Bill Text: FL S0602 | 2021 | Regular Session | Enrolled
Bill Title: Business Organizations
Spectrum: Bipartisan Bill
Status: (Passed) 2021-05-11 - Chapter No. 2021-13 [S0602 Detail]
Download: Florida-2021-S0602-Enrolled.html
ENROLLED
2021 Legislature CS for SB 602
2021602er
1
2 An act relating to business organizations; amending s.
3 605.0410, F.S.; revising requirements relating to
4 inspecting certain records of limited liability
5 companies; amending s. 607.1301, F.S.; revising the
6 definition of the term “accrued interest”; amending s.
7 607.1302, F.S.; revising the circumstances under which
8 shareholders are entitled to appraisal rights and
9 certain payments; revising limitations relating to
10 such rights and payments; revising applicability;
11 amending s. 607.1303, F.S.; revising the circumstances
12 in which certain shareholders may assert specified
13 appraisal rights; amending s. 607.1321, F.S.; revising
14 requirements for shareholders who wish to assert
15 appraisal rights relating to specified corporate
16 actions; amending s. 607.1322, F.S.; making a
17 technical change; amending s. 607.1326, F.S.;
18 entitling corporations to prepay a shareholder if the
19 shareholder makes a demand for payment; specifying
20 when interest is applicable to such prepayments;
21 making technical changes; amending s. 607.1330, F.S.;
22 revising requirements for proceedings relating to
23 unsettled demands for payment; revising the
24 eligibility requirements for shareholders entitled to
25 the fair value of shares during court proceedings;
26 making technical and conforming changes; amending s.
27 607.1405, F.S.; revising the requirements for eligible
28 entities to use the name of a dissolved corporation;
29 amending s. 617.0725, F.S.; providing applicability;
30 amending ss. 617.0825 and 617.1703, F.S.; revising
31 applicability; providing an effective date.
32
33 Be It Enacted by the Legislature of the State of Florida:
34
35 Section 1. Paragraph (b) of subsection (3) of section
36 605.0410, Florida Statutes, is amended to read:
37 605.0410 Records to be kept; rights of member, manager, and
38 person dissociated to information.—
39 (3) In a manager-managed limited liability company, the
40 following rules apply:
41 (b) During regular business hours and at a reasonable
42 location specified by the company, a member may inspect and
43 copy:
44 1. The records described in subsection (1); and
45 2. Full information regarding the activities, affairs,
46 financial condition, and other circumstances of the company as
47 is just and reasonable if:
48 a. The member seeks the information for a purpose
49 reasonably related to the member’s interest as a member; and or
50 b. The member makes a demand in a record received by the
51 company, describing with reasonable particularity the
52 information sought and the purpose for seeking the information,
53 and if the information sought is directly connected to the
54 member’s purpose.
55 Section 2. Subsection (1) of section 607.1301, Florida
56 Statutes, is amended to read:
57 607.1301 Appraisal rights; definitions.—The following
58 definitions apply to ss. 607.1301-607.1340:
59 (1) “Accrued interest” means interest from the date the
60 corporate action becomes effective until the date of payment, at
61 the rate agreed to by the corporation and the shareholder
62 asserting appraisal rights, or at the rate determined by the
63 court to be equitable, which rate may not be greater than the
64 rate of interest of interest determined for judgments pursuant
65 to s. 55.03; however, if the court finds that the shareholder
66 asserting appraisal rights acted arbitrarily or otherwise not in
67 good faith, no interest shall be allowed by the court,
68 determined as of the effective date of the corporate action.
69 Section 3. Subsections (1) and (2) of section 607.1302,
70 Florida Statutes, are amended to read:
71 607.1302 Right of shareholders to appraisal.—
72 (1) A shareholder of a domestic corporation is entitled to
73 appraisal rights, and to obtain payment of the fair value of
74 that shareholder’s shares, in the event of any of the following
75 corporate actions:
76 (a) Consummation of a domestication or a conversion of such
77 corporation pursuant to s. 607.11921 or s. 607.11932, as
78 applicable, if shareholder approval is required for the
79 domestication or the conversion;
80 (b) Consummation of a merger to which such corporation is a
81 party:
82 1. If shareholder approval is required for the merger under
83 s. 607.1103 or would be required but for s. 607.11035, except
84 that appraisal rights shall not be available to any shareholder
85 of the corporation with respect to shares of any class or series
86 that remains outstanding after consummation of the merger where
87 the terms of such class or series have not been materially
88 altered; or
89 2. If such corporation is a subsidiary and the merger is
90 governed by s. 607.1104;
91 (c) Consummation of a share exchange to which the
92 corporation is a party as the corporation whose shares will be
93 acquired, except that appraisal rights shall not be are not
94 available to any shareholder of the corporation with respect to
95 any class or series of shares of the corporation that is not
96 acquired in the share exchange;
97 (d) Consummation of a disposition of assets pursuant to s.
98 607.1202 if the shareholder is entitled to vote on the
99 disposition, including a sale in dissolution, except that
100 appraisal rights shall not be available to any shareholder of
101 the corporation with respect to shares or any class or series
102 if:
103 1. Under the terms of the corporate action approved by the
104 shareholders there is to be distributed to shareholders in cash
105 the corporation’s net assets, in excess of a reasonable amount
106 reserved to meet claims of the type described in ss. 607.1406
107 and 607.1407, within 1 year after the shareholders’ approval of
108 the action and in accordance with their respective interests
109 determined at the time of distribution; and
110 2. The disposition of assets is not an interested
111 transaction;
112 (e) An amendment of the articles of incorporation with
113 respect to a class or series of shares which reduces the number
114 of shares of a class or series owned by the shareholder to a
115 fraction of a share if the corporation has the obligation or the
116 right to repurchase the fractional share so created;
117 (f) Any other merger, share exchange, disposition of
118 assets, or amendment to the articles of incorporation, in each
119 case to the extent provided as of the record date by the
120 articles of incorporation, bylaws, or a resolution of the board
121 of directors providing for appraisal rights, except that no
122 bylaw or board resolution providing for appraisal rights may be
123 amended or otherwise altered except by shareholder approval;
124 (g) An amendment to the articles of incorporation or bylaws
125 of the corporation, the effect of which is to alter or abolish
126 voting or other rights with respect to such interest in a manner
127 that is adverse to the interest of such shareholder, except as
128 the right may be affected by the voting or other rights of new
129 shares then being authorized of a new class or series of shares;
130 (h) An amendment to the articles of incorporation or bylaws
131 of a corporation, the effect of which is to adversely affect the
132 interest of the shareholder by altering or abolishing appraisal
133 rights under this section;
134 (h)(i) With regard to a class of shares prescribed in the
135 articles of incorporation in any corporation as to which that
136 particular class of shares was in existence prior to October 1,
137 2003, including any shares within that class subsequently
138 authorized by amendment, and for classes of shares authorized on
139 or after October 1, 2003, in any corporation with 100 or fewer
140 shareholders prior to October 1, 2003, including any shares
141 within that class subsequently authorized by amendment, any
142 amendment of the articles of incorporation if the shareholder is
143 entitled to vote on the amendment and if such amendment would
144 adversely affect such shareholder by:
145 1. Altering or abolishing any preemptive rights attached to
146 any of his, her, or its shares;
147 2. Altering or abolishing the voting rights pertaining to
148 any of his, her, or its shares, except as such rights may be
149 affected by the voting rights of new shares then being
150 authorized of any existing or new class or series of shares;
151 3. Effecting an exchange, cancellation, or reclassification
152 of any of his, her, or its shares, when such exchange,
153 cancellation, or reclassification would alter or abolish the
154 shareholder’s voting rights or alter his, her, or its percentage
155 of equity in the corporation, or effecting a reduction or
156 cancellation of accrued dividends or other arrearages in respect
157 to such shares;
158 4. Reducing the stated redemption price of any of the
159 shareholder’s redeemable shares, altering or abolishing any
160 provision relating to any sinking fund for the redemption or
161 purchase of any of his, her, or its shares, or making any of
162 his, her, or its shares subject to redemption when they are not
163 otherwise redeemable;
164 5. Making noncumulative, in whole or in part, dividends of
165 any of the shareholder’s preferred shares which had theretofore
166 been cumulative;
167 6. Reducing the stated dividend preference of any of the
168 shareholder’s preferred shares; or
169 7. Reducing any stated preferential amount payable on any
170 of the shareholder’s preferred shares upon voluntary or
171 involuntary liquidation;
172 (i)(j) An amendment of the articles of incorporation of a
173 social purpose corporation to which s. 607.504 or s. 607.505
174 applies;
175 (j)(k) An amendment of the articles of incorporation of a
176 benefit corporation to which s. 607.604 or s. 607.605 applies;
177 (k)(l) A merger, domestication, conversion, or share
178 exchange of a social purpose corporation to which s. 607.504
179 applies; or
180 (l)(m) A merger, domestication, conversion, or share
181 exchange of a benefit corporation to which s. 607.604 applies.
182 (2) Notwithstanding subsection (1), the availability of
183 appraisal rights under paragraphs (1)(a), (b), (c), (d), and
184 (e), (f), and (h) shall be limited in accordance with the
185 following provisions:
186 (a) Appraisal rights shall not be available for the holders
187 of shares of any class or series of shares which is:
188 1. A covered security under s. 18(b)(1)(A) or (B) of the
189 Securities Act of 1933;
190 2. Not a covered security, but traded in an organized
191 market (or subject to a comparable trading process) and has at
192 least 2,000 shareholders and the outstanding shares of such
193 class or series have a market value of at least $20 million,
194 exclusive of the value of outstanding shares held by the
195 corporation’s subsidiaries, by the corporation’s senior
196 executives, by the corporation’s directors, and by the
197 corporation’s beneficial shareholders and voting trust
198 beneficial owners owning more than 10 percent of the outstanding
199 shares; or
200 3. Issued by an open end management investment company
201 registered with the Securities and Exchange Commission under the
202 Investment Company Act of 1940 and which may be redeemed at the
203 option of the holder at net asset value.
204 (b) The applicability of paragraph (a) shall be determined
205 as of:
206 1. The record date fixed to determine the shareholders
207 entitled to receive notice of the meeting of shareholders to act
208 upon the corporate action requiring appraisal rights, the record
209 date fixed to determine the shareholders entitled to sign a
210 written consent approving the corporate action requiring
211 appraisal rights, or, in the case of an offer made pursuant to
212 s. 607.11035, the date of such offer; or
213 2. If there will be no meeting of shareholders, no written
214 consent approving the corporate action, and no offer is made
215 pursuant to s. 607.11035, the close of business on the day
216 before the consummation of the corporate action or the effective
217 date of the amendment of the articles, as applicable.
218 (c) Paragraph (a) is not applicable and appraisal rights
219 shall be available pursuant to subsection (1) for the holders of
220 any class or series of shares where the corporate action is an
221 interested transaction.
222 (d) For the purposes of subparagraph (a)2., a comparable
223 trading process exists if:
224 1. The market price of the corporation’s shares is
225 determined at least quarterly based on an independent valuation
226 and by following a formalized process that is designed to
227 determine a value for the corporation’s shares that is
228 comparable to the value of comparable publicly traded companies;
229 and
230 2. The corporation repurchases the shares at the price set
231 by its board of directors based upon the independent valuation
232 and subject to certain terms and conditions established by the
233 corporation and provides the corporation’s shareholders with a
234 trading market comparable to that typically available had the
235 corporation’s shares been traded in an organized market.
236 Section 4. Subsection (1) of section 607.1303, Florida
237 Statutes, is amended, and paragraph (c) is added to subsection
238 (2) of that section, to read:
239 607.1303 Assertion of rights by nominees and beneficial
240 owners.—
241 (1) A record shareholder may assert appraisal rights as to
242 fewer than all the shares registered in the record shareholder’s
243 name but owned by a beneficial shareholder or a voting trust
244 beneficial owner only if:
245 (a) The record shareholder objects with respect to all
246 shares of the class or series owned by the beneficial
247 shareholder or the voting trust beneficial owner;
248 (b) The particular beneficial shareholder or voting trust
249 beneficial owner acquired all such shares before the record date
250 established under s. 607.1321 in connection with the applicable
251 corporate action; and
252 (c) The record shareholder and notifies the corporation in
253 writing of its the name and address (if the record shareholder
254 beneficially owns the shares as to which appraisal rights are
255 being asserted) or notifies the corporation in writing of the
256 name and address of the particular of each beneficial
257 shareholder or voting trust beneficial owner on whose behalf
258 appraisal rights are being asserted.
259
260 The rights of a record shareholder who asserts appraisal rights
261 for only part of the shares held of record in the record
262 shareholder’s name under this subsection shall be determined as
263 if the shares as to which the record shareholder objects and the
264 record shareholder’s other shares were registered in the names
265 of different record shareholders.
266 (2) A beneficial shareholder and a voting trust beneficial
267 owner may assert appraisal rights as to shares of any class or
268 series held on behalf of the shareholder only if such
269 shareholder:
270 (c) Acquired all shares of the class or series before the
271 record date established under s. 607.1321 in connection with the
272 applicable corporate action.
273 Section 5. Subsections (1), (2), and (3) of section
274 607.1321, Florida Statutes, are amended to read:
275 607.1321 Notice of intent to demand payment.—
276 (1) If a proposed corporate action requiring appraisal
277 rights under s. 607.1302 is submitted to a vote at a
278 shareholders’ meeting, a shareholder who wishes to assert
279 appraisal rights with respect to any class or series of shares:
280 (a) Must have beneficially owned the shares of such class
281 or series as of the record date for the shareholders’ meeting at
282 which the proposed corporate action is to be submitted to a
283 vote;
284 (b) Must deliver to the corporation before the vote is
285 taken written notice of the shareholder’s intent, if the
286 proposed corporate action is effectuated, to demand payment for
287 all shares of such class or series beneficially owned by the
288 shareholder as of the record date for the shareholders’ meeting
289 at which the proposed corporate action is to be submitted to a
290 vote if the proposed corporate action is effectuated; and
291 (c)(b) Must not vote, or cause or permit to be voted, any
292 shares of such class or series in favor of the proposed
293 corporate action.
294 (2) If a proposed corporate action requiring appraisal
295 rights under s. 607.1302 is to be approved by written consent, a
296 shareholder who wishes to assert appraisal rights with respect
297 to any class or series of shares:
298 (a) Must have beneficially owned the shares of such class
299 or series as of the record date established for determining who
300 is entitled to sign a written consent;
301 (b) Must assert such appraisal rights for all shares of
302 such class or series beneficially owned by the shareholder as of
303 the record date for determining who is entitled to sign the
304 written consent; and
305 (c) Must not sign a consent in favor of the proposed
306 corporate action with respect to that class or series of shares.
307 (3) If a proposed corporate action specified in s.
308 607.1302(1) does not require shareholder approval pursuant to s.
309 607.11035, a shareholder who wishes to assert appraisal rights
310 with respect to any class or series of shares:
311 (a) Must have beneficially owned the shares of such class
312 or series as of the date the offer to purchase is made pursuant
313 to s. 607.11035;
314 (b) Must deliver to the corporation before the shares are
315 purchased pursuant to the offer a written notice of the
316 shareholder’s intent to demand payment if the proposed corporate
317 action is effected for all shares of such class or series
318 beneficially owned by the shareholder as of the date the offer
319 to purchase is made pursuant to s. 607.11035; and
320 (c)(b) Must not tender, or cause or permit to be tendered,
321 any shares of such class or series in response to such offer.
322 Section 6. Paragraph (a) of subsection (2) of section
323 607.1322, Florida Statutes, is amended to read:
324 607.1322 Appraisal notice and form.—
325 (2) The appraisal notice must be delivered no earlier than
326 the date the corporate action became effective, and no later
327 than 10 days after such date, and must:
328 (a) Supply a form that specifies the date that the
329 corporate action became effective and that provides for the
330 shareholder to state:
331 1. The shareholder’s name and address.
332 2. The number, classes, and series of shares as to which
333 the shareholder asserts appraisal rights.
334 3. That the shareholder did not vote for or consent to the
335 transaction.
336 4. Whether the shareholder accepts the corporation’s offer
337 as stated in subparagraph (b)4.
338 5. If the offer is not accepted, the shareholder’s
339 estimated fair value of the shares and a demand for payment of
340 the shareholder’s estimated value plus accrued interest, if and
341 to the extent applicable.
342 Section 7. Section 607.1326, Florida Statutes, is amended
343 to read:
344 607.1326 Procedure if shareholder is dissatisfied with
345 offer.—
346 (1) A shareholder who is dissatisfied with the
347 corporation’s offer as set forth pursuant to s. 607.1322(2)(b)4.
348 must notify the corporation on the form provided pursuant to s.
349 607.1322(1) of that shareholder’s estimate of the fair value of
350 the shares and demand payment of that estimate plus accrued
351 interest, if and to the extent applicable.
352 (2) A shareholder who fails to notify the corporation in
353 writing of that shareholder’s demand to be paid the
354 shareholder’s stated estimate of the fair value plus accrued
355 interest, if and to the extent applicable, under subsection (1)
356 within the timeframe set forth in s. 607.1322(2)(b)2. waives the
357 right to demand payment under this section and shall be entitled
358 only to the payment offered by the corporation pursuant to s.
359 607.1322(2)(b)4.
360 (3) With respect to a shareholder who properly makes demand
361 for payment pursuant to subsection (1), at any time after the
362 shareholder makes such demand, including during a court
363 proceeding under s. 607.1330, the corporation shall have the
364 right to prepay to the shareholder all or any portion of the
365 amount that the corporation determines to be due under s.
366 607.1322(2)(b)3. and the shareholder shall be obligated to
367 accept such prepayment.
368 (a) If such prepayment is made within 90 days after the
369 earlier of the date on which the appraisal notice is provided by
370 the corporation under s. 607.1322(1) or the deadline date by
371 which the appraisal notice is required to be provided by the
372 corporation under s. 607.1322(2), accrued interest will be
373 payable, if at all, to the shareholder entitled to appraisal
374 rights, calculated and accrued from the date on which the
375 corporate action became effective and only on amounts that are
376 determined to be due to the shareholder and are above the amount
377 so prepaid. Accrued interest will not be payable to the
378 shareholder entitled to appraisal rights on the prepayment
379 previously made to the shareholder by the corporation pursuant
380 to this paragraph.
381 (b) If such prepayment is made more than 90 days after the
382 earlier of the date on which the appraisal notice is provided by
383 the corporation under s. 607.1322(1) or the deadline date by
384 which the appraisal notice is required to be provided by the
385 corporation under s. 607.1322(2), the prepayment must include
386 accrued interest on the amount of the prepayment, calculated at
387 the rate of interest determined for judgments pursuant to s.
388 55.03 and calculated and accrued from the date that the
389 corporate action became effective through the date of the
390 prepayment previously made to the shareholder by the corporation
391 pursuant to this paragraph. In addition, accrued interest will
392 be payable to the shareholder entitled to appraisal rights on
393 such amounts, if any, determined to be due to the shareholder in
394 excess of the prepaid amount, calculated and accrued from the
395 date on which the corporate action became effective.
396 Section 8. Subsections (1) and (5) of section 607.1330,
397 Florida Statutes, are amended to read:
398 607.1330 Court action.—
399 (1) If a shareholder makes demand for payment under s.
400 607.1326 which remains unsettled, the corporation shall commence
401 a proceeding within 60 days after receiving the payment demand
402 and petition the court to determine the fair value of the shares
403 and accrued interest, if and to the extent applicable,
404 calculated and accrued from the date the corporate action became
405 effective and taking into account the amount of any prepayment
406 previously made to the shareholder by the corporation pursuant
407 to s. 607.1326(3) from the date of the corporate action. If the
408 corporation does not commence the proceeding within the 60-day
409 period, any shareholder who has made a demand pursuant to s.
410 607.1326 may commence the proceeding in the name of the
411 corporation.
412 (5) Each shareholder entitled to appraisal rights who is
413 made a party to the proceeding is entitled to judgment for the
414 amount of the fair value of such shareholder’s shares as found
415 by the court, plus accrued interest, if and to the extent
416 applicable and as found by the court, taking into account the
417 amount of any prepayment previously made to the shareholder by
418 the corporation pursuant to s. 607.1326(3).
419 Section 9. Subsection (5) of section 607.1405, Florida
420 Statutes, is amended to read:
421 607.1405 Effect of dissolution.—
422 (5) Except as provided in s. 607.1422(4), the name of a
423 dissolved corporation is not available for assumption or use by
424 another eligible entity until 120 days 1 year after the
425 effective date of dissolution unless the dissolved corporation
426 provides the department with a record, signed as required by s.
427 607.0120, permitting the immediate assumption or use of the name
428 by another eligible entity.
429 Section 10. Section 617.0725, Florida Statutes, is amended
430 to read:
431 617.0725 Quorum.—An amendment to the articles of
432 incorporation or the bylaws which adds, changes, or deletes a
433 greater or lesser quorum or voting requirement must meet the
434 same quorum or voting requirement and be adopted by the same
435 vote and voting groups required to take action under the quorum
436 and voting requirements then in effect or proposed to be
437 adopted, whichever is greater. This section does not apply to
438 any corporation that is an association, as defined in s.
439 720.301(9), or any corporation regulated under chapter 718 or
440 chapter 719.
441 Section 11. Subsection (9) of section 617.0825, Florida
442 Statutes, is amended to read:
443 617.0825 Board committees and advisory committees.—
444 (9) This section does not apply to a committee established
445 under chapter 718, chapter 719, or chapter 720 to perform the
446 functions set forth in s. 718.303(3), s. 719.303(3), s.
447 720.305(2), s. 720.303(2), or s. 720.3035(1), or s. 720.405,
448 respectively.
449 Section 12. Section 617.1703, Florida Statutes, is amended
450 to read:
451 617.1703 Application of chapter.—
452 (1)(a) This chapter is applicable to a corporation that is
453 an association as defined in and regulated by any of chapter 718
454 regarding condominiums, chapter 719 regarding cooperatives,
455 chapter 720 regarding homeowners’ associations, chapter 721
456 regarding timeshares, or chapter 723 regarding mobile
457 homeowners’ associations, except:
458 1. For In the event of any conflict between the provisions
459 of this chapter and chapter 718 regarding condominiums, chapter
460 719 regarding cooperatives, chapter 720 regarding homeowners’
461 associations, chapter 721 regarding timeshares, or chapter 723;
462 or
463 2. As otherwise provided for in chapter 718, chapter 719,
464 chapter 720, chapter 721, or chapter 723.
465 (b) If subparagraph (a)1. or subparagraph (a)2. applies
466 regarding mobile home owners’ associations, the applicable
467 provisions of such other respective chapters shall apply.
468 (2) The provisions of ss. 617.0605-617.0608 do not apply to
469 corporations regulated by any of the foregoing chapters or to
470 any other corporation where membership in the corporation is
471 required pursuant to a document recorded in the county property
472 records.
473 Section 13. This act shall take effect upon becoming a law.
