I hope you all are having a good summer. We’re at the part of the year where much of the crush of bills that were introduced in the first quarter have either become law or died. Even so we have a lot to report.

There are five Federal Bills reported below, which is a new high for this newsletter. Louisiana and North Carolina added Low-Profit Limited Liability Companies, or L3C’s to their statutes. Delaware passed four bills relating to corporate practice. Florida made a change to Article 7 of the UCC.

This newsletter covers both June and July, we’ll put out another in August.

Robert K. Rowell
General Counsel

Federal Legislation
SB 3380
A bill to amend the Internal Revenue Code of 1986 to provide for the treatment of securities of a controlled corporation exchanged for assets in certain reorganizations.

Full Text available here.
Current Bill Status: May 17, 2010, read twice and referred to the Committee on Finance.

HB 5328
To amend the Internal Revenue Code of 1986 to reduce international tax avoidance and restore a level playing field for American businesses.

Full Text available here.
Current Bill Status: May 18, 2010, referred to the House Committee on Ways and Means.

HB 5366
To require the proposal for debarment from contracting with the Federal Government of persons violating the Foreign Corrupt Practices Act of 1977.

Full Text available here.
Current Bill Status: May 20, 2010, referred to the House Committee on Oversight and Government Reform.

HB 5410
To amend the Federal Election Campaign Act of 1971 to prohibit corporations which are subject to certain criminal or civil sanctions from engaging in campaign-related activity under such Act, and for other purposes.

Full Text available here.
Current Bill Status: May 26, 2010, referred to the House Committee on House Administration.

HB 5437
To amend the Internal Revenue Code of 1986 to provide that the treatment of tenant-stockholders in cooperative housing corporations also shall apply to stockholders of corporations that only own the land on which the residences are located.

Full Text available here.
Current Bill Status: May 27, 2010, referred to the House Committee on Ways and Means.

California
HB 919
Corporations: political activities: shareholder objections.

Full Text available here.
Current Bill Status: June 16, 2010, in Senate, Banking and Finance Committee: Set second hearing. Failed passage.

Connecticut
HB 5530
An Act concerning the Connecticut Business Corporation Act.

Full Text available here.
Current Bill Status: May 10, 2010, signed by the Governor as Public Act 10-35.

Delaware
HB 372
This bill continues the practice of periodically amending the Delaware Limited Liability Company Act (the "Act") to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments of the Act. Section 1. This section amends § 18-101(7) of the Act to provide, in light of the decision of the Delaware Supreme Court in Olson v. Halvorsen, C.A. No. 1884 (Del. Supr. Dec. 15, 2009), that a limited liability company agreement is not subject to any statute of frauds.

Sections 2, 26, 27 and 28. Sections 2, 26, 27 and 28 amend §§ 18-105(b), 18-910(b), 18-911(a) and 18-911(c) of the Act to allow for service of process upon the Secretary of State thereunder by means of electronic transmission but only as prescribed by the Secretary of State, to authorize the Secretary of State to issue such rules and regulations with respect to such service as the Secretary of State deems necessary or appropriate, and to enable the Secretary of State, in the event that service is effected through the Secretary of State in accordance therewith, to provide notice of service by letter sent by a mail or courier service that includes a record of mailing or deposit with the courier and a record of delivery evidenced by the signature of the recipient.

Section 3. This section amends § 18-106 of the Act to confirm the broad powers of a limited liability company.

Sections 4, 6, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 20 and 30. These sections amend §§ 18-203, 18-206(a), 18-206(b), 18-206(d), 18-209(a), 18-209(b), 18-209(c), 18-209(d), 18-209(e), 18-209(f), 18-209, 18-210, 18-301(b) and 18-1105(a) of the Act to provide a mechanism to implement a short form merger under new Section 267 of Title 8 where a domestic limited liability company is the parent Entity (as defined in new Section 267(e)(2) of Title 8).

Section 5. This section amends § 18-204 of the Act to clarify, for purposes of the laws of the State of Delaware, when a power of attorney will be irrevocable, and the effects of such irrevocability.

Sections 12, 18 and 19. Sections 12, 18 and 19 amend §§ 18-209(c)(8), 18-213(b)(7), and 18-216(e)(7) of the Act to allow for service of process upon the Secretary of State thereunder by means of electronic transmission but only as prescribed by the Secretary of State, and to authorize the Secretary of State to issue such rules and regulations with respect to such service as the Secretary of State deems necessary or appropriate.

Section 21. This section amends § 18-305(f) of the Act to clarify both the categories of information that are within its scope and that the prescribed time period for responding to an information demand may be varied by a limited liability company agreement.

Section 22. This section amends § 18-305(g) of the Act to make it consistent with other sections of the Act and to clarify and confirm that all amendments are valid if adopted in the manner provided for in the limited liability company agreement.

Section 23. This section amends § 18-702(a) of the Act to confirm the circumstances in which an assignee of a limited liability company interest has the right to participate in the management of the business and affairs of a limited liability company.

Section 24. This section amends § 18-704(a) of the Act to confirm the circumstances in which an assignee of a limited liability company interest may become a member.

Section 25. This section amends § 18-902 of the Act to require that a foreign limited liability company registering with the Secretary of State must file a certificate, as of a date not earlier than 6 months prior to the filing date, issued by an authorized officer of the jurisdiction of its formation evidencing its existence, along with, if applicable, a translation thereof under oath.

Section 29. This section amends § 18-1101 of the Act to provide that a limited liability company agreement that provides for the application of Delaware law shall be governed by and construed under the laws of the State of Delaware in accordance with its terms. This amendment is not intended to negate the application of Delaware law to the interpretation and enforcement of a limited liability company agreement that does not explicitly provide for the application of Delaware law or to negate the application of the internal affairs doctrine to Delaware limited liability companies
.
Section 31. This section provides that the proposed amendments of the Act shall become effective August 2, 2010.

Follow this link to the Delaware Limited Liability Company Act:
http://delcode.delaware.gov/title6/c018/index.shtml

Current Bill Status: June 10, 2010, signed by Governor.

HB 373
** This bill continues the practice of periodically amending the Delaware Revised Uniform Limited Partnership Act (the "Act") to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments of the Act.

Section 1. This section amends § 17-101(12) of the Act to provide, in light of the decision of the Delaware Supreme Court in Olson v. Halvorsen, C.A. No. 1884 (Del. Supr. Dec. 15, 2009), which dealt with a limited liability company agreement, but may apply to a partnership agreement by analogy, that a partnership agreement is not subject to any statute of frauds.

Sections 2, 26, 27 and 28. Sections 2, 26, 27 and 28 amend §§ 17-105(b), 17-910(b), 17-911(a) and 17-911(c) of the Act to allow for service of process upon the Secretary of State thereunder by means of electronic transmission but only as prescribed by the Secretary of State, to authorize the Secretary of State to issue such rules and regulations with respect to such service as the Secretary of State deems necessary or appropriate, and to enable the Secretary of State, in the event that service is effected through the Secretary of State in accordance therewith, to provide notice of service by letter sent by a mail or courier service that includes a record of mailing or deposit with the courier and a record of delivery evidenced by the signature of the recipient.

Section 3. This section amends § 17-106 of the Act to confirm the broad powers of a limited partnership.

Sections 4, 5, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 21 and 30. Amend §§ 17-203, 17-204(a), 17-206(a), 17-206(b), 17-206(d), 17-211(a), 17-211(b), 17-211(c), 17-211(e), 17-211(f), 17-211(g), 17-211, 17-212, 17-301(b) and 17-1107(a) of the Act to provide a mechanism to implement a short form merger under new Section 267 of Title 8 where a domestic limited partnership is the parent Entity (as defined in new Section 267(e)(2) of Title 8).

Section 6. This section amends § 17-204 of the Act to clarify, for purposes of the laws of the State of Delaware, when a power of attorney will be irrevocable, and the effects of such irrevocability.

Sections 13, 19 and 20. Sections 13, 19 and 20 amend §§ 17-211(c)(8), 17-216(b)(7), and 17-219(e)(7) of the Act to allow for service of process upon the Secretary of State thereunder by means of electronic transmission but only as prescribed by the Secretary of State, and to authorize the Secretary of State to issue such rules and regulations with respect to such service as the Secretary of State deems necessary or appropriate.

Section 22. This section amends § 17-305(e) of the Act to clarify both the categories of information that are within its scope and that the prescribed time period for responding to an information demand may be varied by a partnership agreement.

Section 23. This section amends § 17-305(f) of the Act to make it consistent with other sections of the Act and to clarify and confirm that all amendments are valid if adopted in the manner provided for in the partnership agreement.

Section 24. This section amends § 17-704(a) of the Act to confirm the circumstances in which an assignee of a partnership interest may become a limited partner.

Section 25. This section amends § 17-902 of the Act to require that a foreign limited partnership registering with the Secretary of State must file a certificate, as of a date not earlier than 6 months prior to the filing date, issued by an authorized officer of the jurisdiction of its formation evidencing its existence, along with, if applicable, a translation thereof under oath.

Section 29. This section amends § 17-1101 of the Act to provide that a partnership agreement that provides for the application of Delaware law shall be governed by and construed under the laws of the State of Delaware in accordance with its terms. This amendment is not intended to negate the application of Delaware law to the interpretation and enforcement of a partnership agreement that does not explicitly provide for the application of Delaware law or to negate the application of the internal affairs doctrine to Delaware limited partnerships.

Section 31. This section provides that the proposed amendments of the Act shall become effective August 2, 2010.

Follow this link to the Delaware Revised Uniform Limited Partnership Act: http://delcode.delaware.gov/title6/c017/index.shtml

Current Bill Status: June 10, 2010 signed by Governor.

HB 374
** This bill continues the practice of periodically amending the Delaware Revised Uniform Partnership Act (the "Act") to keep it current and to maintain its national preeminence. The following is a section-by-section review of the proposed amendments of the Act.

Sections 1, 3, 6, 11, 12, 13, 14, 15, 16, 17 and 18. Sections 1, 3, 6, 11, 12, 13, 14, 15, 16, 17 and 18 amend §§ 15-102(2), 15-105(d), 15-120, 15-902(a), 15-902(b), 15-902(c), 15-902(e), 15-902(f), 15-902(g), 15-902(k) and 15-902 of the Act to provide a mechanism to implement a short form merger under new Section 267 of Title 8 where a domestic partnership is the parent Entity (as defined in new Section 267(e)(2) of Title 8).

Section 2. This section amends § 15-101(12) of the Act to provide, in light of the decision of the Delaware Supreme Court in Olson v. Halvorsen, C.A. No. 1884 (Del. Supr. Dec. 15, 2009), which dealt with a limited liability company agreement, but may apply to a partnership agreement by analogy, that a partnership agreement is not subject to any statute of frauds.

Sections 4 and 5. Sections 4 and 5 amend §§ 15-112(b) and 15-113(b) of the Act to allow for service of process upon the Secretary of State thereunder by means of electronic transmission but only as prescribed by the Secretary of State, to authorize the Secretary of State to issue such rules and regulations with respect to such service as the Secretary of State deems necessary or appropriate, and to enable the Secretary of State, in the event that service is effected through the Secretary of State in accordance therewith, to provide notice of service by letter sent by a mail or courier service that includes a record of mailing or deposit with the courier and a record of delivery evidenced by the signature of the recipient.

Section 7. This section amends the Act to add a new § 15-123 of the Act to clarify, for purposes of the laws of the State of Delaware, when a power of attorney will be irrevocable, and the effects of such irrevocability.

Section 8. This section amends § 15-202 of the Act to confirm the broad powers of a partnership.

Section 9. This section amends § 15-403(e) of the Act to clarify both the categories of information that are within its scope and that the prescribed time period for responding to an information demand may be varied by a partnership agreement.

Section 10. This section amends § 15-403(f) of the Act to make it consistent with other sections of the Act and to clarify and confirm that all amendments are valid if adopted in the manner provided for in the partnership agreement.

Section 19. This section amends § 15-1102(a) of the Act to require that a foreign limited liability partnership registering with the Secretary of State must file a certificate, as of a date not earlier than 6 months prior to the filing date, issued by an authorized officer of the jurisdiction of its formation evidencing its existence, along with, if applicable, a translation thereof under oath.

Section 20. This section provides that the proposed amendments of the Act shall become effective August 2, 2010.

Follow this link to the Delaware Revised Uniform Partnership Act: http://delcode.delaware.gov/title6/c015/index.shtml

Current Bill Status: June 10, 2010, signed by Governor.

HB 375
Sections 1-3 and 16-17. These sections amend Sections 104, 111(a)(6), 114(b)(2), 262(b)(3), and 262(d)(2), respectively, to reflect new Section 267. Section 4. This section amends Section 132(b) to clarify that such subsection applies to registered agents for both domestic corporations and foreign corporations. Section 5. The amendment to Section 145(d) clarifies that the second sentence of the subsection, which requires that a determination that indemnification is proper be made by one of the specified decision-making bodies in certain circumstances, applies when the person requesting indemnification is a director or officer of the corporation at the time of such determination (as opposed to when a person requesting indemnification is not a director or officer of the corporation at such time but is serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise). Section 6. The amendment to Section 145(e) clarifies that the first sentence of Section 145(e) is intended to apply to advancement of expenses to present officers and directors of the corporation providing the advancement (and not to advancement to persons serving at the request of the corporation as officers and directors of another corporation, partnership, joint venture, trust or other enterprise) and further clarifies that expenses may be advanced to persons serving at the request of the corporation as directors, officers, employees or agents of another corporation, partnership, joint venture, trust or other enterprise upon such terms and conditions, if any, as the corporation deems appropriate. Section 7. This amendment to Section 242(b) clarifies that the decision to include either a copy or a summary of a proposed amendment to the certificate of corporation in a notice of a stockholder meeting need not be approved by a specific act of the board of directors. The amendment is not intended to define or limit any duty of directors relating to disclosure to stockholders in connection with the transaction. Sections 8, 10-11, 14, 18, and 20. These sections amend Sections 251(b)(3), 251(c)(4), 252(c)(4), 254(d)(4), 263(c)(4), and 264(c)(4), respectively, to clarify that in a merger the certificate of incorporation of the surviving corporation may be amended and restated in its entirety. Section 9. This amendment to Section 251(c) clarifies that the decision to include either a copy or a summary of an agreement of merger or consolidation in a notice of a stockholder meeting need not be approved by a specific act of the board of directors. The amendment is not intended to define or limit any duty of directors relating to disclosure to stockholders in connection with the transaction. Sections 12, 15, 19, 21-22, 27, and 30-35. These sections amend Sections 252(d), 256(d), 263(d), 264(d), 266(c)(6), 321(b), 376(b), 381(c), 381(d), 382(a), 382(c), and 390(b)(5),

Follow this link to the Delaware General Corporation Law:
http://delcode.delaware.gov/title8/c001/index.shtml

Current Bill Status: June 10, 2010, signed by Governor.

Florida
HB 731
Uniform Commercial Code [CPSC]; Revises & provides provisions of Florida Uniform Commercial Code relating to electronic documents of title, warehouse receipts, bills of lading, & other documents of title to conform to revised Article 7 of Uniform Commercial Code as prepared by National Conference of Commissioners on Uniform State Laws. Effective Date: 07/01/2010.

Full Text available here.
Current Bill Status: May 27, 2010, approved by Governor as Chapter No. 2010-131.

Full Text available here.
Current Bill Status: July 2, 2010, approved by Governor and effective July 2, 2010.

SB 3387
Amends the General Not For Profit Corporation Act of 1986. Provides that unless otherwise provided in the articles of incorporation or the bylaws, any action required by the Act to be taken at any annual or special meeting of the members entitled to vote, or any other action which may be taken at a meeting of members entitled to vote, may also be taken without a meeting and without a vote if a consent in writing, setting forth the action so taken, shall be approved by all the members entitled to vote. In connection with informal action taken by the directors, requires that a consent to such action be approved in writing (instead of signed) by all the directors. In provisions concerning a director's conflict of interest, provides that if a director is an officer or director of both parties to a transaction involving a grant or contribution, without consideration, from one entity to the other, that director is not "indirectly" a party to the transaction provided the director does not have a material financial interest in the entity that receives the grant or contribution (replacing an existing similar provision). Effective immediately.

Full Text available here.
Current Bill Status: July 2, 2010, approved by the Governor and effective July 2, 2010.

Full Text available here.
Current Bill Status: June 28, 2010, signed by the Governor. Becomes Act No. 417. Effective date: August 15, 2010.


HB 1488
An Act to amend and reenact R.S. 24:513(A)(1)(b)(iv), relative to not-for-profit organizations; to provide relative to the powers and duties of the legislative auditor; to provide for definitions; and to provide for related matters.

Full Text available here.
Current Bill Status: July 8, 2010, signed by the Governor. Becomes Act No. 1045 Effective date: August 15, 2010.

Michigan
SB 1366
Campaign finance; violations; improper independent expenditures by a corporation; hold officers and shareholders liable in certain circumstances.

Full Text available here.
Current Bill Status: June 2, 2010, referred to Committee on Campaign and Election Oversight.

Full Text available here.
Current Bill Status: May 26, 2010, signed by Governor as Chapter 105

Full Text available here.
Current Bill Status: June 10, 2010, introduced, referred to Assembly Commerce and Economic Development Committee.


HB 2809/S914
Allows professional corporations to use or register an alternate name; allows use of certain abbreviations in certain business names; updates references for certain State business filings.

Full Text available here.
Current Bill Status: June 10, 2010, introduced, referred to Assembly Commerce and Economic Development Committee.


SB 2170
An Act concerning benefit corporations and supplementing Title 14A of the New Jersey Statutes.

Full Text available here.
Current Bill Status: July 1, 2010, introduced in the Senate, Referred to Senate Commerce Committee.

Full Text available here.
Current Bill Status: June 9, 2010, referred to Committee on Cities.


SB 8330
Allows a professional service limited liability company to be the surviving business entity in the case of a merger with a professional service corporation.

Full Text available here.
Current Bill Status: June 23, 2010, referred to Rules Committee.

Full Text available here.
Current Bill Status: July 9, 2010, to the Governor.

Full Text available here.
Current Bill Status: June 7, 2010, approved by the Governor

Rhode Island
HB 8124
An Act relating to Corporations, Associations and Partnerships -- Limited Liability Corporation. This act would provide that when a limited liability corporation whose charter has been revoked is reinstated, title to or interest in any real estate of the corporation is deemed revested in the corporation unless conveyed subsequent to the revocation.This act would take effect upon passage.

Full Text available here.
Current Bill Status: June 8, 2010, House Corporations Committee recommended measure be held for further study.

HB 8125
An Act relating to Corporations, Associations and Partnerships - The Rhode Island Limited Liability Company Act. (would provide that when a limited liability corporation whose charter has been revoked is reinstated, title to or interest in any real estate of the corporation is deemed revested in the corporation unless conveyed subsequent to the revocation.)

Full Text available here.
Current Bill Status: June 8, 2010, House Corporations Committee recommended measure be held for further study.

Full Text available here.
Current Bill Status: Signed by the Governor June 15, 2010, with an effective date June 8, 2010, as Act No. 220.

Full Text available here.
Current Bill Status: June 7, 2010, became Pub. Ch. 1007.