The Oklahoma Bar Journal October 2024

B usiness & C orporate L aw

Recent Developments for Corporations and LLCs By Gary W. Derrick and Jacob L. Fanning

T HE CORPORATE LANDSCAPE in the United States is constantly changing. Each year, legislation is enacted at the state and federal lev els that directly impacts Oklahoma businesses. Transactional lawyers are tasked with the difficult challenge of keeping abreast of these changes. This article will cover recent developments affecting Oklahoma practitioners in 2024. At the state level, new legislation amends the Professional Entity Act 1 (PEA), the Oklahoma General Corporation Act 2 (OGCA) and the Oklahoma Limited Liability Company Act 3 (OLLCA). During the first regular session of the 59th Oklahoma Legislature, the Legislature considered Senate Bill 620 4 (SB 620) and Senate Bill 649 5 (SB 649, and with SB 620, they are referred to as “the bills”) authored by Sen. John Michael Montgomery, Rep. Jon Echols and Rep. Kevin McDugle. These bills were passed by the Oklahoma Senate in March 2023. 6 The bills were not voted on by the House in 2023, however, and were carried over to the second regular session of the Legislature (the 2024 session). During the 2024 session on April 17, the bills were passed by the Oklahoma House of Representatives. 7 On April 23,

with the inclusion of professional limited liability companies and limited partnerships. As a result, there was little need to accom modate foreign professional entities that might seek to qual ify to do business in Oklahoma. Circumstances have since changed, and many professional entities are operating on a multijurisdictional basis. SB 620 addressed this need. It amended the PEA to account for foreign professional entities pro viding professional services in the state of Oklahoma. 11 Changes in definitions. SB 620 expands the definition of “profes sional entity” to include a qualified foreign professional entity. 12 The bill also makes technical changes to correct a cross-reference to the Uniform Limited Partnership Act of 2010 and to clarify that a pro fessional entity includes an entity formed for the purpose of owning a professional entity. 13 Formation and qualification of professional entities. SB 620 retains the requirement that the individual or individuals forming a domestic professional entity must be managers 14 who are licensed or otherwise qualified to render professional services and applies this requirement to a

Gov. Stitt signed the bills, which will take effect Nov. 1. At the federal level, Congress passed the Corporate Transparency Act (CTA), 8 which became effec tive Jan. 1. Under the CTA, most existing and newly formed cor porations, LLCs and other legal entities must report their beneficial ownership and management to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network. 9 The CTA is intended to make it more onerous for domestic and foreign individuals to operate shell companies for illicit purposes. 10 The reporting will impose a new and dramatic step in the formation of legal entities and may require lawyers who assist in the formation of legal entities to report personally as company applicants. PENDING CHANGES TO THE OKLAHOMA ACTS The Professional Entity Act The Professional Entity Act, previously called the Professional Corporation Act, was adopted in 1961. At that time, few, if any, professionals practiced beyond their chosen state jurisdictional boundaries. That was still largely true in 1995 when the Professional Corporation Act became the PEA

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

30 | OCTOBER 2024

THE OKLAHOMA BAR JOURNAL