By: Herrero (Senate Sponsor - Hinojosa) H.B. No. 1493
(In the Senate - Received from the House May 3, 2021;
May 17, 2021, read first time and referred to Committee on State
Affairs; May 24, 2021, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 9, Nays 0;
May 24, 2021, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR H.B. No. 1493 By: Lucio
A BILL TO BE ENTITLED
AN ACT
relating to the use of an entity name that falsely implies
governmental affiliation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 6, Civil Practice and Remedies Code, is
amended by adding Chapter 150C to read as follows:
CHAPTER 150C. ENTITY NAME FALSELY IMPLYING GOVERNMENTAL
AFFILIATION
Sec. 150C.001. DEFINITION. In this chapter, "governmental
unit" has the meaning assigned by Section 101.001.
Sec. 150C.002. FALSELY IMPLYING GOVERNMENTAL AFFILIATION.
(a) A governmental unit is entitled to enjoin another person's use
of an entity name that falsely implies governmental affiliation
with the governmental unit.
(b) In an action brought under this section, the
governmental unit is entitled to injunctive relief throughout the
state.
(c) If the court finds that the person against whom the
injunctive relief is sought wilfully intended to imply governmental
affiliation with the governmental unit, the court, in the court's
discretion, may award reasonable attorney's fees and court costs to
the governmental unit.
SECTION 2. Subchapter B, Chapter 5, Business Organizations
Code, is amended by adding Sections 5.064 and 5.065 to read as
follows:
Sec. 5.064. NAME FALSELY IMPLYING GOVERNMENTAL AFFILIATION
PROHIBITED. (a) A filing entity or a foreign filing entity may not
use a name in this state that falsely implies an affiliation with a
governmental entity.
(b) The submission of a filing instrument is an affirmation
by the organizer or by a managerial official named in the filing
instrument that the name provided as the name of the filing entity
does not falsely imply an affiliation with a governmental entity.
(c) The addition of a word, phrase, or abbreviation that is
required to be included in the name of a domestic or foreign filing
entity under the provisions of this chapter is not a factor when
determining whether a name violates Subsection (a).
(d) For purposes of this section, an entity name means:
(1) the name of a domestic filing entity, as evidenced
by its certificate of formation, as amended or restated; or
(2) in the case of a foreign filing entity, the name of
the foreign filing entity or the fictitious name of a foreign filing
entity, as evidenced by its application for registration or its
most recent amended registration.
(e) The secretary of state shall adopt rules and prescribe
procedures to implement this section.
Sec. 5.065. FALSE IMPLICATION OF GOVERNMENTAL AFFILIATION;
AUTHORITY OF SECRETARY OF STATE AND ATTORNEY GENERAL. (a) On the
written request of a governmental entity, the secretary of state
may, in the secretary's discretion and after consultation with the
attorney general, determine within two years after the secretary's
acceptance of a filing instrument that a filing entity's or a
foreign filing entity's name falsely implies an affiliation with a
governmental entity in violation of Section 5.064.
(b) If the secretary of state determines under Subsection
(a) that a filing entity's or foreign filing entity's name falsely
implies an affiliation with a governmental entity, the secretary of
state shall notify the entity in writing of the need to amend the
entity's name. Not later than the 60th day after the date the
secretary of state sends the notification required by this
subsection, the entity shall:
(1) cease transacting business or operating under that
name in this state; and
(2) file with the secretary of state the applicable
instrument to amend the entity's name as shown in the records of the
secretary of state.
(c) The secretary of state shall provide the filing entity
or foreign filing entity an opportunity to respond to the notice
sent under Subsection (b), including through the submission of
documentation verifying that the filing entity is affiliated with
the governmental entity.
(d) If a filing entity or a foreign filing entity fails to
take the action required by Subsection (b)(2), the secretary of
state shall notify the attorney general of the entity's failure to
file the applicable filing instrument.
(e) The attorney general may bring an action in the name of
the state for injunctive relief to require compliance with this
section.
(f) An action under this section may be brought in a
district court in Travis County.
(g) The attorney general may recover reasonable expenses
incurred in obtaining injunctive relief under this section,
including court costs, reasonable attorney's fees, and
investigatory costs.
(h) The secretary of state shall adopt rules and prescribe
procedures to implement this section.
(i) Notwithstanding Subsection (a), on the written request
of a governmental entity, the secretary of state may, in the
secretary's discretion and after consultation with the attorney
general, determine within 10 years after the secretary's acceptance
of a filing instrument that a filing entity's or a foreign filing
entity's name falsely implies an affiliation with a governmental
entity in violation of Section 5.064. A determination under this
subsection is a determination under Subsection (a) for purposes of
Subsection (b). This subsection expires August 31, 2022.
SECTION 3. This Act takes effect September 1, 2021.
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