Bill Text: MI HB5868 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Businesses; business corporations; business corporation act; general revisions concerning formation of benefit corporations. Amends secs. 105, 106, 131, 202, 211, 745, 746 & 762 of 1972 PA 284 (MCL 450.1105 et seq.). TIE BAR WITH: HB 5867'18, HB 5869'18, HB 5872'18
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2018-04-25 - Bill Electronically Reproduced 04/24/2018 [HB5868 Detail]
Download: Michigan-2017-HB5868-Introduced.html
HOUSE BILL No. 5868
April 24, 2018, Introduced by Reps. Sheppard, Greig, Vaupel, Green, Lasinski, Chang, Love, Cochran, Pagan, Hoadley, Hertel, Dianda, Zemke, Yanez, Brinks, Garrett, Lucido, Iden, LaGrand, Canfield, Inman, Faris and Sneller and referred to the Committee on Commerce and Trade.
A bill to amend 1972 PA 284, entitled
"Business corporation act,"
by amending sections 105, 106, 131, 202, 211, 745, 746, and 762
(MCL 450.1105, 450.1106, 450.1131, 450.1202, 450.1211, 450.1745,
450.1746, and 450.1762), sections 105, 106, 202, 211, and 762 as
amended by 2012 PA 569 and section 131 as amended and sections 745
and 746 as added by 2008 PA 402.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 105. (1) "Administrator" means the chief officer of the
department or of any other agency or department authorized by law
to administer this act, or his or her designated representative.
(2) "Articles of incorporation" includes any of the following:
(a) The original articles of incorporation or any other
instrument filed or issued under any statute to organize a domestic
or foreign corporation, as amended, supplemented, or restated by
certificates of amendment, merger, conversion, or consolidation or
other certificates or instruments filed or issued under any
statute.
(b) A special act or charter creating a domestic or foreign
corporation, as amended, supplemented, or restated.
(3) "Authorized shares" means shares of all classes that a
corporation is authorized to issue.
(4) "Benefit corporation" means a domestic corporation that
meets the requirements for being a benefit corporation under
chapter 9A and has not terminated its status as a benefit
corporation under that chapter.
(5) (4)
"Board" means board of
directors or other governing
board of a corporation.
(6) (5)
"Bonds" includes secured
and unsecured bonds,
debentures, and notes.
Sec. 106. (1) "Corporation" or "domestic corporation" means a
corporation formed under this act, or existing on January 1, 1973
and formed under any other statute of this state for a purpose for
which a corporation may be formed under this act. The term includes
a benefit corporation.
(2) "Department" means the department of licensing and
regulatory affairs.
(3) "Director" means a member of the board of a corporation.
(4) "Distribution" means a direct or indirect transfer of
money or other property, except the corporation's shares, or the
incurrence of indebtedness by the corporation to or for the benefit
of its shareholders in respect to the corporation's shares. A
distribution may be in the form of a dividend, a purchase,
redemption or other acquisition of shares, an issuance of
indebtedness, or any other declaration or payment to or for the
benefit of the shareholders.
(5) "Electronic transmission" or "electronically transmitted"
means any form of communication that meets all of the following:
(a) It does not directly involve the physical transmission of
paper.
(b) It creates a record that may be retained and retrieved by
the recipient.
(c) It may be directly reproduced in paper form by the
recipient through an automated process.
Sec. 131. (1) A document that is required or permitted to be
filed under this act shall be submitted by delivering the document
to the administrator together with the fees and accompanying
documents required by law. The administrator may establish a
procedure for accepting delivery of a document submitted under this
subsection by facsimile or other electronic transmission. However,
by December 31, 2006, the administrator shall establish a procedure
for accepting delivery of a document submitted under this
subsection by electronic mail or over the Internet. Beginning
January 1, 2007, the administrator shall accept delivery of
documents submitted by electronic mail or over the
Internet.internet.
(2) If a document submitted under subsection (1), other than
an annual benefit report submitted under section 961, substantially
conforms to the requirements of this act, the administrator shall
endorse upon it the word "filed" with his or her official title and
the date of receipt and of filing and shall file and index the
document or a photostatic, micrographic, photographic, optical disc
media, or other reproduced copy in his or her office. If requested
at the time of the delivery of the document to his or her office,
the administrator shall include the hour of filing in the
endorsement on the document.
(3) The administrator shall return a copy of a document filed
under subsection (2), other than an annual report, or, at his or
her
discretion, the original, to the person who that submitted
it
for filing. The administrator shall mark the filing date on the
copy or original before returning it or, if the document was
submitted by electronic mail or over the Internet, may provide
proof
of the filing date to the person who that submitted the
document for filing in another manner determined by the
administrator.
(4) The records and files of the administrator relating to
domestic and foreign corporations shall be open to reasonable
inspection by the public. The administrator may maintain records or
files either in their original form or in photostatic,
micrographic, photographic, optical disc media, or other reproduced
form.
(5) The administrator may make copies of any documents filed
under this act or any predecessor act by photostatic, micrographic,
photographic, optical disc media, or other reproduced form and may
destroy the originals of the copied documents. A photostatic,
micrographic, photographic, optical disc media, or other reproduced
copy certified by the administrator, including a copy sent by
facsimile or other electronic transmission, is considered an
original for all purposes and is admissible in evidence in like
manner as an original.
(6) Except as provided in section 806, a document filed under
subsection (2) is effective at the time it is endorsed unless a
subsequent effective time, not later than 90 days after the date of
delivery,
is set forth stated in the document.
(7) The administrator shall charge 1 of the following
nonrefundable fees if expedited filing of a document by the
administrator is requested and the administrator shall retain the
revenue collected under this subsection and the department shall
use it to carry out its duties required by law:
(a) For any filing that a person requests the administrator to
complete within 1 hour on the same day as the day of the request,
$1,000.00. The department may establish a deadline by which a
person must submit a request for filing under this subdivision.
(b) For any filing that a person requests the administrator to
complete within 2 hours on the same day as the day of the request,
$500.00. The department may establish a deadline by which a person
must submit a request for filing under this subdivision.
(c) Except for a filing request under subdivision (a) or (b),
for the filing of any formation or qualification document that a
person requests the administrator to complete on the same day as
the day of the request, $100.00. The department may establish a
deadline by which a person must submit a request for filing under
this subdivision.
(d) Except for a filing request under subdivision (a) or (b),
for the filing of any other document concerning an existing
domestic corporation or a qualified foreign corporation that a
person requests the administrator to complete on the same day as
the day of the request, $200.00. The department may establish a
deadline by which a person must submit a request for filing under
this subdivision.
(e) For the filing of any formation or qualification document
that a person requests the administrator to complete within 24
hours of the time the administrator receives the request, $50.00.
(f) For the filing of any other document concerning an
existing domestic corporation or a qualified foreign corporation
that a person requests the administrator to complete within 24
hours of the time the administrator receives the request, $100.00.
Sec. 202. The articles of incorporation shall contain all of
the following:
(a) The name of the corporation.
(b) The purposes for which the corporation is formed. All of
the following apply for purposes of this subdivision:
(i) Except as otherwise provided in subparagraph (ii) or
(iii), it is a sufficient compliance with this subdivision to state
substantially, alone or with specifically enumerated purposes, that
the corporation may engage in any activity within the purposes for
which corporations may be formed under the business corporation
act, and all activities shall by the statement be considered within
the purposes of the corporation, subject to expressed limitations.
(ii) Any corporation that proposes to conduct educational
purposes shall state the purposes and shall comply with all
requirements of sections 170 to 177 of 1931 PA 327, MCL 450.170 to
450.177.
(iii) A professional corporation shall comply with section
283(2) and (3).
(iv) The purposes of a benefit corporation must comply with
section 953, but a benefit corporation is not required to state its
general public benefit purpose in the articles.
(c) The aggregate number of shares that the corporation has
authority to issue.
(d) If the shares are, or are to be, divided into classes, or
into classes and series, the designation of each class and series,
the number of shares in each class and series, and a statement of
the relative rights, preferences and limitations of the shares of
each class and series, to the extent that the designations,
numbers, relative rights, preferences, and limitations have been
determined.
(e) If any class of shares is to be divided into series, a
statement of any authority vested in the board to divide the class
of shares into series, and to determine or change for any series
its designation, number of shares, relative rights, preferences and
limitations.
(f) The street address, and the mailing address if different
from the street address, of the corporation's initial registered
office and the name of the corporation's initial resident agent at
that address.
(g) The names and addresses of the incorporators.
(h) The duration of the corporation if other than perpetual.
Sec. 211. (1) Except as provided in chapter 2A for a
professional corporation and in subsection (2) for a benefit
corporation, the corporate name of a domestic corporation shall
contain the word "corporation", "company", "incorporated", or
"limited" or shall contain 1 of the following abbreviations: corp.,
co., inc., or ltd., with or without periods.
(2) The corporate name of a benefit corporation shall contain
the words "benefit corporation" or "benefit company" or contain the
initials "B.C.", with or without periods.
Sec. 745. (1) A domestic corporation, except a benefit
corporation, may convert into a business organization if all of the
following requirements are satisfied:
(a) The conversion is permitted by the law that will govern
the internal affairs of the business organization after conversion
and the surviving business organization complies with that law in
converting.
(b) Unless subdivision (d) applies, the board of the domestic
corporation proposing to convert adopts a plan of conversion that
includes all of the following:
(i) The name of the domestic corporation, the name of the
business organization into which the domestic corporation is
converting, the type of business organization into which the
domestic corporation is converting, identification of the statute
that will govern the internal affairs of the surviving business
organization, the street address of the surviving business
organization, the street address of the domestic corporation if
different from the street address of the surviving business
organization, and the principal place of business of the surviving
business organization.
(ii) For the domestic corporation, the designation and number
of outstanding shares of each class and series, specifying the
classes and series entitled to vote, each class and series entitled
to vote as a class, and, if the number of shares is subject to
change before the effective date of the conversion, the manner in
which the change may occur.
(iii) The terms and conditions of the proposed conversion,
including the manner and basis of converting the shares into
ownership interests or obligations of the surviving business
organization, into cash, into other consideration that may include
ownership interests or obligations of an entity that is not a party
to the conversion, or into a combination of cash and other
consideration.
(iv) The terms and conditions of the organizational documents
that are to govern the surviving business organization.
(v) Any other provisions with respect to the proposed
conversion that the board considers necessary or desirable.
(c) If the board adopts the plan of conversion under
subdivision (b), the plan of conversion is submitted for approval
in the same manner required for a merger under section 703a(2),
including the procedures pertaining to dissenters' rights if any
shareholder has the right to dissent under section 762.
(d) If the domestic corporation has not commenced business,
has not issued any shares, and has not elected a board,
subdivisions (b) and (c) do not apply and the incorporators may
approve of the conversion of the corporation into a business
organization by unanimous consent. To effect the conversion, the
majority of the incorporators must execute and file a certificate
of conversion under subdivision (e).
(e) After the plan of conversion is approved under
subdivisions (b) and (c) or the conversion is approved under
subdivision (d), the domestic corporation files any formation
documents required to be filed under the laws governing the
internal affairs of the surviving business organization, in the
manner prescribed by those laws, and files a certificate of
conversion with the administrator. The certificate of conversion
shall include all of the following:
(i) Unless subdivision (d) applies, all of the information
described in subdivision (b)(i) and (ii) and the manner and basis
of converting the shares of the domestic corporation contained in
the plan of conversion.
(ii) Unless subdivision (d) applies, a statement that the
board has adopted the plan of conversion by the board under
subdivision (c), or if subdivision (d) applies to the conversion, a
statement that the domestic corporation has not commenced business,
has not issued any shares, and has not elected a board and that the
plan of conversion was approved by the unanimous consent of the
incorporators.
(iii) A statement that the surviving business organization
will furnish a copy of the plan of conversion, on request and
without cost, to any shareholder of the domestic corporation.
(iv) If approval of the shareholders of the domestic
corporation was required, a statement that the plan was approved by
the shareholders under subdivision (c).
(v) A statement specifying each assumed name of the domestic
corporation to be used by the surviving business organization and
authorized under section 217(5).
(2) Section 131 applies in determining when a certificate of
conversion under this section becomes effective.
(3) When a conversion under this section takes effect, all of
the following apply:
(a) The domestic corporation converts into the surviving
business organization, and the articles of incorporation of the
domestic corporation are canceled. Except as otherwise provided in
this section, the surviving business organization is organized
under and subject to the organizational laws of the jurisdiction of
the surviving business organization as stated in the certificate of
conversion.
(b) The surviving business organization has all of the
liabilities of the domestic corporation. The conversion of the
domestic corporation into a business organization under this
section shall not be considered to affect any obligations or
liabilities of the domestic corporation incurred before the
conversion or the personal liability of any person incurred before
the conversion, and the conversion shall not be considered to
affect the choice of law applicable to the domestic corporation
with respect to matters arising before the conversion.
(c) The title to all real estate and other property and rights
owned by the domestic corporation remain vested in the surviving
business organization without reversion or impairment. The rights,
privileges, powers, and interests in property of the domestic
corporation, as well as the debts, liabilities, and duties of the
domestic corporation, shall not be considered, as a consequence of
the conversion, to have been transferred to the surviving business
organization to which the domestic corporation has converted for
any purpose of the laws of this state.
(d) The surviving business organization may use the name and
the assumed names of the domestic corporation if the filings
required under section 217(5) or any other applicable statute are
made and the laws regarding use and form of names are followed.
(e) A proceeding pending against the domestic corporation may
be continued as if the conversion had not occurred, or the
surviving business organization may be substituted in the
proceeding for the domestic corporation.
(f) The surviving business organization is considered to be
the same entity that existed before the conversion and is
considered to be organized on the date that the domestic
corporation was originally incorporated.
(g) The shares of the domestic corporation that were to be
converted into ownership interests or obligations of the surviving
business organization or into cash or other property are converted.
(h) Unless otherwise provided in a plan of conversion adopted
in accordance with this section, the domestic corporation is not
required to wind up its affairs or pay its liabilities and
distribute its assets on account of the conversion, and the
conversion does not constitute a dissolution of the domestic
corporation.
(4) If the surviving business organization of a conversion
under this section is a foreign business organization, it is
subject to the laws of this state pertaining to the transaction of
business in this state if it transacts business in this state. The
surviving business organization is liable, and is subject to
service of process in a proceeding in this state, for the
enforcement of an obligation of the domestic corporation, and in a
proceeding for the enforcement of a right of a dissenting
shareholder of the domestic corporation against the surviving
business organization.
(5) As used in this section and section 746, "business
organization" and "entity" mean those terms as defined in section
736(1).
Sec. 746. (1) A business organization may convert into a
domestic corporation, except a benefit corporation, if all of the
following requirements are satisfied:
(a) The conversion is permitted by the law that governs the
internal affairs of the business organization and the business
organization complies with that law in converting.
(b) The business organization proposing to convert into a
domestic corporation adopts a plan of conversion that includes all
of the following:
(i) The name of the business organization, the type of
business organization that is converting, identification of the
statute that governs the internal affairs of the business
organization, the name of the surviving domestic corporation into
which the business organization is converting, the street address
of the surviving domestic corporation, and the principal place of
business of the surviving domestic corporation.
(ii) A description of all of the ownership interests in the
business organization, specifying the interests entitled to vote,
any rights those interests have to vote collectively or as a class,
and if the ownership interests are subject to change before the
effective date of the conversion, the manner in which the change
may occur.
(iii) The terms and conditions of the proposed conversion,
including the manner and basis of converting the ownership
interests of the business organization into shares or obligations
of the surviving domestic corporation, into cash, into other
consideration that may include ownership interests or obligations
of an entity that is not a party to the conversion, or into a
combination of cash and other consideration.
(iv) The terms and conditions of the articles and bylaws that
are to govern the surviving domestic corporation.
(v) Any other provisions with respect to the proposed
conversion that the business organization considers necessary or
desirable.
(c) If a plan of conversion is adopted by the business
organization under subdivision (b), the plan of conversion is
submitted for approval in the manner required by the law governing
the internal affairs of that business organization.
(d) After the plan of conversion is approved under
subdivisions (b) and (c), the business organization files a
certificate of conversion with the administrator. The certificate
of conversion shall include all of the following:
(i) All of the information described in subdivision (b)(i) and
(ii) and the manner and basis of converting the ownership interests
of the business organization contained in the plan of conversion.
(ii) A statement that the business organization has adopted
the plan of conversion under subdivision (c).
(iii) A statement that the surviving business corporation will
furnish a copy of the plan of conversion, on request and without
cost, to any owner of the business organization.
(iv) A statement specifying each assumed name of the business
organization to be used by the surviving domestic corporation and
authorized under section 217(6).
(v) Articles of incorporation for the surviving domestic
corporation that meet all of the requirements of this act
applicable to articles of incorporation.
(2) Section 131 applies in determining when a certificate of
conversion under this section becomes effective.
(3) When a conversion under this section takes effect, all of
the following apply:
(a) The business organization converts into the surviving
domestic corporation. Except as otherwise provided in this section,
the surviving domestic corporation is organized under and subject
to this act.
(b) The surviving domestic corporation has all of the
liabilities of the business organization. The conversion of the
business organization into a domestic corporation under this
section shall not be considered to affect any obligations or
liabilities of the business organization incurred before the
conversion or the personal liability of any person incurred before
the conversion, and the conversion shall not be considered to
affect the choice of law applicable to the business organization
with respect to matters arising before the conversion.
(c) The title to all real estate and other property and rights
owned by the business organization remain vested in the surviving
domestic corporation without reversion or impairment. The rights,
privileges, powers, and interests in property of the business
organization, as well as the debts, liabilities, and duties of the
business organization, shall not be considered, as a consequence of
the conversion, to have been transferred to the surviving domestic
corporation to which the business organization has converted for
any purpose of the laws of this state.
(d) The surviving domestic corporation may use the name and
the assumed names of the business organization if the filings
required under section 217(6) or any other applicable statute are
made and the laws regarding use and form of names are followed.
(e) A proceeding pending against the business organization may
be continued as if the conversion had not occurred, or the
surviving domestic corporation may be substituted in the proceeding
for the business organization.
(f) The surviving domestic corporation is considered to be the
same entity that existed before the conversion and is considered to
be organized on the date that the business organization was
originally organized.
(g) The ownership interests of the business organization that
were to be converted into shares or obligations of the surviving
domestic corporation or into cash or other property are converted.
(h) Unless otherwise provided in a plan of conversion adopted
in accordance with this section, the business organization is not
required to wind up its affairs or pay its liabilities and
distribute its assets on account of the conversion, and the
conversion does not constitute a dissolution of the business
organization.
Sec. 762. (1) A shareholder is entitled to dissent from, and
obtain payment of the fair value of his, her, or its shares in the
event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation
is a party if shareholder approval is required for the merger under
section 703a or 736(5) or the articles of incorporation and the
shareholder is entitled to vote on the merger, or the corporation
is a subsidiary that is merged with its parent under section 711.
(b) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, if the shareholder is entitled to vote on the plan.
(c) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation other than in
the usual and regular course of business, if the shareholder is
entitled to vote on the sale or exchange, including a sale in
dissolution but not including a sale pursuant to court order.
(d) Consummation of a plan of conversion to which the
corporation is a party as the corporation that is being converted,
if the shareholder is entitled to vote on the plan. However, any
rights provided under this section are not available if that
corporation is converted into a foreign corporation and the
shareholder receives shares that have terms as favorable to the
shareholder in all material respects, and represent at least the
same percentage interest of the total voting rights of the
outstanding shares of the corporation, as the shares held by the
shareholder before the conversion.
(e) An amendment of the articles of incorporation giving rise
to a right to dissent under section 621.
(f) A transaction giving rise to a right to dissent under
section 754.
(g) An amendment to the articles of incorporation of a benefit
corporation giving rise to a right to dissent under section 953.
(h) Consummation of a plan of merger or share exchange giving
rise to a right to dissent under section 955.
(i) (g)
Any corporate action taken pursuant
to a shareholder
vote to the extent the articles of incorporation, bylaws, or a
resolution of the board provides that voting or nonvoting
shareholders are entitled to dissent and obtain payment for their
shares.
(2) Unless otherwise provided in the articles of
incorporation, bylaws, or a resolution of the board, a shareholder
may not dissent from any of the following:
(a) Any corporate action set forth in subsection (1)(a) to (f)
as to shares that are listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the national association of securities dealers,
on the record date fixed to vote on the corporate action or on the
date the resolution of the parent corporation's board is adopted in
the case of a merger under section 711 that does not require a
shareholder vote under section 713.
(b) A transaction described in subsection (1)(a) in which
shareholders receive cash, shares that satisfy the requirements of
subdivision (a) on the effective date of the merger, or any
combination of cash and those shares.
(c) A transaction described in subsection (1)(b) in which
shareholders receive cash, shares that satisfy the requirements of
subdivision (a) on the effective date of the share exchange, or any
combination of cash and those shares.
(d) A transaction described in subsection (1)(c) that is
conducted pursuant to a plan of dissolution providing for
distribution of substantially all of the corporation's net assets
to shareholders in accordance with their respective interests
within 1 year after the date of closing of the transaction, if the
transaction is for cash, shares that satisfy the requirements of
subdivision (a) on the date of closing, or any combination of cash
and those shares.
(e) A transaction described in subsection (1)(d) in which
shareholders receive cash, shares that satisfy the requirements of
subdivision (a) on the effective date of the conversion, or any
combination of cash and those shares.
(3) A shareholder entitled to dissent and obtain payment for
shares under subsection (1)(a) to (f) may not challenge the
corporate action creating that entitlement unless the action is
unlawful or fraudulent with respect to the shareholder or the
corporation.
(4) A shareholder that exercises a right to dissent and seek
payment
for shares under subsection (1)(g) (1)(i) may not challenge
the corporate action creating that entitlement unless the action is
unlawful or fraudulent with respect to the shareholder or the
corporation.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
Enacting section 2. This amendatory act does not take effect
unless all of the following bills of the 99th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 5872 (request no.
00377'17).
(b) Senate Bill No.____ or House Bill No. 5867 (request no.
00829'17).
(c) Senate Bill No.____ or House Bill No. 5869 (request no.
00831'17).
