have common offices.
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1 (4) They are subject to unified administrative control.
2 (5) They utilize a centralized accounting system.
3 (6) One business organization finances, incorporates, or organizes another.
4 (7) One business organization makes properly documented payments on
5 behalf of another or makes properly documented use of the property of another.
6 (8) The employees of one business organization provides properly
7 documented services for another.
8 (9) One business organization receives no business other than that given to
9 it by another.
10 C. For purposes of this Section, the term "business organization" means a
11 business corporation, nonprofit corporation, limited liability company, partnership,
12 trust, or other form of business organization that is treated as a juridical person or
13 legal entity pursuant to the laws of the state or country under which it is incorporated
14 or organized.
15 D. (1) This Section shall not affect any legal or regulatory action taken by
16 the commissioner of insurance pursuant to the Louisiana Insurance Code, Chapter
17 9 of Title 22 of the Louisiana Revised Statutes of 1950.
18 (2) This Section shall not affect any law or administrative rule that permits
19 or requires a group of business organizations to be consolidated, unified, or
20 disregarded for the purposes provided in the applicable law or administrative rule.
21 Section 2. The provisions of this Act shall apply prospectively to all business
22organizations including those in existence on the effective date of this Act.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 313 Reengrossed 2020 Regular Session Pressly
Abstract: Provides relative to single business entities and affiliated juridical personalities.
Present law as developed in jurisprudence permits courts to disregard the separate legal
personalities otherwise existing between two or more business entities for purposes of
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HB NO. 313
imposing liability, based on a list of factors that include many control-related characteristics
that are lawful and commonly found among affiliated business entities.
Proposed law provides that a separate juridical personality of an affiliated business
organization shall not be disregarded between one business organization and another, except
on grounds that would justify a disregard of the separate personality of a business
organization, as between the business organization and a natural person.
Proposed law provides that the separate juridical personalities of business organizations may
not be disregarded merely because one or more of the following circumstances exist for
business organizations:
(1)Control of one another or under common control of the same person or business
organization.
(2)Common directors, officers, shareholders, members, managers, partners, or
employees.
(3)Common offices.
(4)Subject to unified administrative control.
(5)Utilizes a centralized accounting system.
(6)One business organization finances, incorporates, or organizes another.
(7)One business organization makes properly documented payments on behalf of
another or makes properly documented use of the property of another.
(8)Employees of one business organization provide properly documented services for
another.
(9)One business organization receives no business other than that given to it by another.
Proposed law defines "business organization" as a business corporation, nonprofit
corporation, limited liability company, partnership, trust, or other form of business
organization that is treated as a juridical person or legal entity under the laws of the state or
country under which it is incorporated or organized.
Proposed law does not affect any legal or regulatory action taken by the commissioner of
insurance.
Proposed law does not affect any law or administrative rule that permits or requires a group
of business organizations to be consolidated, unified, or disregarded for the purposes
provided in the applicable law or administrative rule.
Proposed law applies prospectively to all business organizations including those in existence
on the effective date of this Act.
The provisions of the proposed law legislatively overrule Green v. Champion Ins. Co., 577
So. 2d 249 (La. App. 1st Cir. 1991) in favor of a traditional veil piercing analysis.
(Adds R.S. 12:1705)
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HB NO. 313
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Commerce to the
original bill:
1. Make technical changes.
The House Floor Amendments to the engrossed bill:
1. Add the term "trust" to the definition of "business organization" for the purposes
of proposed law.
2. Provide that proposed law shall not affect any legal or regulatory action taken by
the commissioner of insurance.
3. Provide that proposed law shall apply prospectively to all business organizations
including those in existence on the effective date of this Act.
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