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Legislative updates

Senate Bill 197, effective November 1, 2023, amends the State and Its Government title and the Corporations, Associations, and Proprietors of Common Lands title to authorize voluntary corporations (including nonprofit corporations), non-filing entities and non-qualified entities to appoint a process agent; (ii) the business corporation law regarding Applications for Certificate of Authority, foreign corporate names and fees; (iii) the benefit corporation law regarding corporate names; (iv) the LLC law regarding foreign registration and fees; and (iv) the LP law regarding registered agents.

House Bill 584, effective October 7, 2023, amends the Uniform Commercial Code regarding controllable electronic records, controllable accounts and controllable payment intangibles and perfection of security interests therein.

House Bill 1503, effective January 1, 2023, enacts a new Article 12 of the UCC with related amendments to Article 9 regarding transactions involving in, and the perfection of security interests in controllable accounts, controllable electronic records, controllable payment intangibles and electronic money.

Case summaries

Digital Asset Held to Be a Security
SEC v. LBRY, Inc., Case No. 21-cv-260, decided November 7, 2022. The U.S. District Court, District of New Hampshire granted the SEC’s motion for summary judgment, agreeing with the SEC that the defendant, a blockchain company, violated the Securities Act of 1933 by offering and selling an unregistered security – a digital token called an LBC. The court held that an LBC is a security under the three prong Howey test for investment contracts. The defendant argued that an LBC did not meet the third prong – that there was an expectation of profit to be derived from the efforts of others. The court pointed out that the defendant made repeated statements that it expected the LBC to increase in value. In addition, the defendant owned a large amount of LBCs, thereby indicating to investors that the company would work to increase the value of its products so the LBC would increase in value. The court also rejected the defendant’s argument that it lacked notice that an LBC would be considered a security because previous SEC enforcement efforts had involved cryptocurrency. The court noted that the SEC’s theory was based on a straightforward application of long time US Supreme Court precedent.

Other notices

August 2020 — The Secretary of State issued a customer alert stating that newly-registered corporations and LLCs have received a solicitation letter entitled “2020 CERTIFICATE OF STATUS REQUEST FORM” with an offer to provide “an elective Certificate of Status”. The alert states that such notices are not from, nor authorized by, the Secretary of State.

The Secretary of State’s office has posted a notice indicating that it will waive the late filing penalty for the 2020 Annual Report/Annual Fee filing due April 1, 2020 until May 1, 2020. Annual reports/fees submitted after May 1, 2020 will incur a penalty.
The Secretary of State’s office has posted a customer alert regarding email solicitations from “State Filings Compliance Team”. The alert notes that this notice is a sales solicitation and not an official notification from the Corporation Division.


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