Do You Know an Interested Party?

The State of Texas Legislature passed, and the Governor signed into law, House Bill 1295 (HB1295) in 2015 amending Government Code Chapter 2252 by adding Section 2252.908 for Disclosure of Interested Parties effective September 1, 2015.

What does this mean?

This means that Texas Government Code Section 2252.908 requires that a disclosure of interested parties form be completed and submitted to the Texas Ethics Commission (the “Commission”) for all contracts that require approval by an entity’s governing body or have a value of at least $1 million.

Who is an Interested Party?

An Interested Party is a person who has a controlling interest in a business entity with whom the governmental entity contracts or a person who actively participates in facilitating a contract or negotiating the terms of a contract with a governmental entity, including a broker, intermediary, advisor, or attorney for the business entity.

How does this affect you?

Both governmental entities and vendors are affected by this new legislation.

Governmental Entities

Any time after December 31, 2015:

1. If the governing body of your governmental entity approves new contracts or amends existing contracts, or

2. If the management of your governmental entity approves new contracts or amends or renews existing contracts with a value of at least $1 million,

Your governmental entity will need to ensure Form 1295, Certificate of Interested Parties, was completed and filed by the business entity (vendor) you are contracting with and notify the Commission within 30 days after the date of the contract of your receipt of the completed and signed Form 1295 from that vendor.

Vendors (Business Entities)

For the contracts applicable to either items 1. or 2. above, vendors will be required to complete Form 1295 via an electronic filing application with the Commission, print, sign with an authorized agent, and submit to the governmental entity that is the party to the contract for which the form is being filed.

Are there any exceptions?

If the governing body has legal authority to delegate to its staff the authority to execute the contract, has delegated to its staff the authority to execute the contract, and does not participate in the selection of the business entity with which the contract is entered into and has a value less than $1 million, then HB1295 does not apply.

What happens if you don’t comply?

If the governmental entity does not ensure Form 1295 has been completed and filed with the Commission, the governmental entity will not be able to enter into the contract with that business entity (vendor).

How do you file?

The Commission has stated that it will create an online platform wherein a business entity (vendor) may complete Form 1295. Upon completion, the system will generate a certificate of filing. This certificate and completed disclosure form must be printed, signed, and provided to the governmental entity with which the business entity is seeking to contract prior to or at the time of the contract’s execution.

Are any other forms superseded or replaced by this legislation?

No forms were superseded or replaced by this legislation.

To follow the Commission’s implementation concerning HB 1295 and any other updates, please visit the Commission’s website, including the following links:

For Form 1295 click here

For rules concerning House Bill 1295 click here