Bill No.: SF0072 Drafter: LGC
LSO No.: 09LSO-0128 Effective Date: 7/1/2009
Enrolled Act No.: SEA0053
Chapter No.: 115
Prime Sponsor: Joint Corporations, Elections and Political Subdivisions Interim Committee
Catch Title: Corporations act-amendments.
Subject: Amends general corporations law.
Summary/Major Elements:
· Article 1 of the Wyoming Business Corporation Act sets general administrative provisions and definitions of terms used in the Act. The act allows and facilitates electronic filing, electronic signing and other electronic transmissions. The act makes the date a document is received by the Secretary of State the effective date. There are several proposed revisions to the definition section to conform the Wyoming Corporations Act with the Model Act.
· Article 4 governs corporate names in Wyoming. These statutes prevent corporations from using names that are identical to existing corporate names, or names that are so similar as to be indistinguishable. The act provides that where a new corporation is affiliated with an existing Wyoming corporation, the two corporations have proposed to merge or consolidate and the existing corporation has consented in writing to the use of the name by the new corporation, the new and existing corporations may use the same name for no more than 120 days.
· Most of the changes in Article 6 reflect the Model Act’s adoption of new terminology to reflect changes in the rights associated with various types of stock. The historic distinctions between “common shares” and “preferred shares” have become blurred as companies have created various classes and series of stock which combine the attributes of both types of shares. The act acknowledges this practice and adopts more general language which permits broad flexibility in the creation of various types of shares.
· Article 7 sets forth the basic rights of shareholders in a corporation and describes the conduct of meetings and business. The act clarifies procedures for shareholders to take action by written consent rather than holding a shareholders’ meeting and allows notice to non-voting shareholders of action taken by written consent to be sent after written consents are received rather than before action is taken. A major change from current Wyoming law would allow articles of incorporation to provide for action without a meeting when approved by the minimum number of votes required to authorize the action, even if not unanimous.
· Article 8 of the act addresses the duties and requirements of directors and officers of corporations. Current Wyoming law provides that directors may increase or decrease the number of directors by no more than 30%. Shareholders must consent to increases or decreases to the number of directors of more than 30%. The act eliminates the 30% requirement in favor of allowing changes to the number of directors in any manner provided in the corporation’s articles of incorporation. The act eliminates a committee’s ability to amend articles of incorporation or approve a merger plan without shareholder approval. The most significant changes to Article 8 address the statutory standards imposed on directors and officers. A new subarticle from the Model Act is added, defining and governing directors’ conflicting interest transactions. The subarticle protects directors from certain liabilities that might arise as result of the director taking advantage of business opportunities.
· Article 10 deals with the process of amending the articles of incorporation and/or the bylaws of a corporation. The act clarifies that the board of directors, without a shareholder vote, may increase the number of authorized shares of a corporation to the extent necessary to allow a share dividend (which the directors have sole authority to declare). Unless the articles provide otherwise, a shareholder vote now need only be by a majority of the shareholders at a meeting where a quorum is present.
· Article 11 deals with mergers and share exchanges. Generally, the changes organize the law of mergers and share exchanges for all business entities into one article, and provide more direction and clarity on the merger and share exchange process.
· Article 12 deals with the sale of assets. The act requires shareholder approval of a disposition of assets if after the sale, it would leave the corporation without a significant continuing business activity, or at least 25% of its total assets. The act provides more clarity on the process to be followed when shareholder approval of dispositions is required.
· Article 13 deals with what the statutes previously called “Dissenters’ Rights,” but now calls “Appraisal Rights.” The act adopts most of the model act recommendations regarding appraisal rights.
· Article 14 deals with dissolution. The act simplifies the dissolution process, provides further direction regarding the effect of a dissolution, provides for an additional procedure through which a corporation may limit claims and prohibits filing of documents without proper authority.
· Less substantive changes were made throughout Title 17 to update statutory language to reflect the 2007 model act.