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House Bill 1009, effective January 1, 2020, substantially revises the Florida Business Corporation Act. The new law is based on the current version of the Revised Model Business Corporation Act. Nearly every section of Florida’s business corporation law is revised. In some cases the revisions are intended to adopt the language and structure of the Model Act rather than making substantive changes. However, there are many substantive changes as well.
Below are some highlights from the revised Florida Business Corporation Act. All citations are to the sections of Chapter 607 of the Florida Statutes in effect on and after January 1, 2020 (the new law).
The provisions governing incorporation are substantially the same as before. Articles of Incorporation are filed with the Department of State. (Secs. 607.0201, 607.0202) A corporation must designate and maintain a registered agent and office. (Sec. 607.0501)
Under the new law, as under the old law, a name must be distinguishable from the names of other entities on file with the Department of State. However, the new law permits registration under a name that is not otherwise distinguishable (but that is not identical) with the consent of the other entity. (Sec. 607.0401)
The new law contains a provision under which a person may reserve a corporate name for a nonrenewable 120-day term. (Sec. 607.04021)
Corrections to filed documents may now be made at any time. (Sec. 607.0124) Previously, corrections had to be filed within 30 days of filing the document to be corrected.
The new law provides that the Articles of Incorporation or bylaws may include a provision requiring internal corporate claims to be brought exclusively in any specified Florida court, and if specified, any additional courts in other jurisdictions with which the corporation has a reasonable relationship. (However, it may not prohibit bringing such claims in Florida.) (Secs. 607.0202, 607.0206, 607.0208)
The new law prohibits the Articles of Incorporation or bylaws from imposing liability on shareholders for attorney fees and expenses of the corporation or another party in connection with an internal corporate claim. (Secs. 607.0202, 607.0206)
The new law provides that the bylaws may contain a provision requiring a corporation that solicits proxies or consents in connection with an election of directors to include shareholder nominees for the board of directors in its proxy or consent materials and/or to reimburse a shareholder’s expenses in soliciting proxies or consents. (Sec. 607.0206)
The new and old laws allow shareholders to enter into unanimous agreements that govern the exercise of corporate powers, management of the business and affairs, and relations between and among the shareholders, directors, and corporation. However, the old law limited such agreements to corporations with no more than 100 shareholders. The new law eliminates the 100 shareholder limit. (Sec. 607.0732)
Committees may now consist of one or more directors (formerly, two or more). The new law also expands the authority and powers of committees. (Sec. 607.0825)
Under the new law a shareholder bringing a derivative suit may allege the reasons the shareholder did not make an effort to obtain the desired action from the board of directors. (Sec. 607.0742) The old law had a “universal demand” requirement in which the shareholder had to allege that a demand was made on the board.
The new law provides that if the board of directors is authorized to determine the place of a shareholders’ meeting, the board may determine that the meeting be held solely by means of remote communication. (Sec. 607.0709)
The new law provides a procedure in which the back end merger of a two-step acquisition consisting of a tender offer and merger may be effected without shareholder approval of the plan of merger. (Sec. 607.11035)
The new law contains a domestication procedure whereby a domestic corporation may become a foreign corporation and a foreign corporation may become a domestic corporation. (Secs. 607.11921 through 607.11924)
A court is permitted under the new law to appoint receivers, custodians, or provisional directors as alternatives to ordering judicial dissolution in the case of a management deadlock. (Secs. 607.0748, 607.0749)
Those are just some of the provisions of the revised Florida Business Corporation Act that may be of interest to lawyers, directors, officers, and shareholders of Florida corporations. They may wish to review the entire statute to, among other things, make sure their corporations are in compliance with any new requirements or restrictions, to gain awareness of new transactions and powers, and to determine if any amendments to the Articles of Incorporation or bylaws should be made to take advantage of some of the new clauses that the law authorizes.
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