Bill 400

                    Current Status

Bill Number:               400
Ratification Number:       113
Act Number:                72
Introducing Body:          Senate
Subject:                        Annual corporate license tax, ten to
                           fifteen dollars

(A72, R113, S400)

AN ACT TO AMEND SECTION 12-19-70, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE ANNUAL CORPORATION LICENSE TAX, SO AS TO RAISE THE MINIMUM ANNUAL FEE FROM TEN TO FIFTEEN DOLLARS, TO AMEND SECTION 33-1-20, AS AMENDED, RELATING TO DEFINITIONS FOR PURPOSES OF THE SOUTH CAROLINA BUSINESS CORPORATION ACT, SO AS TO DEFINE "DISTRIBUTION", TO AMEND SECTION 33-21-100, AS AMENDED, RELATING TO ARTICLES OF DISSOLUTION FOR A CORPORATION, SO AS TO DELETE THE REQUIREMENT THAT THE ARTICLES BE ACCOMPANIED BY A CERTIFICATE THAT THERE ARE NO UNPAID FEES OR FRANCHISE TAXES, TO AMEND SECTION 33-23-90, AS AMENDED, RELATING TO SURRENDER OF A FOREIGN CORPORATION'S AUTHORITY TO DO BUSINESS IN THIS STATE, SO AS TO DELETE THE REQUIREMENT FOR A CERTIFICATE OF THE SOUTH CAROLINA TAX COMMISSION THAT THERE ARE NO UNPAID FEES OR FRANCHISE TAXES DUE FROM THE CORPORATION, TO AMEND SECTION 33-29-10, AS AMENDED, RELATING TO FILING FEES UNDER THE SOUTH CAROLINA BUSINESS CORPORATION ACT, SO AS TO DELETE THE FEE FOR THE ANNUAL REPORT OF A FOREIGN OR DOMESTIC CORPORATION, TO AMEND SECTION 33-31-50, AS AMENDED, RELATING TO FEES FOR INSURANCE OF A CERTIFICATE OF INCORPORATION, SO AS TO REQUIRE THE FILING OF THE FIRST REPORT OF CORPORATIONS WITH THE SECRETARY OF STATE WHEN AN APPLICATION FOR A CERTIFICATE OF INCORPORATION IS FILED AND TO PROVIDE A FEE, TO AMEND THE 1976 CODE BY ADDING SECTION 33-9-260, SO AS TO PROVIDE FOR DISTRIBUTIONS TO CORPORATE SHAREHOLDERS, AND TO REPEAL SECTION 33-25-10, RELATING TO ANNUAL REPORTS OF DOMESTIC AND FOREIGN CORPORATIONS.

Be it enacted by the General Assembly of the State of South Carolina:

Fee

SECTION 1. Section 12-19-70 of the 1976 Code is amended to read:

"Section 12-19-70. In addition to all other license taxes or fees or taxes of whatever kind, every corporation required to file the report by Section 12-19-20, except the corporations enumerated in Section 12-19-100, shall pay to the Commission at the time of filing the report required by Section 12-19-20 an annual license fee of five dollars plus one mill on each dollar paid to the capital stock and paid in as surplus of the corporation as shown by the records of the corporation on the first day of the income year next preceding the date of filing the report. In no case may the license fee provided by this section be less than fifteen dollars. The license fee provided for by this section must be paid at the time of filing the report pursuant to the provisions of Section 12-19-20. The phrase 'paid in as surplus' for the purposes of Chapter 19, Title 12, shall mean the entire surplus of a corporation other than its earned surplus as defined in Title 33, Chapter 1, Section 33-1-20 (q), and shall include any charges against earned surplus reflected in the balance sheet except charges for reserves."

Subsection deleted

SECTION 2. Section 33-21-100 of the 1976 Code, as amended by Act 146 of 1981, is further amended by deleting subsection (b).

Further

SECTION 3. Section 33-23-90 of the 1976 Code, as amended by Act 146 of 1981, is further amended by deleting item (8) in subsection (a).

Further

SECTION 4. Section 33-29-10 of the 1976 Code, as amended by Act 146 of 1981, is further amended by deleting item (39).

Fee

SECTION 5. Section 33-31-50 of the 1976 Code, as amended by Act 364 of 1980, is further amended to read:

"Section 33-31-50. Upon the filing of the above declaration, accompanied by the First Report of Corporations and the initial license fee of ten dollars, and the payment of a charter fee of fifteen dollars the Secretary of State shall issue to the proposed corporation a certificate of incorporation for the term that may be fixed in the declaration or, in the absence of the limitation, in perpetuity. Provided, that churches, religious organizations, religious societies, religious institutions, and volunteer fire departments shall pay a charter fee of three dollars."

Distributions to shareholders

SECTION 6. The 1976 Code is amended by adding:

"Section 33-9-260. Distributions to Shareholders.

(a) Without the vote of the shareholders, a board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection (c).

(b) If the board of directors does not fix the record date for determining shareholders entitled to a distribution (other than one involving a repurchase or reacquisition of shares), it is the date the board of directors authorizes the distribution.

(c) No distribution may be made if, after giving it effect:

(1) the corporation would not be able to pay its debts as they become due in the usual course of business; or

(2) the corporation's total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

(d) The board of directors may base a determination that a distribution is not prohibited under subsection (c) either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.

(e) The effect of a distribution under subsection (c) is measured:

(1) in the case of distribution by purchase, redemption, or other acquisition of the corporation's shares, as of the earlier of (i) the date money or other property is transferred or debt incurred by the corporation or (ii) the date the shareholder ceases to be a shareholder with respect to the acquired shares;

(2) in the case of any other distribution of indebtedness, as of the date the indebtedness is distributed;

(3) in all other cases, as of (i) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization or (ii) the date the payment is made if it occurs more than 120 days after the date of authorization.

(f) A corporation's indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.

(g) In circumstances to which this section is applicable, it shall supercede the applicability of any other provisions or statutes of this State with respect to the legality of distributions."

Definition

SECTION 7. Section 33-1-20 of the 1976 Code, as last amended by Act 146 of 1981, is further amended by adding a new item (10) and renumbering remaining items to conform:

"(10) 'Distribution' means a direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. A distribution may be in the form of a declaration or payment of a dividend, a purchase, redemption, or other acquisition of shares, a distribution of indebtedness, or otherwise."

Repeal

SECTION 8. Section 33-25-10 of the 1976 Code is repealed.

Time effective

SECTION 9. This act shall take effect upon approval by the Governor.