Statement on Changes to the Procedure for Good Standing Certificates Issued by the Texas Comptroller of Public Accounts

Supplement No. 6 to the Report of the Legal Opinions Committee of the Business Law Section, State Bar of Texas, Regarding Legal Opinions in Business Transactions

This statement ("Supplement # 6") addresses recent announcements of the Texas Comptroller of Public Accounts (the “Comptroller”) that the Comptroller has revised the definition of “good standing” for franchise tax purposes and that Certificates of Account Status (sometimes referred to as Certificates of Good Standing) will no longer be available from the Comptroller’s Office. Instead of issuing Certificates of Account Status, the Comptroller will now provide information regarding an entity’s franchise tax status through an online search mechanism, which will no longer set out a specified future date through which the information so provided will remain valid.  

In summary, the Committee has concluded that, without further inquiry and without obtaining any additional certificate or other writing (other than a Certificate of Fact from the Texas Secretary of State showing that the entity is in existence) and without taking any related qualification or exception in a legal opinion, an opinion giver may rely on the comptroller’s online search mechanism to determine the status of an entity’s Texas franchise tax account and to render a good standing opinion if the search mechanism expressly states that the entity’s right to transact business in Texas is “active”.