CORPORATIONS, ASSOCIATIONS AND PARTNERSHIPS -- RHODE ISLAND BUSINESS CORPORATION ACT -- THE RHODE ISLAND BUSINESS CLIMATE REFORM ACT, the official text

H8450 2026 -- H 8450 ======== LC006320 ======== STATE OF RHODE ISLAND IN GENERAL ASSEMBLY JANUARY SESSION, A.D. 2026 ____________ A N A C T RELATING TO CORPORATIONS, ASSOCIATIONS AND PARTNERSHIPS -- RHODE ISLAND BUSINESS CORPORATION ACT -- THE RHODE ISLAND BUSINESS CLIMATE REFORM ACT Introduced By: Representatives Newberry, Shekarchi, Finkelman, Chippendale, Marszalkowski, Slater, Phillips, J. Brien, Santucci, and Solomon Date Introduced: April 15, 2026 Referred To: House Corporations It is enacted by the General Assembly as follows: 1 SECTION 1. This act shall be known and may be cited as The Rhode Island Business 2 Climate Reform Act. 3 SECTION 2. Sections 7-1.2-711 and 7-1.2-1408 of the General Laws in Chapter 7-1.2 4 entitled Rhode Island Business Corporation Act are hereby amended to read as follows: 5 7-1.2-711. Actions by shareholders. 6 (a) Definitions. In this section: 7 (1) “Derivative proceeding” means a civil suit in the right of a domestic corporation or, to 8 the extent provided in subsection (h) of this section, in the right of a foreign corporation. 9 (2) “Shareholder” includes a beneficial owner whose shares are held in a voting trust or 10 held by a nominee on the beneficial owner s behalf. 11 (b) Standing. A shareholder may not commence or maintain a derivative proceeding unless 12 the shareholder: 13 (i) Was a shareholder of the corporation at the time of the act or omission complained of 14 or became a shareholder through transfer by operation of law from one who was a shareholder at 15 that time; and 16 (ii) Fairly and adequately represents the interests of the corporation in enforcing the right 17 of the corporation. 18 (c) Demand. No shareholder may commence a derivative proceeding until: 1 (1) A written demand had been made upon the corporation to take suitable action; and 2 (2) Ninety (90) days have expired from the date the demand was made unless the 3 shareholder has earlier been notified that the demand has been rejected by the corporation or unless 4 irreparable injury to the corporation would result by waiting for the expiration of the ninety (90) 5 day period. 6 (d) Stay of proceedings. If the corporation commences an inquiry into the allegations made 7 in the demand or complaint, the court may stay any derivative proceeding for such period as the 8 court deems appropriate. 9 (e) Dismissal. 10 (1) On motion by the corporation, the court shall dismiss a derivative proceeding if one of 11 the groups specified in subsection (e)(2) or (e)(6) has determined in good faith after conducting a 12 reasonable inquiry upon which its conclusions are based that the maintenance of the derivate 13 proceedings is not in the best interests of the corporation. 14 (2) Unless a panel is appointed pursuant to subsection (e)(6), the determination in 15 subsection (e)(1) must be made by: 16 (i) A majority vote of independent directors present at a meeting of the board of directors 17 if the independent directors constitute a quorum; or 18 (ii) A majority vote of a committee consisting of two (2) or more independent directors 19 appointed by majority vote of independent directors present at a meeting of the board of directors, 20 whether or not such independent directors constituted a quorum. 21 (3) None of the following by itself causes a director to be considered not independent for 22 purposes of this section: 23 (i) The nomination or election of the directors or persons who are defendants in the 24 derivative proceedings or against whom action is demanded; 25 (ii) The naming of the director as a defendant in the derivative proceeding or as a person 26 against whom action is demanded; or 27 (iii) The approval by the director of the act being challenged in the derivative proceeding 28 or demand if the act resulted in no personal benefit to the director. 29 (4) If a derivative proceeding is commenced after a determination has been made rejecting 30 a demand by a shareholder, the complaint must allege with particularity facts establishing either 31 (A) that a majority of the board of directors did not consist of independent directors at the time the 32 determination was made, or (B) that the requirements of subsection (e)(1) of this section have not 33 been met. 34 (5) If a majority of the board of directors does not consist of independent directors at the LC006320 - Page 2 of 26 1 time the determination is made, the corporation has the burden of proving that the requirements of 2 subsection (e)(1) have been met. If a majority of the board of directors consists of independent 3 directors at the time the determination is made, the plaintiff has the burden of proving that the 4 requirements of subsection (e)(1) have not been met. 5 (6) The court may appoint a panel of one or more independent persons upon motion by the 6 corporation to make a determination whether the maintenance of the derivative proceeding is in the 7 best interests of the corporation. In such case, the plaintiff has the burden of proving that the 8 requirements of subsection (e)(1) have not been met. 9 (f) Discontinuance or settlement. A derivative proceeding may not be discontinued or 10 settled without the court s approval. If the court determines that a proposed discontinuance or 11 settlement will substantially affect the interests of the corporation s shareholders or a class of 12 shareholders, the court shall direct that notice be given to the shareholders affected. 13 (g) Payment of expenses. On termination of the derivative proceeding the court may: 14 (1) Order the corporation to pay the plaintiff s reasonable expenses (including counsel fees) 15 incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the 16 corporation; 17 (2) Order the plaintiff to pay any defendant s reasonable expenses (including counsel fees) 18 incurred in defending the proceeding if it finds that the proceeding was commenced or maintained 19 without reasonable cause or for an improper purpose; or 20 (3) Order a party to pay an opposing party s reasonable expenses (including counsel fees) 21 incurred because of the filing of a pleading, motion or other paper, if it finds that the pleading, 22 motion or other paper was not well grounded in fact, after reasonable inquiry, or warranted by 23 existing law or a good faith argument for the extension, modification or reversal of existing law 24 and was interposed for an improper purpose, such as to harass or cause unnecessary delay or 25 needless increase in the cost of litigation. 26 (h) Applicability to foreign corporations. In any derivative proceeding in the right of a 27 foreign corporation, the matters covered by this subchapter are governed by the laws of the 28 jurisdiction of incorporation of the foreign corporation except for subsections (d), (f), and (g) of 29 this section. 30 (i) Imposition of minimum ownership requirements for initiating derivative actions. On 31 and after July 1, 2026, the following requirements shall apply to any shareholder derivative action 32 brought pursuant to the provisions of this section: 33 (1) Publicly traded entities and for-profit private entities with five hundred (500) or more 34 equity owners or shareholders, and that have elected the statutory business judgment rule may LC006320 - Page 3 of 26 1 impose a minimum ownership threshold of up to five percent (5%) of the outstanding equity for 2 owners to initiate derivative actions. 3 (2) Attorneys fees awarded in these derivative actions shall be limited by specifically 4 disqualifying mere disclosure-only settlements as substantial benefits for the purpose of such 5 awards, regardless of the materiality of the disclosures. 6 7-1.2-1408. Registered office and registered agent of foreign corporation. 7 (a) Each foreign corporation authorized to transact business in this state must shall have 8 and continuously maintain in this state a registered agent, who is either: 9 (1) An individual resident in this state; or 10 (2) A corporation, limited partnership, limited liability partnership, limited liability 11 company, and in each case either domestic or one authorized to transact business in this state. 12 Provided, on and after July 1, 2026, the secretary of state may serve as a registered agent for a 13 foreign corporation or a foreign limited liability company. 14 (b) Foreign corporations who are the holders of mortgages on real estate located within this 15 state which do not maintain the loan documentation and records within the state shall authorize the 16 registered agent to accept mortgage discharge payment and to issue a discharge of the mortgages 17 upon the payment. 18 SECTION 3. Chapter 7-1.2 of the General Laws entitled Rhode Island Business 19 Corporation Act is hereby amended by adding thereto the following sections: 20 7-1.2-815. Business judgment rule. 21 (a) Unless the corporate or controlling documents for an entity subject to the provisions of 22 this chapter specify a different standard for the conduct of a director or manager of the entity, then 23 it shall be conclusively presumed that the entity has elected for application of the business judgment 24 rule to govern the conduct of decisions made by directors or managers as provided pursuant to the 25 provisions of subsection (b) of this section. 26 (b) A director or manager who makes a business judgment for an entity electing application 27 of the business judgment rule pursuant to subsection (a) of this section shall be presumed to have 28 satisfied the requirements of this chapter if all of the following conditions are satisfied: 29 (1) The director or manager has acted in good faith; 30 (2) The director or manager does not have an interest in the subject of the business 31 judgment; 32 (3) The director or manager was informed with respect to the subject of the business 33 judgment to the extent the director or manager believes was appropriate, and that belief was 34 reasonable, under the circumstances; and LC006320 - Page 4 of 26 1 (4) The director or manager believes that the business judgment was in the best interests of 2 the corporation or entity and its shareholders or equity owners, and that belief is rational. 3 (c) A person challenging the conduct of a director or manager as a breach under this chapter 4 has the burden of proving failure of the director or manager to satisfy the requirements of subsection 5 (a) of this section and, if that burden is sustained, of proving the director s or manager s failure to 6 satisfy the requirements under any provision of this chapter, and in a damage action under any 7 section of this chapter, the burden of proving that the breach was the proximate cause of damage 8 suffered by the corporation or its shareholders or equity owners. 9 (d) For the purpose of this section, a director or manager has an interest in a transaction or 10 conduct that is the subject of a business judgment only if any of the following conditions are 11 satisfied: 12 (1) The director, or manager or an associate of the director or manager, is a party to the 13 transaction or conduct; 14 (2) The director or manager or an associate of the director or manager has a material 15 pecuniary interest in the transaction or conduct other than usual and customary directors or 16 managers fees and benefits, of which the director or manager knows or should be aware, that would 17 reasonably be expected to affect the director s or manager s judgment in a manner adverse to the 18 corporation or entity or its shareholders or equity owners; or 19 (3) The director or manager is subject to a controlling influence by a party to the transaction 20 or conduct, other than the corporation or entity or by a person who has a material pecuniary interest 21 in the transaction or conduct, and that controlling influence could reasonably be expected to affect 22 the director s or manager s judgment with respect to the transaction or conduct in a manner adverse 23 to the corporation or entity or its shareholders or equity owners. 24 (e) As used in this section, associate means any of the following persons: 25 (1) The spouse of the director; a child, grandchild, parent, sibling, uncle, aunt, nephew, 26 niece, step-child, stepparent, or step-sibling of the director, including adoptive relationships, and 27 the spouse of such a person; a mother-in-law, father-in law, brother-in-law, or sister-in-law of the 28 director; a person, other than a domestic employee, having the same home as the director; and a 29 trust or estate of which the director or a person designated in this subsection is a substantial 30 beneficiary. 31 (2) A trust, estate, incompetent, conservatee, or minor of which the director is a fiduciary. 32 (3) A person with respect to whom the director or manager has a business or financial 33 relationship other than a person described in subsection (d)(1) or (d)(2) of this section, but if and 34 only if the relationship would reasonably be expected to affect the director s or manager s judgment LC006320 - Page 5 of 26 1 with respect to the transaction or conduct in question in a manner adverse to the corporation or 2 entity or its shareholders or equity owners. For the purpose of this subsection, the following 3 presumptions affecting the burden of proof apply: 4 (i) The director s or manager s judgment is presumed not to be adversely affected solely 5 because the director or manager is a director or principal manager of the business organization. 6 (ii) The director s or manager s judgment is presumed not to be adversely affected if the 7 director or manager is the beneficial owner or record holder of not more than ten percent (10%) of 8 any class of equity interest. 9 (iii) The director s or manager s judgment is presumed to be adversely affected if the 10 director or manager is the beneficial or record holder, other than in a custodial capacity, of more 11 than ten percent (10%) of any class of equity interest. 12 7-1.2-1806. Advanced determinations of director independence. 13 Publicly traded corporations and for-profit corporations that elected the statutory business 14 judgment rule may petition Rhode Island superior courts to hold an evidentiary hearing to 15 determine the independence of a special committee of directors tasked with reviewing related party 16 transactions, such as those involving the corporation and a controlling shareholder, director, or 17 officer. Prior to the evidentiary hearing, the corporation shall notify each of its shareholders to 18 provide them with the opportunity to participate in the proceeding. Once the superior court validates 19 the independence of the committee, that decision shall be binding absent facts, which were not 20 presented to the court, that prove one or more directors is not independent and disinterested with 21 respect to the applicable transaction. 22 7-1.2-1807. Waiver of class-by-class voting. 23 A corporation organized under the provisions of this chapter may include language in its 24 governing documents allowing the corporation to waive class-by-class share voting in certain 25 circumstances, permitting all classes of its stock to vote as a single class. 26 7-1.2-1808. Shielded communications. 27 Shareholders, members, and partners of a corporation organized under the provisions of 28 this chapter shall not be entitled to review certain communications, to include emails, text 29 messages, social media posts, and similar electronic communication, unless the communication 30 effectuates an official action of the entity. Publicly traded entities and corporate entities that elect 31 the statutory business judgment rule may deny inspection demands if the entity is involved, or 32 expects to be involved, in a derivative proceeding or other litigation proceeding involving the 33 entity. Nothing in this section shall be construed as limiting a court of competent jurisdiction from 34 ordering the production or disclosure of any document of communication. LC006320 - Page 6 of 26 1 SECTION 4. Section 7-16-11 of the General Laws in Chapter 7-16 entitled The Rhode 2 Island Limited Liability Company Act is hereby amended to read as follows: 3 7-16-11. Resident agent. 4 (a) Each domestic or foreign registered limited liability company shall have a resident agent 5 for service of process on the limited liability company who shall be either: 6 (1) An individual resident of this state; or 7 (2) A corporation, limited partnership, or limited liability company, and in each case either 8 domestic or one authorized to transact business in this state. Provided, on and after July 1, 2026, 9 the secretary of state may serve as a resident agent for a foreign limited liability company. Provided 10 further, that on and after July 1, 2026, an entity applying to be a foreign limited liability company 11 in Rhode Island shall not be required to provide a certificate of good standing from their home or 12 domestic jurisdiction as part of the application process. 13 (b)(1) A domestic or foreign registered limited liability company may change its resident 14 agent or the address of its resident agent by filing with the secretary of state a statement signed by 15 any authorized person that authorizes the change. 16 (2) A change of a resident agent or address of the resident agent for a domestic or foreign 17 registered limited liability company under this subsection is effective when the secretary of state 18 accepts the statement for filing. 19 (c)(1) A resident agent that changes address in the state shall file with the secretary of state 20 a statement of the change of address signed by the resident agent or on the resident agent s behalf. 21 (2) The statement shall include: 22 (i) The name of the limited liability company for which the change is effective; 23 (ii) The old and new addresses of the resident agent; and 24 (iii) The date on which the change is effective. 25 (3) The change of address of the resident agent is effective when the secretary of state 26 accepts the statement for filing. 27 (d)(1) A resident agent may resign by filing with the secretary of state a counterpart or 28 photocopy of the signed resignation, together with a statement that the resignation has been 29 delivered or sent to the limited liability company. 30 (2) Unless a later time is specified in the resignation, it is effective thirty (30) days after it 31 is filed. 32 (e) The secretary of state is appointed the agent of the domestic limited liability company 33 for service of process if no resident agent has been appointed, if the resident agent s authority has 34 been revoked, or if the resident agent cannot be found or served following the exercise of reasonable LC006320 - Page 7 of 26 1 diligence. 2 SECTION 5. Chapter 7-16 of the General Laws entitled The Rhode Island Limited 3 Liability Company Act is hereby amended by adding thereto the following sections: 4 7-16-78. Anonymous limited liability company filings. 5 (a) On and after July 1, 2026, entities may be formed and filed as anonymous limited 6 liability companies ( ALLC ). An ALLC filing will require the same filings as a traditional LLC, 7 but the names of members and managers shall not be required to be placed on public filings; 8 provided, however, the ALLC filing shall include the registered agent. 9 (b) Equity owners or members names shall be listed with an internal operating agreement 10 of the ALLC. 11 7-16-79. Rhode Island protected series limited liability company. 12 A limited liability company agreement may establish or provide for the establishment of 13 one or more designated series of members, managers, limited liability company interests or assets. 14 Any series may have separate rights, powers or duties with respect to specified property or 15 obligations of the limited liability company or profits and losses associated with specified property 16 or obligations, and any series may have a separate business purpose or investment objective. No 17 provision of this chapter shall be construed to limit the application of the principle of freedom of 18 contract to a series that is not a protected series or a registered series. Other than as specifically 19 provided for otherwise in this chapter, a series may not merge, convert or consolidate. 20 7-16-80. Limitation of liability. 21 A limited liability company operating agreement may provide for the limitation or 22 elimination of any and all liabilities for breach of contract and breach of duties, including fiduciary 23 duties, of a member, manager or other person to a limited liability company or to another member 24 or manager or to another person that is a party to or is otherwise bound by a limited liability 25 company operating agreement; provided that, a limited liability company operating agreement may 26 not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the 27 implied contractual covenant of good faith and fair dealing. 28 SECTION 6. Chapter 8-2 of the General Laws entitled Superior Court is hereby amended 29 by adding thereto the following sections: 30 8-2-41. Complex commercial litigation calendar. 31 (a) On and after July 1, 2027, there shall be a separate calendar for the administration and 32 determination of complex commercial litigation matters. 33 (b) Complex commercial litigation calendar. The presiding judge of the superior court shall 34 create a complex commercial litigation calendar ( CCLC ) which shall replace the business LC006320 - Page 8 of 26 1 calendar in superior court and shall assign personnel to the extent warranted to exclusively hear 2 and decide all eligible complex commercial litigation matters. The calendar shall be referred to as 3 the complex commercial litigation calendar. This calendar shall take the place of the business 4 calendar in the superior court, and shall utilize the same judges and staff who are currently assigned 5 to the business calendar. 6 (c) Eligible cases. 7 (1) Cases eligible for the this calendar shall include any case that includes a claim asserted 8 by any party either directly or by declaratory judgment with an amount in controversy of one 9 million dollars ($1,000,000) or more, designated in the pleadings for either jury or non-jury trials, 10 or involves an exclusive choice of court agreement or a judgment resulting from an exclusive choice 11 of court agreement, or is so designated by the presiding judge, qualifies for assignment to the 12 CCLC. 13 (2) Excluded cases include any case containing a claim for personal, physical or mental 14 injury; mortgage foreclosure actions; mechanics lien actions; condemnation proceedings; and any 15 case involving an exclusive choice of court agreement where a party to the agreement is an 16 individual acting primarily for personal, family, or household purposes or where the agreement 17 relates to an individual or collective contract of employment. 18 (3) Any party may request a judicial conference to seek assignment to the CCLC, and 19 acceptance of any matter in addition to the sections listed in subsection (c)(1) of this section shall 20 be at the discretion of the judge(s) assigned to the calendar. 21 (d) Timing. All matters assigned to the CCLC shall be expedited. All memoranda from all 22 interested parties in a matter assigned to the calendar shall be completed within sixty (60) days of 23 the filing of the certified record. No continuances or postponements shall be granted except for 24 good cause shown. Such continuances as are necessary shall be granted for the shortest practicable 25 time. 26 (e) Use of section. Under no circumstances shall any party be permitted to utilize this 27 section as a basis for dismissal of an action, as this section is enacted for the benefit and 28 convenience of the superior court. 29 8-2-42. Court of chancery. 30 (a) There is hereby established, within the superior court but acting as a separate court, the 31 court of chancery. The court of chancery shall operate independently from the superior court. The 32 courts shall have jurisdiction to hear and determine all matters and causes in equity only, except as 33 otherwise agreed to by the parties or pursuant to the provisions of § 8-2-43(b). 34 (b) The court of chancery shall consist of five (5) chancellors. One chancellor shall be the LC006320 - Page 9 of 26 1 chief chancellor. Chancellors of the court of chancery shall be selected and appointed in the same 2 manner as magistrates of the superior court. Each chancellor shall be appointed for a term of ten 3 (10) years, with advice and consent of the senate. 4 (c) The court of chancery shall not have jurisdiction to determine any matter wherein 5 monetary compensation is the exclusive or sole claim for relief. 6 (d) All jurisdiction and powers of the court of chancery may be exercised in chambers. The 7 court of chancery shall sit without juries. 8 (e) Upon a final determination of all equitable issues, the court of chancery shall transfer 9 any remaining matters to the appropriate trial court for resolution. 10 (f) The court of chancery is to be self-sustaining, funded through court fees generated by 11 the court of chancery. Accordingly the court of chancery shall set fees commensurate with the 12 requirement that the court shall be self-sustaining. 13 8-2-43. Jurisdiction of courts of chancery. 14 (a) Except as provided in subsection (b) of this section, the courts of chancery shall hear 15 disputes in equity only. These may include matters involving fiduciary duty, mediation and 16 arbitration, governance, appraisal, books-and-records inspection demands, and other equitable or 17 statutorily assigned matters, business and technology disputes, and disputes involving deed 18 covenants or restrictions. 19 (b) Persons and entities may include provisions in their governing documents that designate 20 the court of chancery as the exclusive venue for resolving internal disputes and waive the right to 21 a jury trial for internal claims. Internal claims shall cover a broad scope of claims, including 22 derivative claims and allegations of breaches of fiduciary duty. A jury trial waiver shall be 23 enforceable even if the entity s members, owners, officers or governing persons did not individually 24 sign such waiver. 25 SECTION 7. Section 9-26-4.1 of the General Laws in Chapter 9-26 entitled Levy and Sale 26 on Execution is hereby amended to read as follows: 27 9-26-4.1. Homestead estate exemption. 28 (a) In addition to the property exempt from attachment as set forth in § 9-26-4, an estate of 29 homestead to the extent of five hundred thousand dollars ($500,000) in the land and buildings, or 30 personal property that the owner uses as a residence, may be acquired pursuant to this section by 31 an owner of a home or an individual who rightfully possesses the premises by lease, as a life tenant, 32 as a beneficiary of a revocable or irrevocable trust or otherwise, and who occupies or intends to 33 occupy the home as his or her principal residence. Provided, effective July 1, 2026, the estate of 34 homestead for land, buildings, and personal property that the owner uses as a residence, shall be LC006320 - Page 10 of 26 1 unlimited in value, and such land and buildings and personal property shall be exempt from 2 attachment, levy on execution, and sale for payment of debts or legacies, except as provided for 3 otherwise in this section. The estate of homestead provided pursuant to this section shall be 4 automatic by operation of law, and without any requirement or necessity for the filing of a 5 declaration, a statement in a deed, or any other documentation. The estate shall be exempt from the 6 laws of attachment, levy on execution, and sale for payment of debts or legacies, except in the 7 following cases: 8 (1) Sale for taxes, sewer liens, water liens, lighting district assessments, and fire district 9 assessments; 10 (2) For a debt contracted prior to the acquisition of the estate of homestead; 11 (3) For a debt contracted for the purchase of the home; 12 (4) Upon an order issued by the family court to enforce its judgment that a spouse pay a 13 certain amount weekly or otherwise for the support of a spouse or minor children; 14 (5) Where a building or buildings are situated on land not owned by the owner of a 15 homestead estate are attached, levied upon or sold for the ground rent of the lot upon which the 16 building or buildings are situated; 17 (6) For a debt due to, or a lien in favor of, the department of human services and/or the 18 state of Rhode Island for reimbursement of medical assistance, as provided for in § 40-8-15 ; . 19 (7) For a debt heretofore or hereafter owing to a federally insured deposit-taking institution 20 or a person regulated or licensed under title 19. 21 (b) For the purposes of this section, “owner of a home” includes a sole owner, lessee (but 22 only a lessee who or that was the owner of a home prior to a transfer to the lessor), joint tenant, 23 tenant by the entirety, or tenant in common; provided, that only one individual may acquire an 24 estate of homestead in the home for the benefit of his or her family; and provided further, that an 25 estate of homestead may be acquired on only one principal residence for the benefit of a family. 26 For the purposes of this section, “family” includes either a parent and child or children, a husband 27 and wife and their children, if any, or a sole owner. The provisions of this section shall not apply 28 to any debt owing to a regulated institution, a debt secured by a mortgage or other voluntary lien 29 on a home, or a mechanics lien on the property comprising the estate as provided for under chapter 30 28 of title 34. Notwithstanding any other provisions of law, it shall not be necessary to record a 31 declaration of homestead in order to take advantage of the homestead estate exemption. 32 (c) An estate of homestead shall be subordinate to a mortgage encumbering the home that 33 was signed by all the owners of the home at the time of execution of said mortgage. A mortgage 34 executed by fewer than all of the owners of a home that is subject to an estate of homestead shall LC006320 - Page 11 of 26 1 be superior only to the homestead estate of the owners who are parties to the mortgage and their 2 non-titled spouses and minor children, if any. 3 (d) For purposes of this chapter, a mortgage shall include an instrument granting a security 4 interest in a manufactured home or cooperative housing unit. The subordination shall not require 5 the signature of a spouse who is not an owner. No statement that a homestead estate shall be 6 subordinate to the mortgage shall be required in the mortgage instrument and nothing contained in 7 a mortgage or any document executed in connection with the mortgage shall affect or be construed 8 to create, modify, or terminate a homestead estate, other than to subordinate it to the mortgage as 9 aforesaid. A mortgage lender shall not require or record a release of homestead in connection with 10 the making and recording of a mortgage. 11 SECTION 8. Title 9 of the General Laws entitled COURTS AND CIVIL PROCEDURE 12 — PROCEDURE GENERALLY is hereby amended by adding thereto the following chapter: 13 CHAPTER 36 14 RHODE ISLAND RAPID ARBITRATION ACT 15 9-36-1. Definitions. 16 For purposes of this chapter only, unless the context requires otherwise: 17 (1) Agreement means an agreement described in § 9-36-3. 18 (2) Arbitration means an arbitration conducted pursuant to the provisions of this chapter. 19 (3) Arbitrator means a person named in an agreement, selected under an agreement, or 20 appointed by the parties to an agreement or the court of chancery, to preside over an arbitration and 21 issue a final award. If an arbitration proceeds before more than one arbitrator: 22 (i) References in this chapter to an arbitrator shall be deemed to be references to the 23 arbitrators; and 24 (ii) Unless otherwise provided in an agreement, references in this chapter to an act of an 25 arbitrator shall be deemed to be references to an act of a majority of the arbitrators. 26 (4) Business entity means any corporation, association, partnership, or limited liability 27 company as organized under title 7. 28 (5) Consumer means an individual who seeks or acquires, by purchase or lease, any 29 goods or services for personal, family, or household purposes. 30 (6) Final award means an award designated as final and issued in an arbitration by an 31 arbitrator. 32 (7) Organization means a civic association, neighborhood alliance, homeowners 33 maintenance corporation, homeowners maintenance association, condominium association or other 34 similar entity charged with or assuming the duties of maintaining the public areas, open space, or LC006320 - Page 12 of 26 1 common facilities within a residential development or community. 2 9-36-2. Purpose of the chapter. 3 The purpose of this chapter is to provide Rhode Island business, corporate and nonprofit 4 entities a method by which the entities may resolve disputes in a prompt, cost-effective, and 5 efficient manner, through voluntary arbitration conducted by expert arbitrators, and to ensure rapid 6 resolution of those business disputes. This chapter is intended to provide an additional option by 7 which sophisticated entities may resolve their disputes. Therefore, nothing in this chapter is 8 intended to impair the ability of entities to use other arbitral procedures of the entities choosing, 9 including procedures that afford lengthier proceedings and allow for more extensive discovery. 10 9-36-3. Effect of arbitration agreement. 11 (a) A written agreement to submit to arbitration any controversy existing at or arising after 12 the effective date of the agreement is valid, enforceable, and irrevocable, save upon grounds as 13 exist at law or in equity for the revocation of any contract, without regard to the justiciable character 14 of the controversy, as long as: 15 (1) The agreement is signed by the parties to an arbitration; 16 (2) At least one party to the agreement is an entity formed or organized under the laws of 17 this state or having its principal place of business in this state; 18 (3) No party to the agreement is a consumer; 19 (4) The agreement provides that it shall be governed by or construed under the laws of this 20 state, without regard to principles of conflict of laws, regardless of whether the laws of this state 21 govern the parties other rights, remedies, liabilities, powers and duties; and 22 (5) The agreement includes an express reference to this chapter, the Rhode Island rapid 23 arbitration act; 24 (6) During the pendency of an arbitration, an agreement may be amended to alter the 25 procedures of the arbitration only with the approval of an arbitrator, but the agreement may not be 26 amended in order to alter the time set forth in § 9-36-8(b). 27 (b) A party to an agreement is deemed to have waived objection and consented to: 28 (1) The arbitration procedures set forth in this chapter; 29 (2) The submission exclusively to an arbitrator of issues of substantive and procedural 30 arbitrability; 31 (3) The exclusive personal and subject matter jurisdiction of an arbitration, with venue 32 waived as long as the hearing is conducted within this state; 33 (4) The exclusive personal and subject matter jurisdiction of the courts of the state for the 34 limited purposes set forth in § 9-36-4; and LC006320 - Page 13 of 26 1 (5) Except as otherwise limited by the agreement, an arbitrator s power and authority to: 2 (i) Determine in the first instance the scope of the arbitrator s remedial authority, subject 3 to review solely pursuant to the provisions of § 9-36-9; and 4 (ii) Grant relief, including to award any legal or equitable remedy appropriate in the sole 5 judgment of the arbitrator. 6 (c) A party to an agreement is deemed to have waived the right to: 7 (1) Seek to enjoin an arbitration; 8 (2) Remove any action subject to the provisions of this chapter to a federal court; 9 (3) Appeal or challenge an interim ruling or order of an arbitrator; 10 (4) Appeal or challenge a final award, except under § 9-36-9; and 11 (5) Challenge whether an arbitration has been properly held, except pursuant to the 12 provisions of § 9-36-9. 13 9-36-4. Jurisdiction. 14 (a) Jurisdiction of the supreme court. Except as otherwise provided in an arbitration 15 agreement, the consummation of the arbitration agreement confers jurisdiction on the supreme 16 court to hear only a challenge to a final award under § 9-36-9. The supreme court shall not have 17 jurisdiction to hear appeals of: 18 (1) The appointment of an arbitrator under § 9-36-5; 19 (2) The determination of an arbitrator s fees under § 9-36-6(b); 20 (3) The issuance or denial of an injunction in aid of arbitration under subsection (b)(5) of 21 this section; and 22 (4) The grant or denial of an order enforcing a subpoena issued under § 9-36-7(b). 23 (b) A party to any agreement shall be deemed to have waived the right to such appeals. The 24 supreme court, in consultation with the court of chancery, may publish rules for arbitration 25 proceedings under this chapter and, unless an agreement provides for different rules, may specify 26 that those rules govern arbitration proceedings under this chapter. 27 (c) Jurisdiction of the court of chancery. The making of an agreement confers jurisdiction 28 on the court of chancery only to: 29 (1) Appoint an arbitrator under § 9-36-5; 30 (2) Enter judgment under § 9-36-10(b); 31 (3) Upon the request of an arbitrator, enforce a subpoena issued under § 9-36-7(b); 32 (4) Determine an arbitrator s fees under § 9-36-6(b); and 33 (5) Issue, only before an arbitrator accepts appointment, an injunction in aid of an 34 arbitration; provided that, the injunction may not divest the arbitrator of jurisdiction or authority. LC006320 - Page 14 of 26 1 Notwithstanding the foregoing, no court has jurisdiction to enjoin an arbitration under this chapter. 2 The court of chancery may promulgate rules to govern proceedings under this chapter. 3 (d) Jurisdiction of the superior court. The consummation of an arbitration agreement 4 confers jurisdiction on the superior court only to enter judgment under § 9-36-10(c). 5 9-36-5. Appointment of arbitrator by the court of chancery. 6 (a) The court of chancery, on petition or on application of a party in an existing case, has 7 exclusive jurisdiction to appoint one or more arbitrators upon: 8 (1) The consent of all parties to an agreement; 9 (2) The failure or inability of an arbitrator named in or selected under an agreement to serve 10 as an arbitrator; 11 (3) The failure of an arbitration agreement to name an arbitrator or to provide a method for 12 selecting an arbitrator; 13 (4) The inability of the parties to an agreement to appoint an arbitrator; or 14 (5) The failure of a procedure set forth in an arbitration agreement for selecting an 15 arbitrator. 16 (b) Following the petition or application, each party shall propose to the court of chancery 17 no more than three (3) persons that are qualified and willing to serve as an arbitrator. 18 (c)(1) The court of chancery shall, within thirty (30) days of the service of the petition or 19 application, appoint an arbitrator and, in so doing, may take into account: 20 (i) The terms of an agreement; 21 (ii) The persons proposed by the parties; and 22 (iii) Reports made under § 9-36-6(d). 23 (2) An arbitrator appointed by the court of chancery may only be: 24 (i) A person named in or selected under the arbitration agreement; 25 (ii) An expert in any nonlegal discipline described in the arbitration agreement; or 26 (iii) A member in good standing of the bar of the supreme court for at least ten (10) years. 27 (d) An arbitrator so appointed has all the powers of an arbitrator specifically named in an 28 agreement. Unless otherwise provided in an agreement, the court of chancery shall appoint a single 29 arbitrator. 30 9-36-6. Arbitrator fees and expenses of arbitration. 31 (a) A person accepting an appointment as an arbitrator shall: 32 (1) Consent to the terms of this chapter; and 33 (2)(i) Accept the consequences set forth in subsection (b) of this section for failing to 34 comply with the provisions of § 9-36-8(b). LC006320 - Page 15 of 26 1 (ii) An arbitrator is immune from civil liability for or resulting from any act or omission 2 done or made in connection with an arbitration, unless the arbitrator s act or omission was made or 3 done in bad faith, with malicious intent, or in a manner exhibiting a willful, wanton disregard of 4 the rights, safety, or property of another. 5 (b) Unless otherwise provided in an agreement, an arbitrator s fees and expenses, together 6 with other expenses incurred in the conduct of an arbitration, but not including counsel fees of 7 parties to the arbitration, shall be borne as provided in a final award. Notwithstanding the foregoing, 8 an arbitrator that fails to issue a final award in compliance with § 9-36-8(b) is not entitled to full 9 payment of the arbitrator s fees. The arbitrator s fees shall be reduced by twenty-five percent (25%) 10 if the final award is less than thirty (30) days late; the arbitrator s fees shall be reduced by seventy- 11 five percent (75%) if the final award is between thirty (30) and sixty (60) days late; and the 12 arbitrator s fees shall be reduced by one hundred percent (100%) if the final award is more than 13 sixty (60) days late; provided, however, upon petition by an arbitrator, the court of chancery may 14 summarily determine, on clear and convincing evidence, that exceptional circumstances exist such 15 that the reductions in fee provided in this subsection should be modified or eliminated. 16 (c) An arbitrator may retain appropriate counsel, in consultation with the parties. The 17 arbitrator s counsel may make rulings on issues of law, to the extent requested to do so by the 18 arbitrator, which shall have the same effect as a ruling by the arbitrator, if the arbitrator so 19 determines. The fees and expenses incurred by the arbitrator s counsel shall be included in the 20 arbitrator s expenses described in subsection (b) of this section. 21 (d) An arbitrator that fails to issue a final award in compliance with § 9-36-8(b) shall, 22 within ninety (90) days of the failure, report that failure to the clerk of the court of chancery, 23 indicating: 24 (1) The date on which the arbitrator accepted appointment as an arbitrator; and 25 (2) The date on which the final award was issued. 26 9-36-7. Hearing -- Witnesses -- Prehearing evidence gathering -- Rulings before final 27 award. 28 (a) Unless otherwise provided in an arbitration agreement, an arbitrator shall appoint a time 29 and place for a hearing or an adjourned hearing, either of which shall be held within the state unless 30 otherwise provided in an agreement. A party to an arbitration is entitled to be heard, to present 31 evidence relevant to the arbitration, and to cross-examine witnesses appearing at a hearing. 32 Notwithstanding the foregoing, an arbitrator may make such interim rulings and issue such interim 33 orders as the arbitrator deems necessary to determine what evidence and which witnesses may be 34 presented at the hearing, including to limit the presentation of evidence and witnesses as necessary LC006320 - Page 16 of 26 1 to satisfy § 9-36-8(b). An arbitrator may resolve an arbitration on the evidence produced at a 2 hearing notwithstanding the failure of a party duly notified to appear or participate at the hearing. 3 (b) Unless otherwise provided in an agreement, an arbitrator has the power to administer 4 oaths and may order the attendance of witnesses and the production of books, records, contracts, 5 papers, accounts, and all other documents and evidence under the control or in the possession of 6 the parties to the arbitration. Only if provided in the arbitration agreement, shall an arbitrator have 7 the power to issue subpoenas, and all provisions of law compelling a person under subpoena to 8 testify are applicable. Only if provided in the arbitration agreement, shall an arbitrator award 9 commissions to permit a deposition to be taken, in the manner and on the terms designated by the 10 arbitrator, of a witness who cannot be subpoenaed to appeal for the arbitration hearing. 11 (c) An arbitrator may make such rulings, including rulings of law, and issue such orders or 12 impose such sanctions as the arbitrator deems proper to resolve an arbitration in a timely, efficient, 13 and orderly manner. 14 9-36-8. Awards. 15 (a) A final award shall be in writing and signed by an arbitrator, shall be provided to each 16 party to an arbitration, and shall include a form of judgment for entry under § 9-36-10. Unless 17 otherwise provided in an agreement, an arbitrator may make any award, whether legal or equitable 18 in nature, deemed appropriate by the arbitrator. Unless otherwise provided in an arbitration 19 agreement, an arbitrator may make in a final award rulings on any issue of law that the arbitrator 20 considers relevant to an arbitration. 21 (b) Subject to subsection (c) of this section, an arbitrator shall issue a final award within 22 the time fixed by an agreement or, if not so fixed, within one hundred twenty (120) days of the 23 arbitrator s acceptance of the arbitrator s appointment. 24 (c) Parties to an arbitration may extend the time for the final award by unanimous consent 25 in writing either before or after the expiration of that time, but the extension may not exceed, 26 whether singly or in the aggregate, sixty (60) days after the expiration of the period set by 27 subsection (b) of this section. 28 9-36-9. Challenges -- Court powers to vacate, modify, or correct a final award. 29 (a) An appeal to a final award may be taken to the supreme court in the manner as appeals 30 are taken from orders or judgments in a civil action. 31 (b) An appeal to a final award shall be taken within fifteen (15) days of the issuance of the 32 final award. 33 (c) In an appeal of a final award, the supreme court may only vacate, modify, or correct the 34 final award in conformity with the Federal Arbitration Act, 9 U.S.C. §§ 1-16; 9 U.S.C. §§ 201-208; LC006320 - Page 17 of 26 1 9 U.S.C. §§ 301-307. The supreme court shall have the authority to order confirmation of a final 2 award, which confirmation shall be deemed to be confirmation under § 9-36-10(a). 3 (d) Notwithstanding any other provision of this section, an agreement may provide for: 4 (1) No appellate review of a final award; or 5 (2) Appellate review of a final award by one or more arbitrators, in which case appellate 6 review shall proceed as provided in the agreement. An appellate arbitrator may be appointed by the 7 court of chancery of the state under § 9-36-5. An appellate arbitrator shall have authority to order 8 confirmation of a final award, which confirmation shall be deemed to be confirmation under § 9- 9 36-10(a). 10 9-36-10. Confirmation of a final award -- Judgment on final award. 11 (a) Unless an appeal is taken under § 9-36-9 or unless an agreement provides for appellate 12 review by one or more arbitrators, a final award, without further action by the court of chancery of 13 the state, is deemed to have been confirmed by the court of chancery on the fifth business day 14 following the period for appeal under § 9-36-9(b). If an agreement provides for no appellate review 15 of a final award, the final award is deemed to have been so confirmed on the fifth business day 16 following the award s issuance. 17 (b) Except for a final award solely for money damages, upon application to the court of 18 chancery by a party to an arbitration in which a final award has been confirmed under subsection 19 (a) of this section, the court of chancery shall promptly enter a final judgment in conformity with 20 that final award. A final judgment, so entered, has the same effect as if rendered in an action by the 21 court of chancery. 22 (c) If a final award is solely for money damages, upon application to the superior court by 23 a party to an arbitration in which a final award has been confirmed under subsection (a) of this 24 section, the clerk of the superior court shall promptly enter a judgment on the judgment docket in 25 conformity with that final award. The clerk of the superior court shall enter in the judgment docket 26 the names of the parties, the amount of the final award, the time from which interest, if any, runs, 27 and the amount of the costs, with the true date of the filing and entry. A final judgment, so entered, 28 has the same force and effect as if rendered in an action at law, and, from that date, and may be 29 perfected as a lien on all the real estate of the debtor, in the same manner and as fully as judgments 30 rendered in the superior court are perfected as liens, and may be executed and enforced in the same 31 way as judgments of the superior court. 32 9-36-11. Application of chapter. 33 It is the policy of this chapter to give maximum effect to the principle of freedom of 34 contract and to the enforceability of agreements. LC006320 - Page 18 of 26 1 9-36-12. Short title. 2 This chapter may be cited as the Rhode Island Rapid Arbitration Act. 3 SECTION 9. Chapter 18-1 of the General Laws entitled Application of Laws to Trusts 4 is hereby amended by adding thereto the following section: 5 18-1-6. Additional provisions governing trusts. 6 (a) Notwithstanding any provisions to the contrary in this title 18 ( fiduciaries ), or this 7 chapter 1 of title 18 (“application of law to trusts”), the following provisions shall apply to any 8 trusts formed under the provisions of this chapter, effective July 1, 2026. 9 (1) Trustees may allocate trustees duties to different parties, in order to allow family 10 members or trusted advisors to retain control of investment and distribution decisions. 11 (2) Trusts may be established to last for up to one thousand (1,000) years for an initial 12 period of the trust as so-called dynasty trusts , and may be extended for additional one thousand 13 (1,000) year periods an infinite number of times. 14 (3) Individuals inside or outside of Rhode Island may serve as trust protectors and trust 15 advisors through entities including LLCs, without any requirement to register with any Rhode 16 Island government entity. 17 (4) Private settlement of trust matters without court supervision is permitted. 18 (5) Holders of general powers of appointment, parents/guardians, or persons with 19 substantially similar interests may represent minor, unborn, or remainder beneficiaries. 20 (6) Claims based on forced heirship, protecting beneficiaries whose families reside in 21 forced heirship jurisdictions, are hereinafter prohibited. 22 (7) Trusts shall not be required to register and shall not be required to make any trust 23 documents publicly available, and there shall be automatically sealed any trust-related judicial 24 proceedings unless specifically ordered otherwise by a court of competent jurisdiction. 25 (8) No contest or in terrorem clauses shall be generally presumed valid, without common 26 exceptions. 27 (9) Self-settled or domestic asset protection trusts, as well as nominee trusts, are 28 recognized as permissible; provided, the length of time for creditor lookback provisions in domestic 29 asset protection trusts shall be two (2) years with a six (6) month period for known creditors. 30 (10) Beneficiary notice requirements may be modified or eliminated by the trust document, 31 creating so-called silent or quiet trusts. 32 (11) Trusts may remain in effect for the forever or in perpetuity, and the rule of perpetuities, 33 so called, shall not be applied to trusts. 34 (12) Grantors of trusts may be beneficiaries. LC006320 - Page 19 of 26 1 (13) Community property trusts are recognized. 2 (14) The state formally recognizes and adopts the provisions of the Uniform Directed Trust 3 Act. 4 18-1-7. Nominee trusts established. 5 (a) A nominee trust may be established in this state as follows: 6 (1) The party seeking to establish a nominee trust must execute a certificate sworn to or 7 stated to be executed under the penalties of perjury, and in either case signed by a person who from 8 the records of the registry of deeds for the municipality in which real estate owned by a 9 nontestamentary trust lies, and that person appears to be a trustee thereunder and which certifies as 10 to the following: 11 (i) The identity of the trustees or the beneficiaries thereunder; 12 (ii) The authority of the trustees to act with respect to real estate owned by the trust; or 13 (iii) The existence or nonexistence of a fact which constitutes a condition precedent to acts 14 by the trustees or which are in any other manner germane to affairs of the trust. 15 (b) A document executed in compliance with and meeting the requirements of subsection 16 (a) of this section shall be binding on all trustees and the trust estate in favor of a purchaser or other 17 person relying in good faith on the certificate. The certificate most recently recorded in the registry 18 of deeds for the municipality in which the real estate lies shall control. 19 SECTION 10. Section 44-11-2 of the General Laws in Chapter 44-11 entitled Business 20 Corporation Tax is hereby amended to read as follows: 21 44-11-2. Imposition of tax. 22 (a) Each corporation shall annually pay to the state a tax equal to nine percent (9%) of net 23 income, as defined in § 44-11-11, qualified in § 44-11-12, and apportioned to this state as provided 24 in §§ 44-11-13 — 44-11-15, for the taxable year. For tax years beginning on or after January 1, 25 2015, each corporation shall annually pay to the state a tax equal to seven percent (7.0%) of net 26 income, as defined in § 44-11-13 — 44-11-15, for the taxable year. 27 (b) A corporation shall pay the amount of any tax as computed in accordance with 28 subsection (a) after deducting from “net income,” as used in this section, fifty percent (50%) of the 29 excess of capital gains over capital losses realized during the taxable year, if for the taxable year: 30 (1) The corporation is engaged in buying, selling, dealing in, or holding securities on its 31 own behalf and not as a broker, underwriter, or distributor; 32 (2) Its gross receipts derived from these activities during the taxable year amounted to at 33 least ninety percent (90%) of its total gross receipts derived from all of its activities during the year. 34 “Gross receipts” means all receipts, whether in the form of money, credits, or other valuable LC006320 - Page 20 of 26 1 consideration, received during the taxable year in connection with the conduct of the taxpayer s 2 activities. 3 (c) A corporation shall not pay the amount of the tax computed on the basis of its net 4 income under subsection (a), but shall annually pay to the state a tax equal to ten cents ($.10) for 5 each one hundred dollars ($100) of gross income for the taxable year or a tax of one hundred dollars 6 ($100), whichever tax shall be the greater, if for the taxable year the corporation is either a “personal 7 holding company” registered under the federal Investment Company Act of 1940, 15 U.S.C. § 80a- 8 1 et seq., “regulated investment company,” or a “real estate investment trust” as defined in the 9 federal income tax law applicable to the taxable year. “Gross income” means gross income as 10 defined in the federal income tax law applicable to the taxable year, plus: 11 (1) Any interest not included in the federal gross income; minus 12 (2) Interest on obligations of the United States or its possessions, and other interest exempt 13 from taxation by this state; and minus 14 (3) Fifty percent (50%) of the excess of capital gains over capital losses realized during the 15 taxable year. 16 (d)(1) A small business corporation having an election in effect under subchapter S, 26 17 U.S.C. § 1361 et seq., shall not be subject to the Rhode Island income tax on corporations, except 18 that the corporation shall be subject to the provisions of subsection (a), to the extent of the income 19 that is subjected to federal tax under subchapter S. Effective for tax years beginning on or after 20 January 1, 2015, a small business corporation having an election in effect under subchapter S, 26 21 U.S.C. § 1361 et seq., shall be subject to the minimum tax under § 44-11-2(e). 22 (2) The shareholders of the corporation who are residents of Rhode Island shall include in 23 their income their proportionate share of the corporation s federal taxable income. 24 (3) [Deleted by P.L. 2004, ch. 595, art. 29, § 1.] 25 (4) [Deleted by P.L. 2004, ch. 595, art. 29, § 1.] 26 (e) Minimum tax. The tax imposed upon any corporation under this section, including a 27 small business corporation having an election in effect under subchapter S, 26 U.S.C. § 1361 et 28 seq., shall not be less than four hundred fifty dollars ($450). For tax years beginning on or after 29 January 1, 2017, the tax imposed shall not be less than four hundred dollars ($400). Provided, for 30 tax years beginning after July 1, 2026, the minimum tax provided for under this subsection shall be 31 eliminated. 32 SECTION 11. Title 44 of the General Laws entitled TAXATION is hereby amended by 33 adding thereto the following chapter: 34 CHAPTER 12.1 LC006320 - Page 21 of 26 1 FRANCHISE TAX 2 44-12.1-1. Fee imposed. 3 (a) Every corporation, joint-stock company, limited liability company, partnership, 4 statutory trusts or association incorporated in this state or qualified to do business in this state, 5 whether or not doing business for profit, shall pay an annual franchise fee to the state. 6 (b) The franchise fee established herein shall be a minimum of four hundred fifty dollars 7 ($450) for all noncorporation entities to include limited liability companies, partnerships, and 8 statutory trusts. 9 (c) The franchise fee for corporations shall be based upon the number of shares issued, as 10 follows: 11 (1) For a corporation with five thousand (5,000) authorized shares or less, the franchise fee 12 shall be four hundred fifty dollars ($450); 13 (2) For a corporation with five thousand one (5,001) and up to ten thousand (10,000) 14 authorized shares, the franchise fee shall be seven hundred fifty dollars ($750); and 15 (3) For a corporation with ten thousand one (10,001) authorized shares or more, the 16 franchise fee shall be one thousand dollars ($1,000). 17 (d) The franchise fee as described in this section shall be deductible from and against the 18 business corporation tax described in § 44-11-2, or a corresponding tax owed by entities identified 19 in § 44-12.1-1(a). 20 (e) As used in this chapter: 21 (1) “Fee” means the franchise fee established pursuant to this section; 22 (2) “Return” means the fee return describe in § 44-12.1-2; and 23 (3) “Secretary” means the secretary of state. 24 44-12.1-2. Filing of returns -- Contents. 25 Every entity subject to the provisions of this chapter shall, on or before March 15, annually, 26 file with the secretary of state as of the last day of its next preceding taxable year a fee return 27 (hereinafter the “return”), under oath or affirmation, signed by its treasurer or by an authorized 28 officer or agent of the entity, if organized, and if not organized, under oath of someone authorized 29 to act by the entity, containing information as the secretary of state may require, including: 30 (1) The name of the entity and the location of its principal office. 31 (2) The amount of its capital stock authorized, and the par value thereof, if applicable. 32 (3) The amount of its capital stock authorized, without par value, if applicable. 33 44-12.1-3. Valuation of no-par stock. 34 In the case of corporations having capital stock of no-par value, one hundred dollars ($100) LC006320 - Page 22 of 26 1 per share shall be deemed to be the par value for the purposes of this chapter. 2 44-12.1-4. Assessment of fee -- Notice of amount. 3 The secretary of state, as soon as possible after the filing of the return, shall assess, as of 4 the last day of its next preceding taxable year, a fee upon each entity as provided in this chapter 5 and shall mail a notice of the amount of the fee to each entity, but failure to receive the notice shall 6 not invalidate the fee or excuse the nonpayment of the fee. 7 44-12.1-4.1. Hearing on application. 8 Any entity aggrieved by the action of the secretary of state in determining the amount of 9 any fee or penalty imposed under the provisions of this chapter may apply to the secretary of state 10 in writing, within thirty (30) days after the notice of the action is mailed to it, for a hearing relative 11 thereto. The secretary of state shall fix a time and place for the hearing and shall so notify the 12 applicant. At the hearing, the secretary shall correct manifest errors, if any, disclosed at the hearing 13 and assess and collect the lawfully due fee together with any penalty or interest on the fee. 14 44-12.1-5. Payment of fee. 15 The fee shall be payable at the earlier of March 15 or within fifteen (15) days after its 16 assessment and, if not paid when due, shall bear interest from the date of its assessment at the 17 annual rate provided by § 44-1-7 for interest on delinquent payment of state taxes, until paid. 18 44-12.1-5.1. Claims for refund -- Hearing upon denial. 19 (a) Any entity subject to the provisions of this chapter may file a claim for refund with the 20 secretary at any time within two (2) years after the fee has been paid. If the secretary shall determine 21 that the fee has been overpaid, the secretary shall make a refund with interest at the annual rate 22 provided by § 44-1-7.1 from the date of overpayment. 23 (b) Any entity whose claim for refund has been denied may, within thirty (30) days from 24 the date of the mailing by the secretary of the notice of the decision, request a hearing, and the 25 secretary shall, as soon as practicable, set a time and place for the hearing and shall notify the 26 applicant. 27 44-12.1-6. Penalty for failure to make return. 28 If the fee and return that is required to be made by § 44-12.1-2 is not made within the time 29 fixed by this chapter, the officer or agent neglecting or refusing to make the return shall be fined 30 not exceeding five hundred dollars ($500). 31 44-12.1-7. Lien on real estate. 32 The fee shall from the date of assessment become a lien upon the real estate of the entity 33 liable for the fee until the fee is collected. 34 44-12.1-8. Forfeiture of charter or articles for nonpayment of fee. LC006320 - Page 23 of 26 1 The secretary may, after July 15 of each year, make up a list of all entities which have 2 failed to pay any franchise fee assessed for two (2) years after the fee became due and payable, 3 shall certify to the correctness of the list, and shall file the list as a public record in the office of the 4 secretary of state. Upon the filing of the certified list, the charter, articles of organization, or articles 5 of association of each of the entities shall become forfeited by reason of the failure to pay the fee, 6 and all the entities shall cease to be bodies corporate, except as provided in § 7-1.2-1324. The 7 secretary of state shall mail a notice of the forfeiture of charter or articles to each entity at its last 8 known address, but failure to receive the notice shall not invalidate the forfeiture. Any entity or any 9 stockholder, officer, manager or agent of the entity, continuing to act thereafter under any forfeited 10 charter or articles, except as provided in § 7-1.2-1324, or pending an appeal from the forfeiture as 11 provided, shall be deemed guilty of a misdemeanor and upon conviction shall be fined not less than 12 fifty dollars ($50.00) nor more than one thousand dollars ($1,000) for each offense. 13 44-12.1-9. Publication of forfeitures -- Vacation on payment of fee. 14 The secretary of state shall publish on the secretary of state s website the names of all 15 entities whose charters or articles have been forfeited. The forfeiture shall be vacated as to any 16 entity, which shall pay all fees and all interest then due to the secretary within sixty (60) days of 17 the date of the publication. 18 44-12.1-10. Appeal of forfeitures. 19 Any entity, by any stockholder, equity owner, manager or officer of the entity, aggrieved 20 by the forfeiture of the charter or articles of the entity may appeal from the forfeiture, within thirty 21 (30) days from the date of the publication, to the sixth division of the district court, and the court 22 shall proceed as soon as possible to hear the appeal after the manner of equitable causes. If the 23 appellant shall show to the satisfaction of the court that the forfeiture of the charter or articles of 24 the entity was erroneous under the provisions, or that the fee assessed was improper or erroneous 25 in whole or in part, and in that case if the appellant shall pay all fees and all interest then due under 26 this chapter, then the court shall sustain the appeal and shall vacate the forfeiture as to the appellant 27 entity. Upon failure to show error in the forfeiture under the provisions, or to pay all fees and all 28 interest due, the court shall dismiss the appeal and confirm the forfeiture. Upon the sustaining of 29 the appeal of any entity, the clerk of the district court shall, within ten (10) days, file with the 30 secretary of state an attested copy of the decree vacating the forfeiture as to the appellant entity. A 31 party aggrieved by a final order of the court may seek review in the supreme court by writ of 32 certiorari in accordance with the procedures contained in § 42-35-16. 33 44-12.1-11. Corporations exempt. 34 The provisions of this section shall not apply to the following entities: Roger Williams LC006320 - Page 24 of 26 1 General Hospital, Women and Infants Hospital of Rhode Island, Rhode Island Hospital, St. Joseph s 2 Hospital, Butler Hospital, Newport Hospital, South County Hospital, Lincoln School, St. George s 3 School, the Mary C. Wheeler School, Incorporated, insurance or surety companies, corporations 4 mentioned in §§ 7-6-4, 27-25-1, and 44-13-4, and all corporations exempt by charter or by the law 5 of this state. 6 44-12.1-12. Declarations under penalty of perjury. 7 The oath or affirmation required by this chapter as to any report or written statement shall 8 not be required if the report or statement to be sworn to contains or is verified by a written 9 declaration that it is made under the penalties of perjury; and whoever signs or issues any report or 10 statement containing or verified by a written declaration shall, if the report or statement is willfully 11 false, be guilty of perjury. 12 44-12.1-13. Appeals -- Interest on refunds. 13 Appeals from administrative orders or decisions made pursuant to any provisions of this 14 chapter shall be to the sixth division district court pursuant to chapter 8 of title 8. The right to appeal 15 shall be expressly made conditional upon prepayment of all fees, interest, and penalties unless the 16 entity moves for and is granted an exemption from the prepayment. If the court, after appeal, holds 17 that the entity is entitled to a refund, the entity shall also be paid interest on the amount at the rate 18 provided in § 44-1-7.1. 19 SECTION 12. Section 6 of this act shall take effect July 1, 2027. Sections 10 and 11 of this 20 act shall take effect January 1, 2027. The remaining sections of this act shall take effect upon 21 passage. ======== LC006320 ======== LC006320 - Page 25 of 26 EXPLANATION BY THE LEGISLATIVE COUNCIL OF A N A C T RELATING TO CORPORATIONS, ASSOCIATIONS AND PARTNERSHIPS -- RHODE ISLAND BUSINESS CORPORATION ACT -- THE RHODE ISLAND BUSINESS CLIMATE REFORM ACT *** 1 This act would adopt a number of concepts from other jurisdictions with the goal of 2 promoting a stronger climate for business growth in Rhode Island. This act would impose a 3 Franchise Fee on most corporations, LLCs and partnerships, in lieu of the corporation tax. This 4 act would, further, create a court of chancery to handle actions in equity, establish numerous 5 provisions to govern arbitrations, and eliminate the cap on the homestead estate exemption. 6 Section 6 of this act would take effect July 1, 2027. Sections 10 and 11 of this act would 7 take effect January 1, 2027. The remaining sections of this act would take effect upon passage. ======== LC006320 ======== LC006320 - Page 26 of 26