The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 8:50 a.m., on Tuesday, February 2, 1999, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Mark A. James, Chairman

Senator Jon C. Porter, Vice Chairman

Senator Mike McGinness

Senator Maurice Washington

Senator Dina Titus

Senator Valerie Wiener

Senator Terry Care

STAFF MEMBERS PRESENT:

Jo Greenslate, Committee Secretary

OTHERS PRESENT:

Chairman James welcomed visitors from Incline High School. He noted that it was "National Job Shadowing Day" which provides an opportunity for high school students to spend the day with an individual in a profession of their choice. The four guest students were: Brett Craig, Marshall Clyde, Charlie Wagner, and Elan Pardee, all top-ranking members of the Incline High School senior class.

The Chairman stated committee meetings would commence at 8:30 a.m. daily except for 9 a.m. on Mondays.

Chairman James introduced Senator Terry Care, a new member of the Senate Committee on Judiciary, and committee staff members.

Key dates for the Seventieth Legislative Session mentioned by Chairman James include: February 8, 1999, the final date for bill draft requests (BDRs) requested by legislators; February 22, 1999, the final date for the committee to submit BDRs; March 15, 1999, the deadline for individual legislators to introduce bills; March 22, 1999, the deadline for introduction of committee bills; and April 9, 1999, the date by which all bills must be passed out of the house of origin.

Referring to the Committee Standing Rules (Exhibit C), Chairman James remarked the only change from the Sixty-ninth Legislative Session is the addition of No. 13, that states: "The rules governing the operation of the 120-day Session that are adopted by resolution by the 1999 Legislature are hereby adopted by reference."

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Chairman James opened the hearing on Senate Bill (S.B.) 19.

Cristin Buchanan, Legal Secretary, Guild, Russell, Gallagher & Fuller, Ltd., Reno, testified in favor of S.B. 19. Please see Exhibit D for a copy of her testimony.

Ms. Buchanan explained the requirement of a domestic or foreign business entity that incorporates in Nevada to appoint a person or business on its behalf as its resident agent. The purpose of that agent is to provide a means of serving any corporation, partnership or limited liability company with a summons and complaint, also known as "process."

A problem arises, according to Ms. Buchanan, when the address of the resident agent is that of a commercial mail-receiving agency, but the mail-receiving agency is not the resident agent. The process server is not certain of whom to serve since the address is that of the commercial mail-receiving agency and not the actual resident agent.

Ms. Buchanan concluded by urging passage of S.B. 19, which would make it clear that the address of a resident agent means the actual physical location of the resident agent rather than a mailing address.

Senator Wiener inquired whether a possible solution would be to have the proprietor of the mail-receiving agency be the resident agent.

According to Ms. Buchanan, that could solve the problem. She stated that thus far in her experience, the mail-receiving entities have not been the resident agent. Normally the resident agent is an individual, often one of the officers of the corporation, who is not physically present at the mail-receiving agency.

Senator Care queried whether this situation has occurred exclusively with foreign corporations or if it has occurred with domestic corporations as well.

Ms. Buchanan answered that her experience has been primarily with domestic corporations. She pointed out that foreign corporations usually go through attorneys or companies that offer services as resident agents.

John T. Olive, Acorn Corporate Services/Nevada Association of Listed Resident Agents, Las Vegas, spoke in favor of S.B. 19. Mr. Olive commented that the primary reason to require corporations to have a resident agent is to facilitate service of process. Many corporations that are organized under the auspices of the laws of Nevada have principals living outside the state. He noted that currently corporate filings account for $30 million in state revenues, in major part due to the fact that there is a resident agency industry within Nevada. In Mr. Olive’s opinion, requiring resident agents to maintain a physical address within Nevada will raise their level of responsibility and improve compliance with the corporate laws of Nevada.

Senator Care inquired whether Mr. Olive is aware of the number of articles and certificates of acceptance filed annually in Nevada; and if so, the percentage of those lacking a street address as defined in S.B. 19.

Mr. Olive replied that in 1998, there were in excess of 40,000 corporations filed in the state of Nevada. He is unaware of the percentage of filings without street addresses.

Kateri M. Cavin, Deputy Attorney General, Civil Division (Office of the Secretary of State), Office of the Attorney General, noted that current Nevada law requires that resident agents have a physical address; therefore, the Office of the Secretary of State does not accept any filing where the resident agent does not have a physical address. The problem arises when process is being served on an individual that uses a mail-receiving agency, such as Mail Boxes Etc., as a mailing address. Mail Boxes Etc. has a physical address, but it is not the address of the individual or the resident agent being served. Ms. Cavin concurred with Chairman James’ observation that the language in S.B. 19 should correct the problem because it adds the language " . . . at which a resident agent is available for service of process."

Chairman James closed the hearing on S.B. 19. There being no further business, the Chairman adjourned the meeting at 9:30 a.m.

RESPECTFULLY SUBMITTED:

Jo Greenslate,

Committee Secretary

APPROVED BY:

Senator Mark A. James, Chairman

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