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Legislative updates

Senate Bill 43, effective May 1, 2024, amends Utah’s UCC law to provide that if a debtor files a termination statement, the filing office shall send to the secured party of record for the financing statement to which the termination relates a notice that the termination statement has been filed, no later than 14 days after the day on which the termination statement is filed.

House Bill 357, effective January 1, 2024, enacts the Decentralized Autonomous Organization Act, providing for the formation of a DAO by filing a certificate of organization, the legal personality of a DAO, the limited liability of members, and other issues.

House Bill 399, effective July 1, 2023, amends the law regarding the approval of an application for reinstatement of a corporation or nonprofit corporation or application for withdrawal of foreign corporation or nonprofit corporation.

Senate Bill 213, effective May 4, 2022, prohibits the use of “911” in the names of corporations, nonprofit corporations, professional corporations, LLPs, LPs, LLCs, and assumed names.

Senate Bill 182, effective May 4, 2022, establishes a framework for the ownership of digital assets. Among other things, the bill states that digital securities are intangible personal property and shall be considered securities and investment property for the purposes of Chapter 9a, UCC-Secured Transactions.

Senate Bill 28, signed by the governor on March 27, 2019 and effective retroactively for a taxable year beginning on or after January 1, 2019 amends the corporation tax law regarding when a corporation is doing business in the state for corporate income tax purposes.

Senate Bill 39, effective May 8, 2018, changes the name of a certificate of good standing to a certificate of existence.

Case summaries

Thomson v. Short (In re Short), Case No. 19-29471, Chapter 7, Adv. Proc. No. 22-02004, decided May 2, 2023. The U.S. Bankruptcy Court, District of Utah, held that a UCC-1 that lapsed post-petition did not render the security interest unperfected for purposes of its treatment as a secured claim in a bankruptcy case. The claimant filed a UCC-1 in 2015. The debtor filed a voluntary bankruptcy petition in 2019. The UCC-1 lapsed in 2020. The court noted that in general a creditor’s rights vis-à-vis a debtor are fixed on the petition date. For the lapse to affect the creditor’s perfected status in the context of a bankruptcy there must be a statutory provision that would deem the post-petition loss of perfection to have accrued as of the petition date. However, there was no such provision that would apply to a trustee in bankruptcy.

Authority of Division of Corporations
Salt Lake City Laumalie Maonioni Free Wesleyan Church of Tonga v. Department of Commerce, No. 20200778, decided August 18, 2022. The Utah Court of Appeals affirmed the trial court’s dismissal of a nonprofit corporation’s petition for a determination that the Division of Corporations lacked the authority to revoke and rescind articles of amendment that had been filed by the Division. After filing the articles of amendment the corporation was involved in litigation in which the court found that the amendments were not properly approved and all actions taken after the attempted approval were invalid. Based on the court’s decision the Division revoked and rescinded the articles. The court noted that the Division’s role was purely ministerial and only the court could hold the articles of amendment invalid. Thus, the Division was required to give effect to the court’s ruling on the article of amendment’s validity and acted properly in rescinding the articles.

Authority to Retain Counsel
Sumsion v. Bay Harbor Farm, No. 20170066, decided 6/14/18. The Utah Court of Appeals ruled a member owning 45% of an LLC lacked authority to retain counsel for the LLC where the LLC statute required two-thirds consent for any action not in the ordinary course of business. Therefore, the LLC was not the attorney’s client and did not breach a contract by failing to pay him legal fees.

LLC in Bankruptcy
In re Community Translator Network, LLC, Case No. 2:17-cv-00736, decided 2/6/2018. The U.S District Court in Utah ruled that once a bankruptcy court appoints a trustee for a debtor LLC only that trustee can represent the LLC in litigation and the former manager had no authority to appeal on the LLC’s behalf.

Other notices

There are no new notices at this time.

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