Legislature rewrites corporations statutes
A Business Law Section-backed rewrite of Florida’s corporations statutes has passed the Florida Legislature and been sent to Gov. Ron DeSantis.
The Senate voted 40-0 April 30, following the House approval 111-0 four days earlier.
The bill is the first comprehensive rewrite of F.S. Chap. 607 in more than 30 years. The section created a special committee that worked four years on the revisions, which are largely based on the ABA’s Model Business Corporate Act.
The bill addresses myriad issues including filing of corporate documents, proxies, service of process to the corporation, remote participation in shareholder meetings, tightening conflict of interest laws, bankruptcies and appointing receivers, and appraisal rights. It also coordinates various sections of Chap. 607 with the laws governing limited liability companies, not-for-profit corporations, and partnerships.
The bill was sponsored in the Senate by Sen. Kathleen Passidomo, R-Naples, and in the House by Rep. Cord Byrd, R-Jacksonville Beach.
“We are very pleased that the corporation’s rewrite bill has passed the Legislature and we hope that it will be signed into law by the governor in short order,” said Philip Schwartz, a former chair of the Business Law Section and a co-chair of the special committee that developed the legislation. “The bill passed every committee, as well as the House and the Senate, unanimously. We particularly want to recognize the efforts of Sen. Passidomo and Rep. Byrd for their willingness to take on sponsorship of this bill and for their efforts to bring this bill over the finish line.”
That work included some amendments as the bill was going through the legislative process.
One “change added a provision to the bill articulating when an action is to be considered a direct action versus a derivative action, following recent guidance from the Florida courts on this topic,” Schwartz said. “This amendment also modified an existing provision in our state’s LLC statute on the same topic so that the two statutes are harmonized.”
Another change considered but not adopted was adding a provision that oppression of minority shareholders would be grounds for judicial dissolution of a corporation.
“When one or more legislators raised concerns about this provision during the legislative process, we determined it best not to hold up passage of our bill over this provision,” Schwartz said. “Rather, we expect to take this subject up again in a future bill after having more discussion among the members of our group as well as others who might have an interest in this topic.”