ADVISORY OPINION 2007-14

Application of General Statutes § 1-84 (m) to the Office of the Secretary of the State

INTRODUCTION

The Citizen’s Ethics Advisory Board issues this advisory opinion at the request of Lewis Button, a staff attorney at the Office of the Secretary of the State, who asks whether a business entity that registers with the Commercial Recording Division of the Office of the Secretary of the State is a restricted donor for purposes of General Statutes § 1-84 (m), a gift provision in the Code of Ethics for Public Officials (“Code”).   

RELEVANT FACTS

            The following facts are relevant to this opinion.  The Commercial Recording Division of the Office of the Secretary of the State has a two-fold duty: to file and maintain legally required records showing the formation of and fundamental changes to various business entities (e.g., corporations, limited liability partnerships, etc.), and to make that information available to the general public and to the business, banking and legal communities.

            In regard to its former duty—namely, registering those seeking to incorporate, form a limited liability company, etc.—the Commercial Recording Division’s sole function, which, according to Attorney Button, has always been considered ministerial in nature, is to accept completed registration forms along with the requisite fees.  It does not offer any legal advice as to what type of entity to form, nor does it have the authority to remove validly formed business entities, provided that they properly update their forms (generally on an annual basis) and continue to pay the requisite fees.

QUESTION

            Attorney Button asks whether a business entity that registers with the Commercial Recording Division of the Office of the Secretary of the State is a restricted donor for purposes of § 1-84 (m).

ANALYSIS

            Under General Statutes § 1-84 (m), a public official or state employee may not knowingly accept a gift from any person the official or employee knows or has reason to know is

(1)   doing business with or seeking to do business with his or her department or agency,

(2)   engaged in activities which are directly regulated by such department or agency, or

(3)   prequalified under General Statutes § 4a-100.

            Assuming, for purposes of the question at hand, that the business entity is not prequalified under § 4a-100,[1] we must determine whether, by virtue of its registering with the Commercial Recording Division, the business entity is either (1) “doing business with or seeking to do business with” the Office of the Secretary of State or (2) “engaged in activities which are directly regulated by” the Office of the Secretary of State.

            We first address whether the business entity is “doing business with or seeking to do business” with the Office of the Secretary of the State and, in doing so, take this opportunity to clarify the meaning of that phrase. 

            The former State Ethics Commission (“former Commission”) tackled that phrase in Advisory Opinion No. 2004-2.  Citing a dictionary definition, the former Commission noted that “the words ‘doing’ ‘business’ are commonly understood to mean: ‘to perform’ or ‘to execute’ ‘a profit seeking enterprise or concern.’”[2]  It concluded, therefore, that “[o]ne is ‘doing business’ with a ‘department or agency’ when one contacts that department or agency to further a commercial, i.e., business, purpose,” regardless of whether the entity contacted has actual, legal authority to issue or execute the contract, grant, award, etc. being sought.”[3]

            We disagree only to the extent that the former Commission appears to have confused “doing business” with “seeking to do business.”  That is, in our view, a person is “doing business” with a department or agency—not, as the former Commission has it, “when one contacts that department or agency”—but rather when the person is awarded a state grant or enters into a contract, lease or other such agreement with a department or agency.  At the point of contact, the person has merely taken an affirmative step toward “doing business” with a department or agency and is, therefore, “seeking to do business” with the state entity.      

            Notwithstanding that minor distinction, provided that the business entity at issue limits its dealings with the Office of the Secretary of the State to registering with its Commercial Recording Division, that is, provided that it is not otherwise engaged or seeking to engage in any “business”—defined to include things such as contracts, leases, grants and awards[4]—with the Office of the Secretary of the State, it is neither doing nor seeking to do business with that state entity.

            That leaves us with whether, by the mere fact of registering with the Commercial Recording Division, the business entity is “engaged in activities which are directly regulated by” the Office of the Secretary of the State. 

As noted above, the Office of the Secretary of the State has always considered the Commercial Recording Division’s role in registering business entities to be a purely ministerial function.  And the former Commission appears to have agreed.[5]  In Advisory Opinion No. 2003-12, it applied the Code to the business interests of a candidate for the position of Secretary of the State.[6]  After noting that neither the candidate nor any of his associated businesses would be seeking any work from the Office of the Secretary of the State, the former Commission stated as follows: “Given this fact and given that any interaction with the Office would be ministerial in nature (e.g., corporate registration) the possibility of a substantial conflict in this instance appears essentially nil.”[7] 

            We also agree, and our conclusion is bolstered by a comparison of the Commercial Recording Division’s role in registering business entities with that of the Office of State Ethics in registering lobbyists.  In regard to the latter, once a lobbyist registers with the Office of State Ethics, the lobbyist is subject not only to a host of reporting and notification requirements,[8] but also to significant restrictions on its activities.[9]  For example, a registered lobbyist may not

·        knowingly give a gift to any state employee, public official, candidate for public office or a member of any such person’s staff or immediate family;

·        be employed for compensation that is contingent upon the outcome of any administrative or legislative action;

·        do anything with the purpose of placing any public official under personal obligation;

·        attempt to influence any legislative or administrative action for the purpose of thereafter being employed to secure its defeat; or

·        cause any communication to be sent to any public official in the name of any other individual except with the consent of such individual.[10]

If the Office of State Ethics, through the Citizen’s Ethics Advisory Board, finds that a registered lobbyist has violated any of those restrictions, it may, among other things, order the violator to cease and desist the prohibited activity and to pay a civil penalty of up to $10,000.[11]  And if the violation is found to have been intentional, it may prohibit the violator “from engaging in the profession of lobbyist for a period of not more than two years.”[12]

            The Office of the Secretary of the State has no such authority over business entities that register with its Commercial Recording Division: it may not refuse to register a business entity that satisfies the registration prerequisites; it may not remove a validly formed business entity; and it does not possess the authority to enforce compliance with state law.  In short, its duties in this respect are ministerial, not regulatory.  We conclude, therefore, that a business entity is not, by the mere fact of registering with the Commercial Recording Division, “engaged in activities which are directly regulated by” the Office of the Secretary of the State.

CONCLUSION

            Based on the foregoing, it is the opinion of the Citizen’s Ethics Advisory Board that a business entity is not, by virtue of its registering with the Commercial Recording Division of the Office of the Secretary of the State, a restricted donor for purposes of § 1-84 (m).

By order of the Board,

______/s/________________________

Robert Worgaftik, Chairperson

Dated_______11/29/07________