December 2004 ERRATA: In our July 2004 newsletter regarding changes to exempt categories under the Fair Labor Standards Act, we reported that a compensation requirement had been added to the outside sales employees exemption. This was incorrect as a reader pointed out. There is no compensation standard for this classification. The other information regarding this classification is correct as stated in the newsletter. We apologize. It is nice to know these newsletters are read. New Laws and Procedures for Entities in Colorado In the last three years, Colorado’s legislature has made many changes to laws governing business and non-profit entities (corporations, certain partnerships, limited liability companies). The changes have been largely motivated by efforts (1) to move provisions dealing with the same types of actions for all entities into one place (Article 90 of Title 7, CRS) and (2) to provide for actions which will be necessary for the Secretary of State’s office to compel all filings with it to be done electronically some time in 2005. This means that in looking at the law applicable to an entity one must now look to the laws governing the particular entity and to Article 90 (sometimes called the “junction box statute”). A large number of the changes deal with common terminology to be applied to all types of entities. For example: all profit and non-profit organizations are referred to as “entities”; documents creating an entity or under which the entity’s owners obtain limited liability are called “constituent documents”; a “true name” (a term now used throughout the statutes) means the first name and surname of an individual or the “domestic entity name” (another new term), if any, of the entity, or, if the entity does not have a domestic entity name, the name under which it does business in Colorado; and “periodic reports” are now called “annual reports.” The Secretary of State’s office under statutory direction is rapidly moving to a “paperless” office where electronic filings will be mandated. Already the formation of corporations and limited liability companies, as well as a number of other filings, can be done electronically. To encourage electronic filing, a filing fee of 99¢ is available for electronically filed documents (as compared, for example, with $50 for a paper filing of corporate Articles of Incorporation). The Secretary of State reports that 80% of several types of filings are now being done electronically. The statutes now require all electronic filings to have a cover sheet which is available at the Secretary of State’s website at sos.state.co.us. The site and instructions on it are fairly friendly. The cover sheets can constitute the entire document which needs to be filed but often extra material should be filed for an entity. This is accomplished by attachments which can only be furnished as “.txt” or “.pdf” files. While many of the statutory changes are procedural and ministerial in nature, there are substantive changes as well. For example, any type of entity can now be a registered agent (including the company itself). A plan of merger no longer needs to be filed with Articles of Merger (now called a “Statement of Merger”). Provisions in Article 90 may make alternative procedures available for a particular entity. For example, corporate merger statutes are more limited in the Colorado Business Corporations Act than they are under Article 90. It is now easer to reinstate and preserve a dissolved entity. It is important to know there are many, many changes in some 1,500 pages of entity statutory revisions over the last three years. One should not assume that it is simply “legal business as usual” after July 1, 2004, when most of the changes took effect. If you have questions on any particular matter, we will be happy to discuss them with you.
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