Best Practices Expedited Services Presenters Scott Anderson

Best Practices: Expedited Services

Presenters Scott Anderson, scotta@sos. nv. gov Deputy Secretary, Commercial Recordings Nevada Secretary of State Julia Dale, dalej@michigan. gov Director, Corporations Division Michigan Department of Licensing and Regulatory Affairs Marissa Soto-Ortiz, marissa. soto-ortiz@sec. state. ma. us Assistant Director, Corporations Division Office of the Secretary of the Commonwealth of Massachusetts

Michigan Corporations Division Expedited Service Requests

In the beginning. . . • November 21, 2006, then Governor, Jennifer M. Granholm signed bills establishing expedited services; the new laws became effective January 1, 2006. • Public Acts 217 -220 allowed businesses to request expedited services for a fee in order to meet their time constraints or deadlines to file corporation paperwork.

• The nonrefundable expedited service fees are in addition to the regular fees applicable to the specific documents. • Expedited review and filing (if fileable) is available for all documents for profit corporations, limited liability companies, limited partnerships and nonprofit corporations.

• Unless expedited service is requested, documents will continue to be reviewed in the order received • For documents submitted via mail, including Fed. Ex, UPS, etc, . the expedited service time starts once the document is stamped received in our Division.

New Expedited Services • One hour ($1, 000) Review completed within one hour on day of receipt. Document and request for 1 hour expedited must be received by 4 p. m. EST or EDT. • Two hour ($500) Review completed within two hours on day of receipt. Document and request for two hour expedited service must be received by 3 p. m. EST or EDT.

• Same day ($100 formation documents and applications for certificate of authority; $200 for any document concerning an existing entity. ) Review is completed on day of receipt. Document and request for same day expedited service must be received by 1 p. m. EST or EDT. • 24 -hour service ($50 formation documents and applications for certificate of authority; $100 for any document for an existing entity. )

Expedited Services Apply to: • • Certificates & Copies Documents Annual Reports Annual Statements

2006 Expedited Services Enacted Month Expedited Received Expedited Fees Collected January 1, 091 $76, 275. 00 February 1, 164 $92, 189. 00 March 1, 550 $126, 578. 00 April 1, 204 $98, 322. 00 May 1, 272 $106, 432. 00 June 1, 214 $107, 493. 00 July 864 $70, 363. 00 August 961 $82, 400. 00 September 938 $78, 560. 00 October 1, 078 $104, 890. 00 November 953 $83, 340. 00 December 1, 156 $119, 820. 00 Total 13, 445 $1, 146, 662. 00

• In 2006, total revenue for the Division was approximately $21, 907, 341. Expedited Services Fees for that year accounted for approximately 5% of the total revenue. • • FY 2010 expedited fees = 3% of revenue FY 2011 expedited fees = 2. 2% of revenue FY 2012 expedited fees = 1. 8% of revenue FY 2013 expedited fees = 2. 9% of revenue

Total Documents & Total Expedited Documents Service Level 2011 2012 2013 1 hour 62 58 48 2 hour 110 119 136 Same Day 1, 283 1, 612 1, 682 24 Hour 9, 670 11, 103 11, 455 Non-Expedited 159, 804 162, 843 167, 106 % of Docs Expedited 6. 5% 7. 3% Total 175, 735 180, 427 170, 929

Expedited by Type Document Type 2011 2012 2013 Formation 80, 366 81, 873 84, 350 Change of RA/RO 9, 262 9, 671 9, 797 Assumed Name 18, 178 17, 768 18, 291 Cert. of Authority 5, 293 5, 470 5, 952 Dissolutions 9, 509 9, 414 10, 491

Total Annual Reports/Statements and Total Expedited Annual Reports/Statements 2011 2012 2013 Total Filed that Year 543, 099 508, 222 579, 862 # of Expedited 22, 891 25, 492 22, 891 % of Expedited 4. 2% 5% 4. 2%

Customer Driven. Business Minded. • Michigan’s Dashboards were implemented by Governor Rick Snyder to provide a quick assessment of the state’s performance in key areas. • Since December 2012 the Corporations Division has reported (on a monthly basis) the percentage of non-expedited documents reviewed within 3 days. The statutory review period is 10 days.

Michigan Corporations Division’s Dashboard Metrics • Although customers continue to utilize our expedited services; the majority (over 92% in 2013) do not. • Our dashboard metrics from 2012 -2014 reveal that an overwhelming majority of the documents submitted to the Corporations Division are reviewed within 3 days.

Document Review Yearly Averages • 2012: 110, 652 received, average of 96. 67% reviewed within 3 days. • 2013: 138, 814 received, average of 96. 22% reviewed within 3 days. • 2014: (Jan 1 st – April 24 th) 51, 123 received, average of 95. 08 reviewed within 3 days.

Massachusetts Expedited Filings The Online Filing System

Massachusetts Online Filing • Expedited filings are done through the online filing system • All filings may be filed through the online filing system • Expedited services fees are based on the filing fee • Filings are received before 4 pm are reviewed that day.

• Filings received in the proper order through the online filing system will be time stamped with that specific time. • Filings are reviewed and approved in chronological order as received by the system. • Rejection notification is also expedited through this service.

Expedited Fee Schedule • Transaction Cost $0. 00 – 14. 99 $15. 00 - 24. 99 $25. 00 – 74. 99 $75. 00 – 84. 99 $85. 00 – 99. 99 $100 – 109. 99 $110 – 149. 99 $150 – 199. 00 $200 – 499. 00 $500. 00 Over $500. 00 Transaction fee $3. 00 $3. 50 $5. 00 $6. 00 $8. 50 $9. 00 $10. 00 $12. 00 $15. 00 $20. 00 4. 5% of filing fee

Expedited Fees • Expedited fees are not kept by the Division • The Division gets a credit with contractor for every so many transactions. Each credit is equated with one full-time employee or contractor. • The expedited fees allow us to maintain the system.

Electronic Filing Volume 2001 – 4029 2002 – 23, 131 2003 - 59, 540 2004 - 152, 079 2005 - 169, 558 2006 - 194, 608 2007 - 228, 494 * As of April 23, 2014 2008 – 269, 455 2009 – 269, 937 2010 – 297, 542 2011 – 325, 609 2012 – 368, 103 2013 – 369, 213 2014*- 172, 181

Expedited Filings v. Paper • The introduction of the online (expedited) filings system has changed the way the public files in Massachusetts. • In 2002 over 182, 000 annual reports were filed in paper, and could take months to review. • In 2013 over 320, 000 annual reports were filed and are on the system within 24 hours.

Expedited Filings vs. Paper Entity Type Detail Online Paper Bus & Prof. Corporations New Formations during the Year 12, 052 2, 726 LLCs New Formations during the Year 17, 084 3, 842 New Formations during the Year 25 36 Limited Partnerships New Formations during the Year 299 70 Business Trusts New Formations during the Year 25 14 Registered LLPs

Expedited Filings A Nevada Perspective

Nevada Perspective • Enabling legislation passed in 1987 – Backlogs/Customer Demands – 24 -hour only – $50 per service • Special Revenue Account • Legislature saw as funding mechanism – Fee raise to $100 (1991) – Excess swept to General Fund at FYE

Nevada Perspective (Cont. ) • 1 -hour, 2 hour and 4 - hour Service offered – 24 -hour still more popular – $500 for 2 -hour, $1000 for 1 -hour • • 2005 – ½ to Gen Fund, ½ to Special Revenue 2006 – Peak in Fees $11. 5 Million 2009 – Spec Revenue Account Terminated 2007 – Current – Decreasing Revenue

Nevada Perspective

Nevada Perspective • Issues – Backlogs and Regular Filings – Online Services • To Charge or Not to Charge – Budget/Reliance on Revenue Stream – Legislative/Political