The Indiana Business Entity Harmonization Act, Senate Enrolled Act (SEA) 433, was passed by the state legislature in 2017 and became law on January 1, 2018. If you are starting a business or managing business transactions in Indiana, the provisions of the law should be noted and discussed with an experienced business attorney and other business advisors.
Why Was the Indiana Business Entity Harmonization Act Passed?
SEA 433 created new articles under title 23 of Indiana Code with the goal of simplifying and streamlining Indiana business law regarding the organization and transactions of business entities. The law enacted provisions of model acts recommended by the Uniform Law Commission (ULC), a non-partisan organization established to advocate for more uniform legislation across states.
Title 23 of Indiana Code sets forth the types of business structures that may be formed and operated in Indiana, how those entities must register with the Indiana Secretary of State, and the rules regarding transactions, such as business mergers or conversions. The Indiana Business Entity Harmonization Act added to Indiana Code title 23 article 0.5: the Uniform Business Organizations Administrative Provisions Act and article 0.6: the Uniform Business Organization Transactions Act.
In this blog, an Indianapolis business attorney explains the provisions of the law and how the regulations affect you when you are maintaining or starting a business in Indiana. Businesses based outside of the state that engage in business transactions in Indiana must also be aware of provisions of the law that apply to their activities.
The Uniform Business Organizations Administrative Provisions Act
Prior to the passing of the Indiana Business Entity Harmonization Act, businesses registered in Indiana as corporations, nonprofit corporations, and limited liability companies (LLCs) were required to file biennial reports with the Indiana Secretary of State. Article 0.5 of title 23 now contains a provision that requires limited partnerships (LPs) and limited liability partnerships (LLPs) to file biennial reports as well.
The Act also updates the rules regarding naming and registering your business name. The changes require anyone starting a business in Indiana to register an entity name that differs from any other legal business names and informal business names—such as doing business as (DBA) names—registered with the state. Names of entities that have been dissolved can be reserved and then claimed by a new business 120 days after the date of the previous entity’s dissolution.
Indiana business law under title 23 now allows a registered agent that represents multiple entities to file as a commercial registered agent. This can be beneficial for agents representing multiple entities because a commercial registered agent can update agent contact or other relevant information for all entities represented in one filing.
Businesses based outside of Indiana that transact business in the state should take note of chapter five of article 0.5, which conveys the requirements for foreign entities doing business in Indiana. A foreign entity is any business governed by another jurisdiction outside of the state of Indiana. Foreign entities doing business in Indiana must register with the Secretary of State. Failure to do so can result in a fine of up to $10,000 but does not invalidate existing business contracts or pierce the veil of the entity. Additionally, some activities by a foreign entity are allowed under Indiana business law but do not constitute doing business in the state, as outlined in Indiana Code § 23-0.5-5-5.
The Uniform Business Organization Transactions Act
Indiana Code title 23, article 0.6, the Uniform Business Organization Transactions Code, consolidates the provisions of Indiana business law related to business transactions for different types of entities, including mergers, conversions, domestications, and interest exchanges. The exceptions are mergers of corporations, which continue to be governed by Indiana Code § 23-1-40 and of nonprofits, which are governed in general by title 23, article 17.
The process for each transaction includes a requirement of a recorded plan with specific information that must be included. These plans must be approved as outlined by Indiana business law, and related articles must be filed with the Indiana Secretary of State.
Discuss the Indiana Business Entity Harmonization with Your Indianapolis Business Attorney at Camden & Meridew
Whether you are starting a business or conducting business transactions in Indiana, the provisions implemented under the Indiana Business Entity Harmonization Act and other existing laws can be complex, and failing to properly file or operate your business can have serious consequences. To ensure that your business is functioning within the requirements of Indiana business law, contact experienced Indianapolis business attorney Corey Meridew of Camden & Meridew, P.C. You may reach Corey by calling 317-770-0000 or completing our online contact form.