ORDER OF THE
DEPARTMENT OF FINANCIAL INSTITUTIONS,
APPROVED BY THE GOVERNOR, OCTOBER 5, 2023
DIVISION OF CORPORATE AND CONSUMER SERVICES
CREATING RULES
The Wisconsin Department of Financial Institutions – Division of Corporate and Consumer Services by this order repeals DFI-CCS 1.06 (2), 1.10 (3) (d), 1.11 (1), 2.03 (1) (d) and (10), 2.04 (title), (intro.), and (1) to (7), 3.03 (4) (b), 3.15, 3.19. 5.02 (4), 5.04 (1) (d), 7.07, 10.02, 10.03, and 10.04 (title), (intro.), (1), (2), and (3) of the Wisconsin Administrative Code; renumbers 3.03 (4) (a), 7.07 (note), and 10.04 (4); renumbers and amends 2.04 (8); to amend 1.01 (20) (a), 1.05, 1.06 (1) and (4) (b), 1.07, 1.10 (1) (f) and (g) and (3) (a), 1.11 (2) and (4), 1.13 (1) and (3) (b), 2.03 (2), (3), (5), (6), and (9), 2.05, 2.06, 2.08, 3.02 (5), 3.04 (2), 3.14, 3.16 (note), 3.18, 4.02 (3) (c), 4.08 (1), 5.03, 5.05 (1), 6.01, 7.01 (1) (intro.), 10.01 (title) and (intro.); repeals and recreates 1.10 (3) (c) and (e), 4.10, and 6.02 (5); and creates 10.01 (7), (8), (9), (10), (11), (12) and (13) of the Wisconsin Administrative Code, relating to the elimination of rules made obsolete or redundant by 2021 Wisconsin Act 258, and various updates to Uniform Commercial Code rules. The scope statement for this rule was approved by the Governor on July 21, 2022, published in Administrative Register No. 800A1 on August 1, 2022, and approved by the Division of Corporate and Consumer Services on August 15, 2022. ______________________________________________________________________________
ANALYSIS
1. Statutes interpreted:
2. Statutory authority:
3. Explanation of agency authority:
Pursuant to Chapter 409 of the Wisconsin Statutes, the Department of Financial Institutions serves as the filing office for Uniform Commercial Code (UCC) filings. See Wis. Stat. s. 409.501. Section 409.526 of the Wisconsin Statutes authorizes the Department to promulgate administrative rules to implement Chapter 409. In addition, with regard to corporations, limited liability companies, and other entities required to register and file business records with the Department, the Department is authorized to specify by rule “a larger fee for filing records in paper format.” Wis. Stat. ss. 178.0120(2)(c), 179.0124(2)(c), 180.0122(5), 181.0507(2)(c), 183.0122(2)(c). The Department is also authorized to establish by rule a fee for filing, or providing a certified copy of, any record filed with the Department under chapters 178, 179, 180, 181, or 183 of the Wisconsin Statutes, if those statutory chapters do not already establish a fee for that type of filing or search. Wis. Stat. ss. 178.0120(1), 179.0124(1), 180.0122(1g), 181.0507(1), 183.0122(1). 4. Related statutes or rules:
Not applicable.
5. Plain language analysis:
These proposed rules make three categories of changes to the administrative rules administered by the Department’s Division of Corporate and Consumer Services (the Division).
First, the proposed changes implement 2021 Wisconsin Act 258, which affects limited liability companies and other entities required to file business records with the division, by eliminating rules that were superseded by the Act. For example, the Act’s language includes most of the substantive content of existing section DFI-CCS 10.04 of the Wisconsin Administrative Code; because that content is now set forth in statute, the redundant language of the administrative rule is unnecessary and can be repealed. In addition, while the Act specified filing fees for almost all documents to be filed with the Department under the applicable statutory chapters, it did not specify fees for (1) applications for reinstatement under chapters 179, 181, or 183, (2) amendments, cancellations, or renewals of partnership authority under chapter 179, (3) statements of change of registered agent or registered agent’s name, email, address, or street address under chapter 180, (4) statements of revocation or rescission of dissolution under chapters 178, 179, 181, or 183, (5) statements of withdrawal of a filed record before effectiveness under chapters 179, 180, 181, or 183, (6) statements of disassociation under chapter 179, or (7) statements of authority or denial under chapter 183. The proposed rule would fill those gaps by establishing fees for those documents that are identical to the fees charged for the same document types under analogous statutory chapters. Second, the proposed rule updates various provisions relating to UCC filings to reflect minor changes in technology and practices — as well as minor changes to the language of the model administrative rules promulgated by the Secured Transactions Section of the International Association of Commercial Administrators (“IACA”) — that have occurred in the 20 years since the administrative rules governing the UCC were originally promulgated in this state. The Department consulted the most recent version of the IACA model rules and the rules, practices, technology, and experiences of filing offices in other states when considering administrative rules to govern UCC filings, as it did in proposing these changes. While virtually all the changes in this proposed rule are non-substantive clarifications and repeals of provisions addressing practices that have become obsolete (such as accepting cash payments) or system limitations that no longer apply (such as character limits on certain online forms), the Department believes these proposed updates will better harmonize Wisconsin’s rules with modern practices and rule language in other states.
Third, to incentivize online filings and reduce administrative costs to the public, the proposed rules would impose larger fees for filing documents on paper where an online option is available and update certain UCC search and document fees to more closely reflect the capabilities of the department’s UCC system and, with regard to bulk image requests, to ensure that any third-party costs to retrieve the images are paid by the requesting party rather than the public.
6. Summary of, and comparison with, existing or proposed federal regulation:
Not applicable. Filing fees for business registration documents and the implementation of the UCC are matters of state law.
7. Comparison with rules in adjacent states:
Every state has adopted the UCC, and versions adopted in Wisconsin, Illinois, Iowa, Michigan, and Minnesota are substantially similar. Each requires the filing office rules to conform closely to Article 9 of the UCC and the rules, practices, and technology used in other states, and in Michigan—like Wisconsin—the filing office is expressly required to consider IACA’s most recent model rules. See Ill. Admin. Code tit. 14, §§180.10 to 180.19; Iowa Admin. Code r. 721-30.1(554) to 721-30.6(554); Mich. Admin. Code R. 440.1101 to 440.9994; Minn. Stat. § 5.12; Minn. R. 8280.0010 to 8280.0480. Though calculated differently in some cases, Wisconsin and its neighbors charge comparable fees for UCC searches and bulk copies of data or images. See Ill. Admin. Code tit. 14, §§180.13 and 180.14; Iowa Admin. Code r. 721-30.1(10), (13), and (14); Mich. Admin. Code R. 440.9523 (6) and 440.9525; Minn. Stat. § 5.24, Minn. R. 8280.0060; Office of the Minnesota Secretary of State, UCC Search Fees, available at https://mblsportal.sos.state.mn.us/Secured/SearchUCC (last accessed Oct. 11, 2022); Office of the Minnesota Secretary of State, UCC Data Available for Purchase, available at https://www.sos.state.mn.us/business-liens/business-liens-data/ucc-data-available-for-purchase (last accessed Oct. 11, 2022). Iowa imposes a $10 to $30 across-the-board surcharge for filing UCC documents in paper format, Iowa Admin. Code r. 721-30.1(10), while Michigan, Minnesota, and Illinois charge the same fees for paper or electronic filing of UCC documents. See Ill. Admin. Code tit. 14, §§180.13 and 180.14; Iowa Admin. Code r. 721-30.1(10), (13), and (14); Mich. Admin. Code R. 440.9523 (6) and 440.9525; Minn. Stat. § 5.24, Minn. R. 8280.0060; Office of the Minnesota Secretary of State, UCC Fee Schedule, available at https://www.sos.state.mn.us/business-liens/ucc-tax-cns-forms-fees/uniform-commercial-code-ucc-fee-schedule (last accessed Oct. 11, 2022). 2021 Wisconsin Act 258 authorized the Department to charge higher fees for business registration documents delivered in paper format. Wisconsin’s neighbors do not yet have that statutory authority for those types of filings, and therefore they generally do not impose surcharges for filing business registration documents in paper format. 8. Summary of factual data and analytical methodologies:
The proposed rules are based on (1) the Department’s experience in administering Wis. Stat. ch. 409 and Wis. Admin. Code chs. DFI-CCS 1 through 7 and 10; (2) the Department’s knowledge of the rules, practices, technology, and experiences of other states’ regulators in administering their versions of the UCC; (3) the Department’s review of the most recent version of IACA’s model rules; and (4) the Department’s experience in processing documents filed under chapters 178, 179, 180, 181, and 183 of the Wisconsin Statutes, including its observation that documents filed in paper format require more staff time and resources to process than those filed online. 9. Analysis and supporting documents used to determine effect on small business:
