HB 26-1088

HB 26-1088 is a Colorado bill that gives more power to the Secretary of State to handle fraudulent business filings. It allows the Secretary to mark or remove filings if payments are reversed and can suspend complaints based on certain relationships between parties involved. The bill also stops using unauthorized entities as registered agents for businesses, which helps prevent fraud. Signed into law, this means it's now official state policy and affects how businesses operate in Colorado by making it harder for fraudulent entities to exist or function within the state’s business registration system.

Official Summary

The bill authorizes the secretary of state (secretary) to:Mark as void or remove from the system an entity filing and adjust the entity's status if an electronic payment for the entity filing fee is reversed or is not completed; Suspend or dismiss a complaint if the secretary determines that a relationship exists between the complainant and the person that is the subject of the complaint alleging a fraudulent filing; andMark a business record with a notice that an entity is unauthorized or fraudulent without referring a complaint about the entity to the attorney general if the secretary receives a notice from the attorney general that the entity being listed as the registered agent was created or registered without authorization or for fraudulent purposes.     The bill prohibits using a fraudulent entity as a registered agent in a business entity filing.     Current law provides an administrative process for determining if an entity filing is made fraudulently or otherwise violates the law when a complaint is made. When a complaint is filed, the secretary will note on the entity's records a notice of the complaint and investigation. If such a determination is made, the entity filings may be canceled and the filers penalized. The procedures require the attorney general to notify the entity's registered agent. If the entity does not reply within 21 days after the notification, another notice is mailed, and if the entity does not reply to that notice within 21 days, the complaint is deemed to be conceded. The bill:Authorizes the attorney general to provide written notice to any other point of contact that the attorney general determines through investigation to be a means to reach the entity, if the address of the registered agent is the same as the address of the complainant;Repeals the second 21-day notice period; andAuthorizes a person that is injured by such a violation to bring an action to dissolve the entity; and Authorizes the secretary to the mentioned actions against another entity that also uses the same fraudulent or unauthorized entity.     Under current law, actions to dissolve an entity must be brought in the district court for the county where the entity's principal office is located; if the entity has no principal office in this state, where the registered agent is located; or, if the entity has no registered agent, in Denver. The bill authorizes the action to be brought in Denver when the dissolution is based on a fraudulent filing.      To implement the bill, $193,954 is appropriated from the department of state cash fund to the department of state.(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)

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