Fiscal Note
Fiscal Services Division
SF 579 – Model Business Corporation Act (LSB1234SZ)
Staff Contact: Maria Wagenhofer (515.281.5270) maria.wagenhofer@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 579 amends and creates new provisions under Iowa Code chapter 490, the Iowa
Business Corporation Act (IBCA), relating to domestic or foreign for-profit corporations
authorized to do business in Iowa.
Background
The IBCA governs the default requirements of for-profit corporations, including creation,
organization, operations, and relationships of the corporation. The IBCA was created in 1989
based on legislation by the American Bar Association (ABA) referred to as the Model Business
Corporation Act (MBCA) and has subsequently been amended to reflect changes in the MBCA.
Senate File 579 includes amendments to the IBCA that reflect the current version of the MBCA,
which was adopted by the ABA in 2016. The Secretary of State (SOS) administers the IBCA.
In addition to making changes to existing law, Division I, Section 4, and Division III of the Bill
have been identified as having potential fiscal impacts and are outlined below.
Division I, Section 4: This Division reconfigures various SOS filing fees for business entities
governed under the IBCA and increases the electronic biennial report electronic filing fee from
$45 to $60. The changes are effective January 1, 2022.
Background
As established in Iowa Code chapter 9, the SOS’s Office, Business Services Division, is
responsible for reviewing, processing, approving, and filing, on a limited basis, statutory
documents relating to domestic and foreign business entities operating within Iowa. Each
domestic and foreign corporation registered to do business in the State must deliver to the SOS
a biennial report containing information related to the two-year period preceding the calendar
year in which the report is filed.
2017 Iowa Acts, chapter 170 (FY 2018 Standing Appropriations Act), created a Technology
Modernization Fund under the control of the SOS. From each fee collected by the SOS, the
amount credited to the Fund equals the difference between the fee amount collected and the
amount assessed for the same fee on June 30, 2017. No more than $2.0 million is credited to
the Fund in a fiscal year, and moneys in the Fund are appropriated to the SOS for purposes of
modernizing technology used by the SOS’s Office to fulfill its duties. The Fund will be repealed
on July 1, 2022 (FY 2023). The Fund is codified in Iowa Code section 9.4A.
In 2017, the SOS set biennial report filing fees in rule 721 IAC 40.8(3) for business entities
governed under the IBCA. Fees for electronic filings were set at $45 per biennial report, and
fees for paper filings were set at $60 per biennial report. Biennial report filing fees were
previously set at $30 for electronic filings and $45 for paper filings.
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Assumptions
• Business entities governed under the IBCA file biennial reports with the SOS in even-
numbered years. Limited liability corporations (LLCs) file biennial reports in odd-numbered
years.
• Senate File 579 sets the biennial report filing fee at $60 for business entities governed under
the IBCA, regardless of filing mechanism, and the filing fee will remain at $60 following the
repeal of the Technology Modernization Fund on July 1, 2022.
• The SOS’s Office will still continue to collect $15 per biennial report as established in 2017
Iowa Acts, chapter 170, for deposit into the Technology Modernization Fund until July 1,
2022.
• The additional fee revenue collected by the SOS from the increased biennial report filing fee
for electronic filings established in SF 579 will be deposited into the General Fund beginning
January 1, 2022.
• Following the repeal of the Technology Modernization Fund on July 1, 2022, all filing fee
revenue from biennial reports will be deposited into the General Fund.
• In FY 2020, the SOS processed 62,987 total biennial reports, of which 60,307 were filed
electronically. While some of those filings may have included late LLC biennial reports, the
majority of the filings were submitted by business entities governed under the IBCA. For
estimation purposes, it is assumed that there will be approximately 60,000 biennial reports
filed electronically in FY 2022 and each even-numbered fiscal year thereafter.
• In FY 2020, biennial report filing fee revenue was $2.9 million. The majority of that revenue
was from business entities governed under the IBCA.
Fiscal Impact
Senate File 579 is projected to increase annual fee revenue in FY 2022, FY 2024, and
subsequent even-numbered fiscal years by an estimated $900,000. This increased fee revenue
would be deposited into the General Fund. Following the repeal of the Technology
Modernization Fund on July 1, 2022, the fees collected will be deposited into the General Fund
beginning in FY 2024.
Senate File 579 also creates a new fee for reinstatements without amended articles. However,
no historical data exists to make a fiscal impact estimate for this provision.
Division III: The Bill creates a Business Administration Fund under the SOS to collect
surcharges from requested preclearance and expedited filing services. Table 1 and Table 2
include the services provided and the amount of surcharge assessed.
Table 1 — Preclearance Filing Services
Table 2 — Expedited Filing Services
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Surcharges are to be added to the amount of the fee implemented, assessed, and collected for
the actual filing of the document. All moneys are to be deposited into the Business
Administration Fund, and moneys in the Fund are to be appropriated to the SOS’s Office for the
purpose of supporting the administration of business entities under Iowa Code Title XII. The
SOS’s Office is to adopt rules pursuant to Iowa Code chapter 17A to administer these extra
services, and the Bill grants the SOS’s Office the authority to offer extra filing services upon
request by filers, increase the amount of a surcharge, or modify the period of service.
Assumptions
• The surcharge amount does not change.
• The number of filings affected is an approximation and may change due to increases or
decreases in demand.
• Surcharge revenue will be retained by the SOS’s Office to ensure sufficient staffing is
available to address demand in filings.
Fiscal Impact
The total revenue generated as a result of the preclearance and expedited filing services will
depend on the demand for the services. The SOS’s Office anticipates an annual revenue
increase of between approximately $25,000 to $75,000 as a result of the added filing services.
Sources
Secretary of State
LSA analysis
/s/ Holly M. Lyons
March 22, 2021
Doc ID 1217253
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 490.101, 490.120, 490.1622, 490.122, 490.123, 490.125, 490.127, 490.128, 490.129, 490.135, 490.140, 490.202, 490.143, 490.601, 490.850, 490.205, 490.206, 490.1020, 490.302, 490.303, 490.401, 490.301, 490.403, 490.502, 490.503, 490.504, 490.1507, 490.604, 490.625, 490.621, 490.622, 490.624, 490.626, 490.640, 490.701, 490.704, 490.702, 490.728, 490.709, 490.707, 490.708, 490.720, 490.722, 490.724, 490.729, 490.1004, 490.727, 490.731, 490.732, 490.743, 490.744, 490.745, 490.746, 490.748, 490.803, 490.602, 490.806, 490.807, 490.808, 490.809, 490.741, 490.820, 490.821, 490.822, 490.823, 490.824, 490.825, 490.831, 490.1409, 490.842, 490.141, 490.856, 490.853, 490.854, 490.858, 490.851, 490.852, 490.861, 490.862, 490.860, 490.863, 490.932, 490.1005, 490.1003, 490.1006, 490.1021, 490.1102, 490.1105, 490.1104, 490.1108, 490.1201, 490.1202, 490.1302, 490.1322, 490.1325, 490.1324, 490.1326, 490.1330, 490.826, 490.1404, 490.1405, 490.1406, 490.1407, 490.1421, 490.1420, 490.1423, 490.1431, 490.1430, 490.1434, 490.1501, 490.1502, 490.1508, 490.1506, 490.1509, 490.1601, 490.1602, 490.1620, 490.1702, 249A.53, 455B.430, 490.1701, 499.69A, 490.902, 491.17, 499.27A, 501A.804A, 501A.807, 504.701, 504.702A