New Laws in Multiple States Aim to Strengthen Corporate Regulations and Protect Shareholders

Colorado – Senate Bill 22-034, effective February 1, 2023, introduced new measures to counteract fraudulent business documents filed with the Colorado Secretary of State. The bill amended the Corporations and Associations Act to address this issue. Additionally, Senate Bill 23-1297, effective August 7, 2023, stated that corporations in Colorado cannot issue a scrip in bearer form without surrendering enough scrip to equal a full share.

Delaware – Senate Bill 110, effective August 1, 2023, amended Delaware’s corporation and LLC laws by increasing the courthouse municipality fee from $20 to $40. Another bill, Senate Bill 112, also effective August 1, 2023, made changes to the LP law related to the execution of documents, merger and consolidation, partnership interest subscriptions, and more. Similarly, Senate Bill 113, effective August 1, 2023, amended the LLC law in Delaware regarding execution of documents, merger and consolidation, fees, and the annual tax. Senate Bill 114, also effective August 1, 2023, brought amendments to the General Corporation Law pertaining to stock issuance, corporate powers, and other related matters. Lastly, Senate Bill 115, effective August 1, 2023, modified the partnership law in Delaware in areas such as partnership subscriptions, definitions, and merger and consolidation.

In a notable legal case, In re McDonald’s Corporation Stockholder Derivative Litigation, the Delaware Chancery Court established that corporate officers have a duty of oversight. This ruling confirmed that officers carry the same fiduciary duties as directors, including the duty of oversight.

Georgia – Senate Bill 148, effective July 1, 2023, made several amendments to the Nonprofit Corporation Code in Georgia. These changes addressed the duties of the Secretary of State, execution of documents, definitions, member and director meetings, voting, actions without a meeting, and more.

Indiana – House Bill 1581, effective July 1, 2023, introduced amendments to Indiana’s business organization laws. The changes encompassed definitions applicable to agricultural cooperatives, articles of organization for agricultural cooperatives, revocations of agricultural cooperatives and business trusts, and the addition of members to solely owned LLCs.

Iowa – House Bill 655, effective January 1, 2024, restructured and renamed Iowa Code chapter 489, previously the Revised Uniform Limited Liability Company Act, to the Uniform Limited Liability Company Act. The revised law covered various topics, including the duty of loyalty and care of members and managers, charging orders, prevention of dissolution by adding new members, and distributions during LLC winding up.

Kansas – Senate Bill 244, effective July 1, 2023, amended the general corporation code in Kansas. The changes focused on electronic transmissions and signatures, emergency bylaws, indemnification, stock certificates, business combinations, mergers, dissolution, revival, and the contents of annual reports for various entities.

Louisiana – House Bill 395, effective August 1, 2023, introduced amendments to Louisiana’s business entity laws. The changes included requirements for partnership contracts to be written in English when filed with the Secretary of State, acknowledgments or authentic acts for certain documents, alternative supporting documents for foreign corporations, and satisfaction of criteria for using professional status indicators in an LLC’s name.

Maryland – House Bill 999, effective July 1, 2023, repealed provisions that required certain reports on personal property to be filed for the acceptance of articles of dissolution and issuance of a certificate of termination for certain corporations with the State Department of Assessments and Taxation. Additionally, House Bill 209, effective October 1, 2023, amended the Corporations and Associations Code in Maryland regarding stock certificates, conversions, remote communication for meetings, ex officio directors in nonstock corporations, and the termination of a REIT.

Massachusetts – House Bill 58, effective March 31, 2023, amended the Business Corporations and Corporations for Charitable and Certain Other Purposes laws in Massachusetts. The changes allowed public corporations and nonprofit corporations to hold shareholder or member meetings solely through remote communication.

This is just a selection of the legislative changes that have taken place in various states. It is important for businesses and individuals to stay informed about these updates to ensure compliance with relevant laws and regulations.