Bill Text: IA SSB3083 | 2021-2022 | 89th General Assembly | Introduced

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Bill Title: A bill for an act relating to corporations by providing for the use of electronic mail and other electronic transmissions, and shareholders' lists.(See SF 2303.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2022-02-15 - Committee report approving bill, renumbered as SF 2303. [SSB3083 Detail]

Download: Iowa-2021-SSB3083-Introduced.html

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Senate Study Bill 3083 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE
ON JUDICIARY BILL BY
CHAIRPERSON ZAUN)
A BILL FOR
An Act relating to corporations by providing for the use of
electronic mail and other electronic transmissions, and
shareholders’ lists.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
SHAREHOLDER NOTICES, LISTS, AND RECORDS
Section 1. Section 490.140, Code 2022, is amended by adding
the following new subsections:
NEW SUBSECTION . 12A. “Electronic mail” means an electronic
transmission directed to a unique electronic mail address.
NEW SUBSECTION . 12B. “Electronic mail address” means a
destination, commonly expressed as a string of characters,
consisting of a unique user name or mailbox, commonly referred
to as the “local part” of the address, and a reference to an
internet domain, commonly referred to as the “domain part” of
the address, whether or not displayed, to which electronic mail
may be sent or delivered.
Sec. 2. Section 490.141, Code 2022, is amended to read as
follows:
490.141 Notices and other communications.
1. A notice under this chapter must be in writing unless
oral notice is reasonable in the circumstances. Unless
otherwise agreed between the sender and the recipient, words
in a notice or other communication under this chapter must be
in English.
2. A notice or other communication may be given by
any method of delivery, except that a notice or other
communication by electronic transmissions transmission must be
in accordance with this section . If the methods of delivery
are impracticable, a notice or other communication from a
corporation may be given by means of a broad nonexclusionary
distribution to the public, which may include a newspaper
of general circulation in the area where published; radio,
television, or other form of public broadcast communication;
or other methods of distribution that the corporation has
previously identified to its shareholders.
3. A notice or other communication to a domestic corporation
or to a registered foreign corporation registered to do
business in this state may be delivered to the corporation’s
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registered agent at its registered office or to the secretary
at the corporation’s principal office shown in its most recent
biennial report required by section 490.1621 or, in the case
of a foreign corporation that has not yet delivered a biennial
report, in its foreign registration statement.
4. A notice or other communication from a corporation
to a shareholder may be delivered by electronic mail to the
electronic mail address for a shareholder required to be
included in the record of shareholders maintained pursuant
to section 490.1601, subsection 4, unless the shareholder
has previously notified the corporation in writing that
the shareholder objects to receiving notices and other
communication by electronic mail. Any notice or other
communication may be delivered to a shareholder by another form
of electronic transmission if consented to by the shareholder
or if authorized by subsection 10. Any notice or other
communication from the corporation to any other person may be
delivered by electronic transmission if consented to by the
recipient or if authorized by subsection 10 .
5. Any consent given under this subsection 4 or subsection
10 may be revoked with respect to future notices or
communications by the person who consented by giving written
or electronic notice to the person to whom the consent was
delivered. Any such consent is deemed revoked
5. A notice or other communication shall no longer be
delivered to an electronic mail address or other electronic
transmission address pursuant to subsection 4, if all of the
following apply:
a. The corporation is unable to deliver two consecutive
electronic transmissions given by the corporation in
accordance with such consent receives notice from the
information processing system into which such notice or other
communication was entered that two consecutive notices or
other communications given by electronic transmission have
not been delivered to the electronic mail address or other
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electronic transmission address to which such notice or other
communication was directed .
b. Such inability notice of nondelivery becomes known to the
secretary , or an assistant secretary or to the transfer agent,
or other another person responsible for the giving of notice
notices or other communications for the corporation ; provided,
however, that the inadvertent failure to treat such inability
as a revocation recognize such notice of nondelivery as a
cessation of authority to provide a shareholder with notice
by electronic mail or other electronic transmission shall not
invalidate any meeting or other action.
6. Unless otherwise agreed between the sender and the
recipient, an a notice or other communication by electronic
transmission is received when all of the following apply:
a. The electronic transmission enters an information
processing system that the recipient has designated or uses
for the purposes of receiving electronic transmissions or
information of the type sent, and from which the recipient is
able to retrieve the directed to any of the following:
(1) In the case of a shareholder, the electronic mail
address for the shareholder required to be included in the
record of shareholders maintained pursuant to section 490.1601,
subsection 4, or other electronic transmission address at
which the shareholder has consented to receive notice or other
communications by electronic transmission .
(2) In the case of any other recipient, the electronic
transmission address at which the recipient has consented
to receive notice or other communications by electronic
transmission.
b. The electronic transmission is in a form capable of being
processed by that system.
7. Receipt of an electronic acknowledgment from an
information processing system described in subsection 6 ,
paragraph “a” , establishes that an electronic transmission was
received but, by itself, does not establish that the content
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sent corresponds to the content received.
8. An electronic transmission is received under this
section even if no person is aware of its receipt.
9. A notice or other communication, if in a comprehensible
form or manner, is effective at the earliest of the following:
a. If in a physical form, the earliest of when it is
actually received, or when it is left at any of the following:
(1) A shareholder’s address shown on included in the
corporation’s record of shareholders maintained by the
corporation under pursuant to section 490.1601, subsection 4 .
(2) A director’s residence or usual place of business.
(3) The domestic or registered foreign corporation’s
principal office.
b. If mailed by United States mail postage prepaid and
correctly addressed to a shareholder at the shareholder’s
address included in the record of shareholders pursuant to
section 490.1601, subsection 4 , upon deposit in the United
States mail.
c. If mailed by United States mail postage prepaid and
correctly addressed to a recipient other than a shareholder, at
the address included in the corporation’s records the earliest
of when it is actually received, or as follows:
(1) If sent by registered or certified mail, return receipt
requested, the date shown on the return receipt signed by or on
behalf of the addressee.
(2) Five days after it is deposited in the United States
mail.
d. If an electronic transmission, when it is received as
provided in subsection 6 .
e. If oral, when communicated.
10. A notice or other communication may be in the form of
an electronic transmission that cannot be directly reproduced
in paper form by the recipient through an automated process
used in conventional commercial practice only if all of the
following apply:
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a. The electronic transmission is otherwise retrievable in
perceivable form.
b. The sender and the recipient have consented in writing to
the use of such form of electronic transmission.
11. If this chapter prescribes requirements for notices
or other communications in particular circumstances, those
requirements govern. If articles of incorporation or bylaws
prescribe requirements for notices or other communications,
not inconsistent with this section or other provisions of
this chapter , those requirements govern. The articles of
incorporation or bylaws may authorize or require delivery of
notices of meetings of directors by electronic transmission.
12. In the event that any provisions of this chapter are
deemed to modify, limit, or supersede the federal Electronic
Signatures in Global and National Commerce Act, 15 U.S.C.
§§7001 §7001 et seq., the provisions of this chapter shall
control to the maximum extent permitted by section 102(a)(2) of
that federal Act.
13. a. Whenever notice would otherwise be required to
be given under any provision of this subchapter chapter
to a shareholder, such the notice need not be given if the
corporation is not permitted to deliver notice by electronic
transmission pursuant to subsections 4 and 5 and any of the
following apply:
(1) Notices to the shareholders of two consecutive annual
meetings, and all notices of meetings during the period
between such two consecutive annual meetings, have been sent
to such shareholder at such shareholder’s address as shown
on the records of the corporation included in the record
of shareholders maintained pursuant to section 490.1601,
subsection 4, and have been returned undeliverable or could not
be delivered.
(2) All, but not less than two, payments of dividends on
securities during a twelve-month period, or two consecutive
payments of dividends on securities during a period of more
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than twelve months, have been sent to such shareholder at
such shareholder’s address as shown on the records of the
corporation included in the record of shareholders maintained
pursuant to section 490.1601, subsection 4, and have been
returned undeliverable or could not be delivered.
(3) No address has been provided to the corporation by or on
behalf of a shareholder and the corporation has not otherwise
obtained an address for the shareholder that the corporation
believes is reliable.
b. If In addition, if any such shareholder shall deliver
to which this subsection applies delivers to the corporation a
written notice setting forth such shareholder’s then-current
address, the requirement that notice be given to such
shareholder shall be reinstated.
Sec. 3. Section 490.720, Code 2022, is amended to read as
follows:
490.720 Shareholders’ list List of shareholders for meeting.
1. After fixing a record date for a meeting, a corporation
shall prepare an alphabetical list of the names of all its the
shareholders who are entitled to notice of a the shareholders’
meeting. If the board of directors fixes a different record
date under section 490.707, subsection 5 , to determine the
shareholders entitled to vote at the meeting, a corporation
also shall prepare an alphabetical list of the names of
all its the shareholders who are entitled to vote at the
meeting. A The list must be arranged by voting group , and
within each voting group by class or series of shares, and
show contain the address of , and number and class or series
of shares held by , each shareholder . Nothing contained in
this subsection shall require and, if the notice or other
communications regarding the meeting has been or will be sent
by the corporation to include on such list the a shareholder by
electronic mail address or other electronic contact information
of a transmission, the electronic mail or other electronic
transmission address of that shareholder.
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2. a. The shareholders’ list for of shareholders entitled
to notice shall be available for inspection by any shareholder,
beginning two business days after notice of the meeting is
given for which the list was prepared and continuing through
the meeting. The shareholders’ list list of shareholders for
notice shall be made available at via any of the following:
(1) The At the corporation’s principal office or at a place
identified in the meeting notice in the city where the meeting
will be held.
(2) A On a reasonably accessible electronic network,
provided that the information required to gain access to such
list is provided with the notice of the meeting. The list of
shareholders entitled to vote shall be similarly available
for inspection promptly after the record date for voting. In
the event that the corporation determines to make the list
available on an electronic network, the corporation may take
reasonable steps to ensure that such information is available
only to shareholders of the corporation.
b. A shareholders’ list for voting shall be similarly
available for inspection promptly after the record date for
voting. A shareholder, or the shareholder’s agent or attorney,
is entitled on written demand to inspect and, subject to the
requirements of section 490.1602, subsection 3 , to copy a
list of shareholders , during regular business hours and at
the shareholder’s expense, during the period it is available
for inspection. A corporation may satisfy the shareholder’s
right to copy a list of shareholders by furnishing a copy
in the manner described in section 490.1603, subsection 2.
A shareholder and the shareholder’s agent or attorney who
inspects or is furnished a copy of a list of shareholders under
this subsection or under subsection 3 or who copies the list
under this subsection may use the information on that list only
for purposes related to the meeting and its subject matter and
must keep the information on that list confidential.
3. If the meeting is to be held at a place, the corporation
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shall make the list of shareholders entitled to vote available
at the meeting and any adjournment , and any shareholder, or the
shareholder’s agent or attorney, is entitled to inspect the
list at any time during the meeting or and any adjournment.
If the meeting is to be held solely by means of remote
communication, then such list shall also be open to available
for such inspection during the meeting and any adjournment on a
reasonably accessible electronic network, and the information
required to access such list shall be provided with the notice
of the meeting. The corporation may satisfy its obligation
to make such list available for inspection during a meeting
by furnishing a copy of the list in the manner described in
section 490.1603, subsection 2, to the shareholders prior to
the meeting.
4. If the corporation refuses to allow a shareholder, or
the shareholder’s agent or attorney, to inspect a shareholders’
list of shareholders before or at the meeting or any
adjournment , or copy a list as permitted by subsection 2 , the
district court of the county where a corporation’s principal
office or, if none in this state, its registered office, is
located, on application of the shareholder, may summarily order
the inspection or copying at the corporation’s expense and may
postpone the meeting for which the list was prepared until the
inspection or copying is complete.
5. Refusal or failure to prepare or make available the
shareholders’ list of shareholders does not affect the validity
of action taken at the meeting.
Sec. 4. Section 490.1601, subsection 4, Code 2022, is
amended to read as follows:
4. A corporation shall maintain a record of its current
shareholders in alphabetical order by class or series of shares
showing the address of , and the number and class or series of
shares held by, each shareholder to which notices and other
communications from the corporation are to be sent, and which
shall include the number and class or series of shares held by
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each such shareholder . Nothing contained in this subsection
shall require the corporation to include in such record the
electronic mail address or other electronic contact information
of In addition, if a shareholder has provided an electronic
mail address to the corporation or has consented to receive
notices or other communications by electronic mail or other
electronic transmission, the record of shareholders shall
include the electronic mail or other electronic transmission
address of the shareholder if notices or other communications
are being delivered by the corporation to the shareholder at
such electronic mail or other electronic transmission address
pursuant to section 490.141, subsection 4. An electronic
mail address of a shareholder shall be deemed to be provided
by a shareholder if the electronic mail address is contained
in a communication to the corporation by or on behalf of
the shareholder unless the communication expressly indicates
that the electronic mail address shall not be used to deliver
notices or other communications .
DIVISION II
GRAMMATICAL CHANGES
Sec. 5. Section 490.140, subsection 57, Code 2022, is
amended to read as follows:
57. “United States” includes a district, authority, bureau,
commission, department, and any other agency of the United
States.
Sec. 6. Section 490.143, subsection 1, paragraph e,
subparagraph (2), Code 2022, is amended to read as follows:
(2) Has a material relationship with a director or officer
who pursues or takes advantage of the business opportunity,
directly , or indirectly through or on behalf of another person.
Sec. 7. Section 490.1704, subsection 4, Code 2022, is
amended to read as follows:
4. Unless otherwise provided in the articles of
incorporation, the violation by a director of the duties
imposed by subsections 1 and 2 shall not constitute an
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intentional infliction of harm on the corporation or the
shareholders for the purposes of sections section 490.202,
subsection 2 , paragraphs “d” and “e” .
DIVISION III
TERMINOLOGY CHANGES
Sec. 8. Section 490.120, subsection 5, Code 2022, is amended
to read as follows:
5. The document must be in the English language. A
corporate name need not be in English if written in English
letters or Arabic or Roman numerals, and the certificate of
existence registration required of foreign corporations need
not be in English if accompanied by a reasonably authenticated
English translation.
Sec. 9. Section 490.401, subsection 2, paragraphs c and e,
Code 2022, are amended to read as follows:
c. The name of a registered foreign corporation registered
to do business in this state or an alternate name adopted by
a registered foreign corporation registered to do business in
this state because its corporate name is unavailable.
e. The name of a foreign nonprofit corporation registered
authorized to do business in this state or an alternate
name adopted by a foreign nonprofit corporation registered
authorized to conduct activities in this state because its real
name is unavailable.
Sec. 10. Section 490.401, subsection 4, unnumbered
paragraph 1, Code 2022, is amended to read as follows:
A corporation may use the name, including the fictitious
name, of another domestic or foreign corporation that is used
in this state if the other corporation is incorporated or
authorized registered to transact do business in this state
and the proposed user corporation submits documentation to the
satisfaction of the secretary of state establishing any of the
following conditions:
Sec. 11. Section 490.748, subsection 3, Code 2022, is
amended to read as follows:
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3. The district court may appoint an individual or domestic
or registered foreign corporation , registered to do business
in this state, as a custodian or receiver and may require the
custodian or receiver to post bond, with or without sureties,
in an amount the district court directs.
Sec. 12. Section 490.922, subsection 5, Code 2022, is
amended to read as follows:
5. If the domesticating corporation is a registered
foreign corporation that is registered to do business in this
state under subchapter XV , its registration statement shall
be canceled automatically when the domestication becomes
effective.
Sec. 13. Section 490.1511, subsection 4, Code 2022, is
amended to read as follows:
4. The registration of a registered foreign corporation
to do business in this state ceases on the effective date
of the termination as set forth in the certificate of
termination, unless before that date the foreign corporation
cures each ground for termination stated in the certificate of
termination. If the foreign corporation cures each ground, the
secretary of state shall file a statement that the certificate
of termination is withdrawn.
Sec. 14. Section 490.1621, subsection 4, Code 2022, is
amended to read as follows:
4. The first biennial report shall be delivered to the
secretary of state between January 1 and April 1 of the first
even-numbered year following the calendar year in which a
domestic corporation was incorporated or a foreign corporation
was authorized to transact registered to do business in this
state . Subsequent biennial reports must be delivered to
the secretary of state between January 1 and April 1 of the
following even-numbered calendar years. For purposes of this
section , each biennial report shall contain information related
to the two-year period immediately preceding the calendar year
in which the report is filed.
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EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
BACKGROUND. This bill amends provisions in the Iowa
business corporation Act (IBCA) (Code chapter 490) as
revised in HF 844 (2021 Iowa Acts, chapter 165) based on
recommendations by the American bar association and published
as the 2016 revised version of the “Model Business Corporation
Act” (MBCA). The bill includes later additions to the MBCA
relating to the use of electronic transmission to deliver and
receive communications between a corporation and shareholders.
The bill also makes changes to the use of grammar in provisions
enacted in HF 844 and the terminology used in the MBCA and
enacted in HF 844 to enhance the IBCA’s readability.
DIVISION I —— NOTICES AND OTHER COMMUNICATION. The bill
defines electronic mail (email) as any electronic transmission
directed to a unique electronic mail address (amended Code
section 490.140(12A), (12B)). The use of other forms of
electronic transmission is also allowed. The exception for a
corporation’s use of electronic transmission, including email,
to communicate with a shareholder is the shareholder’s written
objection (amended Code section 490.140(4)). The corporation
must also cease using this form of communication if it receives
a message that the electronic transmission could not be
delivered (amended Code section 490.140(5)).
DIVISION I —— LIST OF SHAREHOLDERS. The phrase
“shareholders’ list” refers to a register of all active owners
of the corporation’s shares which the corporation must keep
current. The bill changes the name to “list of shareholders”.
The bill provides that if a communication regarding a meeting
has been sent by the corporation to the shareholder by email
or other electronic transmission, the address of the email or
other electronic transmission must be included as part of the
list (amended Code section 490.720(1)). The bill also provides
that a corporation may comply with its obligation to make the
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list available for inspection by providing a copy of the list
prior to meeting; the list is often used for the restricted
use of protecting shareholder rights (amended Code section
490.720(2)).
DIVISION I —— RECORD OF SHAREHOLDERS. The corporation is
required to maintain a record of shareholders which is the
basis for providing communications to shareholders. If a
shareholder provides an email address to the corporation or has
consented to receive communication by electronic transmission,
the record must include the email or other electronic
transmission address of the shareholder (amended Code section
490.1601(4)). In these cases, the electronic mail address
or other electronic transmission address of a shareholder is
deemed to be provided by a shareholder to the corporation
if it is contained in a communication to the corporation by
or on behalf of the shareholder, unless the shareholder’s
communication expressly indicates otherwise.
DIVISION II —— GRAMMATICAL CHANGES. The bill amends several
provisions to correspond to modern rules of grammar, including
the proper use of an indefinite article, a comma, and the
singular (amended Code sections 490.140(57), 490.143(1), and
490.1704(4)).
DIVISION III —— TERMINOLOGY CHANGES. Prior to the enactment
of the revised MBCA, the IBCA, like other model business
organization statutes (e.g., limited liability companies
under Code chapter 489 or nonprofit corporations under Code
chapter 504), provided that a foreign business was “authorized
to transact business in this state” or the equivalent phrase
“authorized to do business in this state” by obtaining a
certificate of authorization (e.g., Code section 489.208 or
504.112). By comparison, a domestic corporation (incorporated
with the secretary of state) may obtain a certificate of
existence (Code section 490.128) which is also the phrase used
by other business organizations, including limited liability
companies (Code section 489.208). A domestic or foreign
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nonprofit corporation may obtain a certificate of existence
or certificate of authority (Code section 504.112). The
MBCA provides that in order “to do business in this state” a
foreign corporation must be registered with the secretary of
state and obtain a certificate of registration (Code section
490.128). Such a corporation is defined as a “registered
foreign corporation” (Code section 490.140(47)).
The bill makes changes to this terminology when referring
to foreign corporations to conform with the MBCA’s use of
terms and to enhance readability. The phrase “certificate of
existence” is changed to “certificate of registration” (amended
Code section 490.120(5)). The phrase “authorized to transact
business in this state” is changed to “registered to do
business in this state” (amended Code sections 490.401(4) and
490.1621(4)). The phrase “foreign corporation registered to
do business in this state” is shortened to “registered foreign
corporation” (amended Code sections 490.401(2), 490.748(3),
490.922(5), and 490.1511(4)). When referring to a foreign
nonprofit corporation, the phrase “registered to do business in
this state” is changed to “authorized to do business in this
state (amended Code section 490.401(2)).
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