COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.:4366H.01I Bill No.:HB 2157 Subject:Business and Commerce; Secretary of State; Corporations Type:Original Date:April 4, 2022Bill Summary:This proposal creates provisions relating to business entities registered with
the state.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON GENERAL REVENUE FUNDFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2026)
General Revenue($1,239,594)($1,213,204)($952,075)($688,410)Total Estimated
Net Effect on
General
Revenue($1,239,594)($1,213,204)($952,075)($688,410)
ESTIMATED NET EFFECT ON OTHER STATE FUNDSFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2026)
Technology
Trust Fund$180$216$213,807$395,614
Total Estimated
Net Effect on
Other State
Funds $180$216$213,807$395,614
Numbers within parentheses: () indicate costs or losses. L.R. No. 4366H.01I
Bill No. HB 2157
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ESTIMATED NET EFFECT ON FEDERAL FUNDSFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2026)
Total Estimated
Net Effect on
All Federal
Funds $0$0$0$0
ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)FUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2026)
Total Estimated
Net Effect on
FTE 000$0
☒ Estimated Net Effect (expenditures or reduced revenues) expected to exceed $250,000 in any
of the three fiscal years after implementation of the act or at full implementation of the act.
☒ Estimated Net Effect (savings or increased revenues) expected to exceed $250,000 in any of
the three fiscal years after implementation of the act or at full implementation of the act.
ESTIMATED NET EFFECT ON LOCAL FUNDSFUND
AFFECTED
FY 2023FY 2024FY 2025Fully
Implemented
(FY 2026)
Local
Government$0$0$0$0
FISCAL ANALYSIS L.R. No. 4366H.01I
Bill No. HB 2157
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ASSUMPTION
Officials from the Office of the Secretary of State (SOS) assume state General Revenue
regarding these particular filings will decrease, for Limited Liability Companies, and decrease
for Limited Liability Partnerships in the first five years.
A new filing of Information Statement for LLCs will start in 2025 and affect LLCs every five
years thereafter for each new registration, resulting in a positive fiscal impact.
State revenue in 10 years would then level back as the fee-cut shifts to the information statement
required every five years.
These estimates assume various rate(s) of participation and use of an averaging of historical data
to determine estimations.
347.044-347.183 (LLC)
FYGR 0101TECH 0266FY2023 $ (1,239,029.15) $ 180 FY2024 $ (1,212,613.66) $ 216 FY2025 $ (951,530.18) $ 224,302
358.460-358.470 (LLP)
FYGR 0101TECH 0266FY2023$ (565.00)FY2024$ (590.00)FY2025$ (545.00)
Current customer ratio of paper vs online is 25% to 75% for creation filings the change in fees
would strive to move that ratio to 5% paper and 95% online. Filing online will have a cost
savings as the system is set up to auto process creation documents. While this cost saving is not
true for all filings, as manual review by an examiner is required for those documents, there are
added benefits to customers submitting online.
It is assumed that 30% of the current LLCs listed as active are actually doing business and will
file an information statement as required under 347.044, with an increase rate over time as new
LLCs will know before creating that an information statement will be required in five years. The
first LLC was created in December of 1993, since that time over 800,000 entities have been
created, or converted to the entity type of Limited Liability Company. L.R. No. 4366H.01I
Bill No. HB 2157
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Series LLC is a growing area of the LLC entity type. It is unknown how many filings will be
effected by the change in cost, as SOS does not currently have revenue collected for these filings.
The best estimate is based on what an examiner thinks LLCs file per month annualized.
The technology trust fund is not impacted until January of 2025 when 347.044 starts.
Expenditures for notices mailed to the affected LLCs are estimated at $241,024 in FY25. These
will be split between GR and Tech Fund for a total of $120,512 each in FY25 and $213,022 each
in FY26.
SOS states the overall impact is estimated at:
Fund
AffectedFY 2023FY 2024FY 2025FY 2026FY 2027FY 2028
General
Revenue($1,239,595)($1,213,204)($952,075) ($475,388)($861,047)($868,440)
Technology
Trust Fund$180$216$224,032$395,613$213,413$274,525
Total
Estimated
Net Effect
on All State
Funds($1,239,445)($1,212,988)($728,043) $79,775($647,634)($593,915)
The Secretary of State reserves the right to offset or request additional resources for estimated
fiscal note impacts during the budget process.
Oversight notes that on similar legislation, SB 286 from 2021, SOS stated all changes to
software would require working with a third party vendor and/or the Information Technology
department. Resulting in an estimated expenditure of $77,600. SOS is now handling this in-
house; therefore, Oversight will no longer reflect this cost on the fiscal note.
Oversight will reflect the estimated fiscal impact as provided by SOS.
The SOS also assumes many bills considered by the General Assembly include provisions
allowing or requiring agencies to submit rules and regulations to implement the act. The SOS is
provided with core funding to handle a certain amount of normal activity resulting from each
year’s legislative session. The fiscal impact for this fiscal note to the SOS for Administrative
Rules is less than $5,000. The SOS recognizes that this is a small amount and does not expect
that additional funding would be required to meet these costs. However, the SOS also
recognizes that many such bills may be passed by the General Assembly in a given year and that
collectively the costs may be in excess of what the office can sustain with the core budget.
Therefore, the SOS reserves the right to request funding for the cost of supporting administrative L.R. No. 4366H.01I
Bill No. HB 2157
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rules requirements should the need arise based on a review of the finally approved bills signed by
the governor.
Oversight assumes the SOS could absorb the costs of printing and distributing regulations
related to this proposal. If multiple bills pass which require the printing and distribution of
regulations at substantial costs, the SOS could require additional resources. L.R. No. 4366H.01I
Bill No. HB 2157
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FISCAL
IMPACT – State
Government
FY 2023
(10 Mo.)
FY 2024FY 2025Fully
Implemented
(FY 2026)
GENERAL
REVENUE
Loss-SOS-fee
Revenue
reduction (LLC)
($1,243,409)($1,218,818)($1,286,208)($1,266,614)
Loss-SOS-fee
Revenue
reduction (LLP)
($565)($590)($545)$0
Cost-SOS-notices
mailed to affected
LLCs
$0$0($120,512)($213,022)
Income-SOS-fee
Revenue for LLC
$4,380$6,204$455,190$791,226ESTIMATED
NET EFFECT
TO GENERAL
REVENUE
($1,239,594)($1,213,204)($952,075)($688,410)
FISCAL
IMPACT – State
Government
continued
FY 2023
(10 Mo.)
FY 2024FY 2025Fully
Implemented
(FY 2026)
TECHNOLOGY
TRUST FUND L.R. No. 4366H.01I
Bill No. HB 2157
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Income -SOS-
filing fees
$180$216$334,319$608,636Cost-SOS-notices
mailed to affected
LLCs
$0$0($120,512)($213,022)
ESTIMATED
NET EFFECT
TO THE
TECHNOLOGY
TRUST FUND
$180$216$213,807$395,614
FISCAL
IMPACT –
Local
Government
FY 2023
(10 Mo.)
FY 2024FY 2025Fully
Implemented
(FY 20256)
$0$0$0$0
FISCAL IMPACT – Small Business
The fees that small businesses pay to the Office of the Secretary of State could change as a result
of this proposal.
FISCAL DESCRIPTION
This act provisions relating to entities registered with the state.
(SECTION 347.020)
The act prohibits the name of any dissolved or canceled LLC from being used by any other for a
period of one year following the dissolution or cancellation.
(Section 347.044, 347.179, 347.183)
Every limited liability company (LLC) and foreign limited liability company (foreign LLC) is
required to file an information statement with the Secretary of State (SOS) once every 5 years,
accompanied by a fee of $15, or $5 if filed electronically. The SOS is permitted to
administratively cancel the articles of incorporation of an LLC or the registration of a foreign
LLC for failure to timely file an information statement. The act provides procedures for allowing
a foreign LLC to apply to the SOS to have its registration reinstated following such a
cancellation. Procedures are also created allowing an LLC to apply for reinstatement following
the erroneous or accidental filing of a notice of winding up or notice of termination. L.R. No. 4366H.01I
Bill No. HB 2157
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(Section 347.143)
The act modifies the procedure by which a court may decree dissolution of an LLC. Specifically,
the court may issue such a decree if it determines:
· It is not reasonably practicable to carry on the business in conformity with the operating
agreement;
· Dissolution is reasonably necessary for the protection of the rights or interests of the
complaining members;
· The business of the limited liability company has been abandoned;
· The management of the limited liability company is deadlocked or subject to internal
dissension; or
· Those in control of the limited liability company have been found guilty of, or have knowingly
countenanced, persistent and pervasive fraud, mismanagement, or abuse of authority.
(Sections 347.179, 347.183, 358.460, and 358.470)
The act reduces various filing fees imposed on LLC's and partnerships for filing certain
documents with the SOS and provides for reduced fees for filing certain documents in an
electronic format. Additionally, the act creates the following new fees:
· A fee of $95 for filing a withdrawal of an erroneously or accidentally filed notice of winding up
or articles of termination;
· A fee of $10 for a filing relating to a limited liability series an additional fee of ten dollars for
each series effected or $5 if filing online in an electronic format prescribed by the secretary; and
· A fee of $95 for filing an application for reinstatement or $45 for filing online in an electronic
format prescribed by the secretary.
(Section 347.186)
For purposes of Series LLCs, the maximum number of designated series that can be affected by a
single filing made with the Secretary of State is 50.
This legislation is not federally mandated, would not duplicate any other program and would not
require additional capital improvements or rental space.
SOURCES OF INFORMATION
Office of the Secretary of State L.R. No. 4366H.01I
Bill No. HB 2157
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Julie MorffRoss StropeDirectorAssistant DirectorApril 4, 2022April 4, 2022