NRAI Compliance Updates - May, 2007


Greetings,

State bills signed into law this month include:

Hawaii HB 1307 Business Registration of Foreign NFP’s and LLC
Indiana SB 553 Decreased filing fees for electronic filing
Virginia SB 1286 Updated Nonstock Corporation Act
Washington HB 1042 Modifies Share Acquisition Time

On the Federal side, HR 1257 and its companion Bill 1181 attempting to give shareholders an advisory vote on executive compensation are continuing to make their way through Congress.

Robert K. Rowell
General Counsel


New, Pending and Passed Legislation


Federal Legislation

HR 1257 and SB 1181

To amend the Securities Exchange Act of 1934 to provide shareholders with an advisory vote on executive compensation. 

Full Text available at: 

HR 1257 at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1257rfs.txt

SB 1181 at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s1181is.txt

Current Bill Status: Bill appears to have passed in the House. On April 20, 2007 in the Senate it has been read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

SB 1234

A bill to strengthen the liability of parent companies for violations of sanctions by foreign entities, and for other purposes. 

Full Text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:s1235is.txt

Current Bill Status: April 16, 2007 Introduced, read twice, and referred to the Committee on the Judiciary.


Arizona

HB 2111

AN ACT amending sections 10-120, 10-122, 10-127, 10-203, 10-224, 10-1006, 10-1007, 10-1008, 10-1105, 10-1503, 10-2020, 10-2079, 10-2145, 10-3120, 10-3122, 10 3203, 10-3224, 10-11006, 10-11007, 10-11008, 10-11105, 10-11107, 10-11403, 10-11503, 29-633, 29-635, 29-754, 29-782, 29-783, 29-802, 29-851 and 29-855, Arizona Revised Statutes; amending title 29, chapter 4, article 1, Arizona Revised Statutes, by adding sections 29-614 and 29-615; relating to corporations and limited liability companies.

Title 29, Chapter 4, Arizona Revised Statutes, prescribes the requirements for a Limited Liability Company (LLC) to operate under the jurisdiction and regulatory control of the ACC. Additionally, Title 10, the Corporations and Associations provisions of statute, regulates corporations. In order to conform all corporate statutes to provide the business community with an efficient and consistent means to operate, the ACC has made numerous changes to the statutes over the last several years. 

HB 2111 is an omnibus bill that makes further conforming changes to the Arizona Revised Statutes. The provisions also clarify that all filing fees are nonrefundable, electronic images are acceptable and official filings, and the official time for publication begins on the date documents are approved by the ACC. 

Provisions
• Clarifies documents may be delivered to the ACC by means of fax or electronic transmission.

• Authorizes the ACC to prescribe the format for filing an electronic document.

• Clarifies the filing fees submitted to the ACC are nonrefundable.

• Clarifies the official time requirement for publication begins on the date the documents are approved by the ACC.

• Permits a person to apply to the ACC for a Certificate of Good Standing for either a domestic or foreign LLC and outlines specific requirements. 

• If a state agency can confirm through the ACC that an applicant is entitled to a Certificate of Good Standing, prohibits that agency from requiring the applicant to obtain the certificate. 

• Requires Articles of Merger or Consolidation to contain any amendments to the Articles of Organization of the surviving LLC, if the surviving business is an LLC. 

• Establishes that if the Articles of Merger include amendments to the Articles of Organization, then they must be filed with the ACC as Articles of Amendment and Merger.

• Rewrites and clarifies the process and procedures after dissolution of the LLC, including the stipulation that a dissolved LLC cannot carry on any business except as necessary to wind up and liquidate its affairs as outlined in current law.

Full Text available at: http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/48leg/1r/bills/hb2111h.htm

Current Bill Status: April 26, 2007 sent to Governor


Delaware

HB 160

An Act to Amend Title 8 of the Delaware Code relating to the General Corporation Law.

Section 1. The amendment to § 141(d) clarifies that when a provision of the certificate of incorporation endows some directors with greater or lesser voting power than other directors, that differentiation of voting power applies both in voting by the board of directors and in voting by committees of the board and in subcommittees, unless otherwise provided in the certificate of incorporation or bylaws.

Section 2. This amendment revises the specifications regarding the application of § 203, in order to accommodate ongoing changes in the structure and identification of securities trading markets, including recent changes in the configuration and status of securities trading markets administered by The NASDAQ Stock Market, Inc.

Section 3. The amendment to § 216(4) clarifies that, unless otherwise provided in the certificate of incorporation or the bylaws, a plurality vote (and not a majority of the quorum) is the vote required to elect directors where one or more classes or series of stock votes as a separate class or series on the election of directors.

Sections 4 through 9. The amendments to § 251 and § 255 eliminate the requirement that an agreement of merger or consolidation include a certification by the secretary or assistant secretary of the corporation that the agreement has been adopted by the requisite vote of the stockholders or members, as applicable, or otherwise approved in accordance with § 251 without a vote of the stockholders, if a certificate of merger or consolidation is filed in lieu of filing the agreement. The certification requirement for a Delaware corporation is also eliminated from § § 252, 254, 256, 257, 258, 263 and 264 by virtue of the cross-references to § 251 and § 255. Any certification required under other applicable law is not affected by the amendments to § 251 and § 255.

Section 10. The amendment to § 258(b) clarifies that the agreement of merger or consolidation must also be certified by each of the constituent foreign corporations in accordance with the laws under which each was formed.
Sections 11-12. These amendments revise the specifications regarding the application of § 262 and the availability of appraisal rights, in order to accommodate ongoing changes in the structure and identification of securities trading markets, including recent changes in the configuration and status of securities trading markets administered by The National Association of Securities Dealers, Inc.

Sections 13 and 16. The amendment to § 262(k) and an amendment to § 262(e) clarify the right of a stockholder who has demanded appraisal to withdraw that demand and receive the merger consideration at any time within 60 days after the effective date of the merger, even if a petition for appraisal has been filed, as long as that stockholder has not filed such a petition or otherwise joined the proceeding as a named party. Another amendment to § 262(e) enables beneficial holders of shares of stock held in street name to (i) file petitions for appraisal, and (ii) request a statement of shares with respect to which demands for appraisal have been received, in their own name rather than in the name of the stockholder of record.

Sections 14 and 15. These Sections amend the approach to awarding interest in appraisal proceedings, principally by establishing a presumption that interest is to be awarded for the period from the effective date of the merger until the date of payment of judgment, compounded quarterly and accruing at the rate of 5% over the Federal Reserve discount rate, giving effect to any variation in that rate during that period. The Court of Chancery may depart from this presumptive approach for good cause, in order, for example, to avoid an inequitable result such as rewarding, or insufficiently compensating for, improper delay of the proceeding or unreasonable or bad faith assertion of valuation claims. The amendments to § 262(h) also clarify that the Court of Chancery in appraisal proceedings does not determine the fair value of shares on its own initiative, and that appraisal proceedings are adversary proceedings to be litigated in accordance with generally applicable rules of the Court of Chancery.

Section 17. The amendment describes the effective time for the amendments.

Full Text available at: http://www.legis.state.de.us/LIS/lis144.nsf/vwLegislation/HB+160/$file/legis.html?open

Current Bill Status: May 8, 2007 Introduced and Assigned to Judiciary Committee in House.

SB 85

This Bill limits the cumulative successor asbestos-related liabilities of a corporation, in certain situations, to the fair market value of the total gross assets of the transferor determined as of the time of the merger or consolidation. The Bill’s application is limited to those cases where the merger or consolidation occurred prior to January 1, 1972 and only applies where the successor corporation did not produce, sell or distribute asbestos products after the merger or consolidation. The provisions of this Bill only apply to cases filed in Delaware courts, including federal courts seated in Delaware. 

Full Text available at: http://www.legis.state.de.us/LIS/lis144.nsf/vwLegislation/SB+85/$file/legis.html?open

Current Bill Status: April 26, 2007 Introduced and Apr 26, 2007 - Assigned to Executive Committee in Senate.

SB 95

An Act to Amend Title 6 of the Delaware Code relating to the Creation, Regulation, Operation and Dissolution of Domestic Limited Partnerships and the Registration and Regulation of Foreign Limited Partnerships.

Full Text available at: http://www.legis.state.de.us/LIS/lis144.nsf/vwLegislation/SB+95/$file/legis.html?open

Current Bill Status: May 3, 2007 in Senate Executive Committee.

SB 96

An Act to Amend Title 6 of the Delaware Code relating to the Creation, Regulation, Operation and Dissolution of Domestic Limited Liability Companies and the Registration and Regulation of Foreign Limited Liability Companies.

Full Text available at: http://www.legis.state.de.us/LIS/lis144.nsf/vwLegislation/SB+96/$file/legis.html?open

Current Bill Status: May 3, 2007 in Senate Executive Committee.

SB 98

An Act to Amend Title 6 of the Delaware Code relating to the Creation, Regulation, Operation and Dissolution of Domestic Partnerships and the Registration and Regulation of Foreign Limited Liability Partnerships.

Full Text available at: http://www.legis.state.de.us/LIS/lis144.nsf/vwLegislation/SB+98/$file/legis.html?open

Current Bill Status: May 3, 2007 in Senate Executive Committee.


Georgia

SB 234

To amend Title 14 of the Official Code of Georgia Annotated, relating to corporations, partnerships, and associations, so as to provide for the Secretary of State to collect a filing fee for certificates of conversion filed when a Georgia corporation, Georgia limited partnership, or Georgia limited liability company converts to a foreign corporation, foreign limited partnership, or foreign limited liability company, respectively; to provide that a certificate of conversion be filed with the Secretary of State to evidence a conversion; to allow a copy of a certificate of conversion be filed with the clerk of the superior court in any county in which a converting entity owns property; to provide for related matters; to repeal conflicting laws; and for other purposes. 

Full Text available at: http://www.legis.state.ga.us/legis/2007_08/fulltext/sb234.htm

Current Bill Status: May 3, 2007 sent to Governor.


Hawaii

HB 1307

Clarifies the business registration requirements for foreign nonprofit corporations and foreign limited liability companies.

Full Text available at: http://www.capitol.hawaii.gov/sessioncurrent/Bills/HB1307_HD2_.htm

Current Bill Status: May 8, 2007 sent to Governor.


Indiana

SB 553

Decreases certain filing fees charged by the secretary of state, if a document is filed electronically. 

Full Text available at: http://www.in.gov/legislative/bills/2007/SE/SE0553.1.html

Current Bill Status: April 25, 2007 Signed by Governor.


Maine

SB 608

An Act to update the Maine Business Corporation Act.

Full Text available at: http://janus.state.me.us/legis/LawMakerWeb/externalsiteframe.asp?ID=280024653&LD=1741&Type=1&SessionID=7

Current Bill Status: March 27, 2007 Bill referred to the Committee on Judiciary.


New York

A 7476

Requires public agencies to determine whether each corporation it intends to contract with is a delinquent corporation; requires the corporation to be active, registered, and in good standing with the department of state, insofar as legally required. 

Full Text available at: http://assembly.state.ny.us/leg/?bn=A07476&sh=t

Current Bill Status: April 17, 2007 introduced and referred to Ways and Means Committee.

A 7765

Denies tax benefits to any corporation that outsources any of its business to a
foreign entity or country.

Full Text available at: http://assembly.state.ny.us/leg/?bn=A07664&sh=t

Current Bill Status: April 23, 2007 introduced and referred to referred to Ways and Means Committee.

SB 3826/A 7892

Relates to shareholder votes in mutual companies.

Full Text available at: http://assembly.state.ny.us/leg/?bn=S03826&sh=t

Current Bill Status: March 16, 2007 Referred to Housing, Construction and Community Development.

SB 4663/A 5554


Provides that unless certificate of incorporation of nonprofit corporation provides otherwise, members of board and committees thereof may use teleconferencing.

Full Text available at: http://assembly.state.ny.us/leg/?bn=S04663&sh=t

Current Bill Status: April 20, 2007 introduced and referred to Corporations, Authorities and Commissions.

SB 4703

Determines annual filing fees for limited liability companies and partnerships at $100 per partner or member with a maximum of $25,000.

Full Text available at: http://assembly.state.ny.us/leg/?bn=S04703&sh=t

Current Bill Status: April 20, 2007 referred to Investigations and Government Operations.

SB 5210/A 6148

Establishes the 'business trust law' as a new consolidated law regulating domestic and foreign business trusts.

Full Text available at: http://assembly.state.ny.us/leg/?bn=S05210&sh=t

Current Bill Status: April 26, 2007 referred to Corporations, Authorities and Commissions.


Oregon

HB 2310

Establishes rights of judgment creditors and judgment debtors relating to distributional interests in limited liability companies. 

Full Text available at: http://www.leg.state.or.us/07reg/measures/hb2300.dir/hb2310.a.html

Current Bill Status: May 2, 2007 ordered Engrossed and printed.


Texas

SB 854/ HB 1737

Relating to business entities and associations. This Bill makes both technical and substantive amendments to the Code. The technical amendments (1) correct errors in the Code, (2) clarify certain provisions of the Code, (3) fill gaps in coverage of certain provisions of the Code, (4) clarify the transition rules for electing to be governed by the Code’s provisions versus the provisions of prior law, (5) eliminate certain redundant or antiquated provisions, and (6) conform the language of the Code to the language of its source statutes in certain instances where the Code’s language unintentionally deviated.

Substantive amendments that would be effected by this Bill include the following, with the affected section of the Bill in parenthetical: (a) enhanced flexibility for partnerships by creating new rights to cancel events requiring winding up when there are no limited partners, when all or substantially all assets have been sold and upon a request of a partner; (b) enhanced flexibility for nonprofit corporations by eliminating strict requirements for delivery of non-unanimous consents of directors and for setting a new record date for adjournment of a meeting of members; (c) additional logical information requirements for certificates of merger, conversion and exchange; (d) elimination of an outmoded statement required for a certificate of formation of a professional association; (e) addition of express authority for corporate director resignations that are irrevocable or take effect on a later date or specified event; and (f) enhanced flexibility for limited liability companies by creating a new right to cancel an event requiring winding up arising from the termination of membership of a company’s last remaining member.


Full Text available at: http://www.capitol.state.tx.us/tlodocs/80R/billtext/html/SB00854I.htm

Current Bill Status: May 8, 2007 having passed the House the Bill is introduced in the Senate.


Vermont

HB 544

Corporations; wage claims; piercing the corporate veil - This bill proposes to make officers, directors, or agents of a dissolved corporation that has not entered bankruptcy liable for unpaid wages as long as the officer, director, or agent has actively asserted substantial control over the management or financial affairs of the corporation. This bill would not extend liability beyond unpaid wages. 

Full Text available at: http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/intro/H-544.HTM

Current Bill Status: April 20, 2007 prefiled.


Virginia

SB 1286

This bill updates the Virginia Nonstock Corporation Act to make several provisions consistent with changes to the Virginia Stock Corporation Act that were enacted in 2005, based upon recent amendments to the Model Business Corporation Act. Specific areas of substantive change include setting forth procedures for the approval of a business opportunity; defining "disinterested director"; permitting several corporate actions to be taken electronically; updating provisions regarding member voting and elections; staggering the terms of directors; indemnifying directors and officers; streamlining the process for combining corporations with other types of business entities; asserting claims against dissolved corporations; and confirming that provisions in corporate documents filed with the State Corporation Commission may be made dependent on statistical or market indices or other objectively ascertainable facts. 

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?071+ful+CHAP0925

Current Bill Status: April 11, 2007 approved by Governor Acts of Assembly Chapter text (CHAP0925)


Washington

HB 1041

AN ACT Relating to plurality voting for directors; amending RCW 23B.08.030, 23B.08.050, 23B.08.070, 23B.08.100, and 23B.10.200; adding a new section to chapter 23B.10 RCW; and adding a new section to chapter 23B.07 RCW.

Full Text available at: http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bills/House%20Passed%20Legislature/1041-S.PL.pdf

Current Bill Status: April 22, 2007 delivered to Governor.

HB 1042

Modifying the share acquisition time period for engaging in a significant business transaction. Relating to business transactions; and amending RCW 23B.19.040. 

Full Text available at: http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bills/Session%20Law%202007/1042.SL.pdf

Current Bill Status: April 17, 2007 Signed into law by Governor with an effective date of July 22, 2007.


For an archive of NRAI Legislative Updates, visit www.nrai.com and select Research Center.


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