Bill Text: FL S0602 | 2021 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Business Organizations
Spectrum: Bipartisan Bill
Status: (Passed) 2021-05-11 - Chapter No. 2021-13 [S0602 Detail]
Download: Florida-2021-S0602-Introduced.html
Bill Title: Business Organizations
Spectrum: Bipartisan Bill
Status: (Passed) 2021-05-11 - Chapter No. 2021-13 [S0602 Detail]
Download: Florida-2021-S0602-Introduced.html
Florida Senate - 2021 SB 602
By Senator Burgess
20-00386B-21 2021602__
1 A bill to be entitled
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 ss. 617.0825 and 617.1703, F.S.; revising
30 applicability; providing an effective date.
31
32 Be It Enacted by the Legislature of the State of Florida:
33
34 Section 1. Paragraph (b) of subsection (3) of section
35 605.0410, Florida Statutes, is amended to read:
36 605.0410 Records to be kept; rights of member, manager, and
37 person dissociated to information.—
38 (3) In a manager-managed limited liability company, the
39 following rules apply:
40 (b) During regular business hours and at a reasonable
41 location specified by the company, a member may inspect and
42 copy:
43 1. The records described in subsection (1); and
44 2. Full information regarding the activities, affairs,
45 financial condition, and other circumstances of the company as
46 is just and reasonable if:
47 a. The member seeks the information for a purpose
48 reasonably related to the member’s interest as a member; and or
49 b. The member makes a demand in a record received by the
50 company, describing with reasonable particularity the
51 information sought and the purpose for seeking the information,
52 and if the information sought is directly connected to the
53 member’s purpose.
54 Section 2. Subsection (1) of section 607.1301, Florida
55 Statutes, is amended to read:
56 607.1301 Appraisal rights; definitions.—The following
57 definitions apply to ss. 607.1301-607.1340:
58 (1) “Accrued interest” means interest from the date the
59 corporate action becomes effective until the date of payment, at
60 the rate agreed to by the corporation and the shareholder
61 asserting appraisal rights, or at the rate determined by the
62 court to be equitable, which rate may not be greater than the
63 rate of interest of interest determined for judgments pursuant
64 to s. 55.03; however, if the court finds that the shareholder
65 asserting appraisal rights acted arbitrarily or otherwise not in
66 good faith, no interest shall be allowed by the court,
67 determined as of the effective date of the corporate action.
68 Section 3. Subsections (1) and (2) of section 607.1302,
69 Florida Statutes, are amended to read:
70 607.1302 Right of shareholders to appraisal.—
71 (1) A shareholder of a domestic corporation is entitled to
72 appraisal rights, and to obtain payment of the fair value of
73 that shareholder’s shares, in the event of any of the following
74 corporate actions:
75 (a) Consummation of a domestication or a conversion of such
76 corporation pursuant to s. 607.11921 or s. 607.11932, as
77 applicable, if shareholder approval is required for the
78 domestication or the conversion;
79 (b) Consummation of a merger to which such corporation is a
80 party:
81 1. If shareholder approval is required for the merger under
82 s. 607.1103 or would be required but for s. 607.11035, except
83 that appraisal rights shall not be available to any shareholder
84 of the corporation with respect to shares of any class or series
85 that remains outstanding after consummation of the merger where
86 the terms of such class or series have not been materially
87 altered; or
88 2. If such corporation is a subsidiary and the merger is
89 governed by s. 607.1104;
90 (c) Consummation of a share exchange to which the
91 corporation is a party as the corporation whose shares will be
92 acquired, except that appraisal rights shall not be are not
93 available to any shareholder of the corporation with respect to
94 any class or series of shares of the corporation that is not
95 acquired in the share exchange;
96 (d) Consummation of a disposition of assets pursuant to s.
97 607.1202 if the shareholder is entitled to vote on the
98 disposition, including a sale in dissolution, except that
99 appraisal rights shall not be available to any shareholder of
100 the corporation with respect to shares or any class or series
101 if:
102 1. Under the terms of the corporate action approved by the
103 shareholders there is to be distributed to shareholders in cash
104 the corporation’s net assets, in excess of a reasonable amount
105 reserved to meet claims of the type described in ss. 607.1406
106 and 607.1407, within 1 year after the shareholders’ approval of
107 the action and in accordance with their respective interests
108 determined at the time of distribution; and
109 2. The disposition of assets is not an interested
110 transaction;
111 (e) An amendment of the articles of incorporation with
112 respect to a class or series of shares which reduces the number
113 of shares of a class or series owned by the shareholder to a
114 fraction of a share if the corporation has the obligation or the
115 right to repurchase the fractional share so created;
116 (f) Any other merger, share exchange, disposition of
117 assets, or amendment to the articles of incorporation, in each
118 case to the extent provided as of the record date by the
119 articles of incorporation, bylaws, or a resolution of the board
120 of directors providing for appraisal rights, except that no
121 bylaw or board resolution providing for appraisal rights may be
122 amended or otherwise altered except by shareholder approval;
123 (g) An amendment to the articles of incorporation or bylaws
124 of the corporation, the effect of which is to alter or abolish
125 voting or other rights with respect to such interest in a manner
126 that is adverse to the interest of such shareholder, except as
127 the right may be affected by the voting or other rights of new
128 shares then being authorized of a new class or series of shares;
129 (h) An amendment to the articles of incorporation or bylaws
130 of a corporation, the effect of which is to adversely affect the
131 interest of the shareholder by altering or abolishing appraisal
132 rights under this section;
133 (h)(i) With regard to a class of shares prescribed in the
134 articles of incorporation in any corporation as to which that
135 particular class of shares was in existence prior to October 1,
136 2003, including any shares within that class subsequently
137 authorized by amendment, and for classes of shares authorized on
138 or after October 1, 2003, in any corporation with 100 or fewer
139 shareholders prior to October 1, 2003, including any shares
140 within that class subsequently authorized by amendment, any
141 amendment of the articles of incorporation if the shareholder is
142 entitled to vote on the amendment and if such amendment would
143 adversely affect such shareholder by:
144 1. Altering or abolishing any preemptive rights attached to
145 any of his, her, or its shares;
146 2. Altering or abolishing the voting rights pertaining to
147 any of his, her, or its shares, except as such rights may be
148 affected by the voting rights of new shares then being
149 authorized of any existing or new class or series of shares;
150 3. Effecting an exchange, cancellation, or reclassification
151 of any of his, her, or its shares, when such exchange,
152 cancellation, or reclassification would alter or abolish the
153 shareholder’s voting rights or alter his, her, or its percentage
154 of equity in the corporation, or effecting a reduction or
155 cancellation of accrued dividends or other arrearages in respect
156 to such shares;
157 4. Reducing the stated redemption price of any of the
158 shareholder’s redeemable shares, altering or abolishing any
159 provision relating to any sinking fund for the redemption or
160 purchase of any of his, her, or its shares, or making any of
161 his, her, or its shares subject to redemption when they are not
162 otherwise redeemable;
163 5. Making noncumulative, in whole or in part, dividends of
164 any of the shareholder’s preferred shares which had theretofore
165 been cumulative;
166 6. Reducing the stated dividend preference of any of the
167 shareholder’s preferred shares; or
168 7. Reducing any stated preferential amount payable on any
169 of the shareholder’s preferred shares upon voluntary or
170 involuntary liquidation;
171 (i)(j) An amendment of the articles of incorporation of a
172 social purpose corporation to which s. 607.504 or s. 607.505
173 applies;
174 (j)(k) An amendment of the articles of incorporation of a
175 benefit corporation to which s. 607.604 or s. 607.605 applies;
176 (k)(l) A merger, domestication, conversion, or share
177 exchange of a social purpose corporation to which s. 607.504
178 applies; or
179 (l)(m) A merger, domestication, conversion, or share
180 exchange of a benefit corporation to which s. 607.604 applies.
181 (2) Notwithstanding subsection (1), the availability of
182 appraisal rights under paragraphs (1)(a), (b), (c), (d), and
183 (e), (f), and (h) shall be limited in accordance with the
184 following provisions:
185 (a) Appraisal rights shall not be available for the holders
186 of shares of any class or series of shares which is:
187 1. A covered security under s. 18(b)(1)(A) or (B) of the
188 Securities Act of 1933;
189 2. Not a covered security, but traded in an organized
190 market (or subject to a comparable trading process) and has at
191 least 2,000 shareholders and the outstanding shares of such
192 class or series have a market value of at least $20 million,
193 exclusive of the value of outstanding shares held by the
194 corporation’s subsidiaries, by the corporation’s senior
195 executives, by the corporation’s directors, and by the
196 corporation’s beneficial shareholders and voting trust
197 beneficial owners owning more than 10 percent of the outstanding
198 shares; or
199 3. Issued by an open end management investment company
200 registered with the Securities and Exchange Commission under the
201 Investment Company Act of 1940 and which may be redeemed at the
202 option of the holder at net asset value.
203 (b) The applicability of paragraph (a) shall be determined
204 as of:
205 1. The record date fixed to determine the shareholders
206 entitled to receive notice of the meeting of shareholders to act
207 upon the corporate action requiring appraisal rights, the record
208 date fixed to determine the shareholders entitled to sign a
209 written consent approving the corporate action requiring
210 appraisal rights, or, in the case of an offer made pursuant to
211 s. 607.11035, the date of such offer; or
212 2. If there will be no meeting of shareholders, no written
213 consent approving the corporate action, and no offer is made
214 pursuant to s. 607.11035, the close of business on the day
215 before the consummation of the corporate action or the effective
216 date of the amendment of the articles, as applicable.
217 (c) Paragraph (a) is not applicable and appraisal rights
218 shall be available pursuant to subsection (1) for the holders of
219 any class or series of shares where the corporate action is an
220 interested transaction.
221 (d) For the purposes of subparagraph (a)2., a comparable
222 trading process exists if:
223 1. The market price of the corporation’s shares is
224 determined at least quarterly based on an independent valuation
225 and by following a formalized process that is designed to
226 determine a value for the corporation’s shares that is
227 comparable to the value of comparable publicly traded companies;
228 and
229 2. The corporation repurchases the shares at the price set
230 by its board of directors based upon the independent valuation
231 and subject to certain terms and conditions established by the
232 corporation and provides the corporation’s shareholders with a
233 trading market comparable to that typically available had the
234 corporation’s shares been traded in an organized market.
235 Section 4. Subsection (1) of section 607.1303, Florida
236 Statutes, is amended, and paragraph (c) is added to subsection
237 (2) of that section, to read:
238 607.1303 Assertion of rights by nominees and beneficial
239 owners.—
240 (1) A record shareholder may assert appraisal rights as to
241 fewer than all the shares registered in the record shareholder’s
242 name but owned by a beneficial shareholder or a voting trust
243 beneficial owner only if:
244 (a) The record shareholder objects with respect to all
245 shares of the class or series owned by the beneficial
246 shareholder or the voting trust beneficial owner;
247 (b) The particular beneficial shareholder or voting trust
248 beneficial owner acquired all such shares before the record date
249 established under s. 607.1321 in connection with the applicable
250 corporate action; and
251 (c) The record shareholder and notifies the corporation in
252 writing of its the name and address (if the record shareholder
253 beneficially owns the shares as to which appraisal rights are
254 being asserted) or notifies the corporation in writing of the
255 name and address of the particular of each beneficial
256 shareholder or voting trust beneficial owner on whose behalf
257 appraisal rights are being asserted.
258
259 The rights of a record shareholder who asserts appraisal rights
260 for only part of the shares held of record in the record
261 shareholder’s name under this subsection shall be determined as
262 if the shares as to which the record shareholder objects and the
263 record shareholder’s other shares were registered in the names
264 of different record shareholders.
265 (2) A beneficial shareholder and a voting trust beneficial
266 owner may assert appraisal rights as to shares of any class or
267 series held on behalf of the shareholder only if such
268 shareholder:
269 (c) Acquired all shares of the class or series before the
270 record date established under s. 607.1321 in connection with the
271 applicable corporate action.
272 Section 5. Subsections (1), (2), and (3) of section
273 607.1321, Florida Statutes, are amended to read:
274 607.1321 Notice of intent to demand payment.—
275 (1) If a proposed corporate action requiring appraisal
276 rights under s. 607.1302 is submitted to a vote at a
277 shareholders’ meeting, a shareholder who wishes to assert
278 appraisal rights with respect to any class or series of shares:
279 (a) Must have beneficially owned the shares of such class
280 or series as of the record date for the shareholders’ meeting at
281 which the proposed corporate action is to be submitted to a
282 vote;
283 (b) Must deliver to the corporation before the vote is
284 taken written notice of the shareholder’s intent, if the
285 proposed corporate action is effectuated, to demand payment for
286 all shares of such class or series beneficially owned by the
287 shareholder as of the record date for the shareholders’ meeting
288 at which the proposed corporate action is to be submitted to a
289 vote if the proposed corporate action is effectuated; and
290 (c)(b) Must not vote, or cause or permit to be voted, any
291 shares of such class or series in favor of the proposed
292 corporate action.
293 (2) If a proposed corporate action requiring appraisal
294 rights under s. 607.1302 is to be approved by written consent, a
295 shareholder who wishes to assert appraisal rights with respect
296 to any class or series of shares:
297 (a) Must have beneficially owned the shares of such class
298 or series as of the record date established for determining who
299 is entitled to sign a written consent;
300 (b) Must assert such appraisal rights for all shares of
301 such class or series beneficially owned by the shareholder as of
302 the record date for determining who is entitled to sign the
303 written consent; and
304 (c) Must not sign a consent in favor of the proposed
305 corporate action with respect to that class or series of shares.
306 (3) If a proposed corporate action specified in s.
307 607.1302(1) does not require shareholder approval pursuant to s.
308 607.11035, a shareholder who wishes to assert appraisal rights
309 with respect to any class or series of shares:
310 (a) Must have beneficially owned the shares of such class
311 or series as of the date the offer to purchase is made pursuant
312 to s. 607.11035;
313 (b) Must deliver to the corporation before the shares are
314 purchased pursuant to the offer a written notice of the
315 shareholder’s intent to demand payment if the proposed corporate
316 action is effected for all shares of such class or series
317 beneficially owned by the shareholder as of the date the offer
318 to purchase is made pursuant to s. 607.11035; and
319 (c)(b) Must not tender, or cause or permit to be tendered,
320 any shares of such class or series in response to such offer.
321 Section 6. Paragraph (a) of subsection (2) of section
322 607.1322, Florida Statutes, is amended to read:
323 607.1322 Appraisal notice and form.—
324 (2) The appraisal notice must be delivered no earlier than
325 the date the corporate action became effective, and no later
326 than 10 days after such date, and must:
327 (a) Supply a form that specifies the date that the
328 corporate action became effective and that provides for the
329 shareholder to state:
330 1. The shareholder’s name and address.
331 2. The number, classes, and series of shares as to which
332 the shareholder asserts appraisal rights.
333 3. That the shareholder did not vote for or consent to the
334 transaction.
335 4. Whether the shareholder accepts the corporation’s offer
336 as stated in subparagraph (b)4.
337 5. If the offer is not accepted, the shareholder’s
338 estimated fair value of the shares and a demand for payment of
339 the shareholder’s estimated value plus accrued interest, if and
340 to the extent applicable.
341 Section 7. Section 607.1326, Florida Statutes, is amended
342 to read:
343 607.1326 Procedure if shareholder is dissatisfied with
344 offer.—
345 (1) A shareholder who is dissatisfied with the
346 corporation’s offer as set forth pursuant to s. 607.1322(2)(b)4.
347 must notify the corporation on the form provided pursuant to s.
348 607.1322(1) of that shareholder’s estimate of the fair value of
349 the shares and demand payment of that estimate plus accrued
350 interest, if and to the extent applicable.
351 (2) A shareholder who fails to notify the corporation in
352 writing of that shareholder’s demand to be paid the
353 shareholder’s stated estimate of the fair value plus accrued
354 interest, if and to the extent applicable, under subsection (1)
355 within the timeframe set forth in s. 607.1322(2)(b)2. waives the
356 right to demand payment under this section and shall be entitled
357 only to the payment offered by the corporation pursuant to s.
358 607.1322(2)(b)4.
359 (3) With respect to a shareholder who properly makes demand
360 for payment pursuant to subsection (1), at any time after the
361 shareholder makes such demand, including during a court
362 proceeding under s. 607.1330, the corporation shall have the
363 right to prepay to the shareholder all or any portion of the
364 amount that the corporation determines to be due under s.
365 607.1322(2)(b)3. and the shareholder shall be obligated to
366 accept such prepayment.
367 (a) If such prepayment is made within 90 days after the
368 earlier of the date on which the appraisal notice is provided by
369 the corporation under s. 607.1322(1) or the deadline date by
370 which the appraisal notice is required to be provided by the
371 corporation under s. 607.1322(2), accrued interest will be
372 payable, if at all, to the shareholder entitled to appraisal
373 rights, calculated and accrued from the date on which the
374 corporate action became effective and only on amounts that are
375 determined to be due to the shareholder and are above the amount
376 so prepaid. Accrued interest will not be payable to the
377 shareholder entitled to appraisal rights on the prepayment
378 previously made to the shareholder by the corporation pursuant
379 to this paragraph.
380 (b) If such prepayment is made more than 90 days after the
381 earlier of the date on which the appraisal notice is provided by
382 the corporation under s. 607.1322(1) or the deadline date by
383 which the appraisal notice is required to be provided by the
384 corporation under s. 607.1322(2), the prepayment must include
385 accrued interest on the amount of the prepayment, calculated at
386 the rate of interest determined for judgments pursuant to s.
387 55.03 and calculated and accrued from the date that the
388 corporate action became effective through the date of the
389 prepayment previously made to the shareholder by the corporation
390 pursuant to this paragraph. In addition, accrued interest will
391 be payable to the shareholder entitled to appraisal rights on
392 such amounts, if any, determined to be due to the shareholder in
393 excess of the prepaid amount, calculated and accrued from the
394 date on which the corporate action became effective.
395 Section 8. Subsections (1) and (5) of section 607.1330,
396 Florida Statutes, are amended to read:
397 607.1330 Court action.—
398 (1) If a shareholder makes demand for payment under s.
399 607.1326 which remains unsettled, the corporation shall commence
400 a proceeding within 60 days after receiving the payment demand
401 and petition the court to determine the fair value of the shares
402 and accrued interest, if and to the extent applicable,
403 calculated and accrued from the date the corporate action became
404 effective and taking into account the amount of any prepayment
405 previously made to the shareholder by the corporation pursuant
406 to s. 607.1326(3) from the date of the corporate action. If the
407 corporation does not commence the proceeding within the 60-day
408 period, any shareholder who has made a demand pursuant to s.
409 607.1326 may commence the proceeding in the name of the
410 corporation.
411 (5) Each shareholder entitled to appraisal rights who is
412 made a party to the proceeding is entitled to judgment for the
413 amount of the fair value of such shareholder’s shares as found
414 by the court, plus accrued interest, if and to the extent
415 applicable and as found by the court, taking into account the
416 amount of any prepayment previously made to the shareholder by
417 the corporation pursuant to s. 607.1326(3).
418 Section 9. Subsection (5) of section 607.1405, Florida
419 Statutes, is amended to read:
420 607.1405 Effect of dissolution.—
421 (5) Except as provided in s. 607.1422(4), the name of a
422 dissolved corporation is not available for assumption or use by
423 another eligible entity until 120 days 1 year after the
424 effective date of dissolution unless the dissolved corporation
425 provides the department with a record, signed as required by s.
426 607.0120, permitting the immediate assumption or use of the name
427 by another eligible entity.
428 Section 10. Subsection (9) of section 617.0825, Florida
429 Statutes, is amended to read:
430 617.0825 Board committees and advisory committees.—
431 (9) This section does not apply to a committee established
432 under chapter 718, chapter 719, or chapter 720 to perform the
433 functions set forth in s. 718.303(3), s. 719.303(3), s.
434 720.305(2), s. 720.303(2), or s. 720.3035(1), or s. 720.405,
435 respectively.
436 Section 11. Section 617.1703, Florida Statutes, is amended
437 to read:
438 617.1703 Application of chapter.—
439 (1)(a) This chapter is applicable to a corporation that is
440 an association as defined in and regulated by any of chapter 718
441 regarding condominiums, chapter 719 regarding cooperatives,
442 chapter 720 regarding homeowners’ associations, chapter 721
443 regarding timeshares, or chapter 723 regarding mobile
444 homeowners’ associations, except:
445 1. For In the event of any conflict between the provisions
446 of this chapter and chapter 718 regarding condominiums, chapter
447 719 regarding cooperatives, chapter 720 regarding homeowners’
448 associations, chapter 721 regarding timeshares, or chapter 723;
449 or
450 2. As otherwise provided for in chapter 718, chapter 719,
451 chapter 720, chapter 721, or chapter 723.
452 (b) If subparagraph (a)1. or subparagraph (a)2. applies
453 regarding mobile home owners’ associations, the applicable
454 provisions of such other respective chapters shall apply.
455 (2) The provisions of ss. 617.0605-617.0608 do not apply to
456 corporations regulated by any of the foregoing chapters or to
457 any other corporation where membership in the corporation is
458 required pursuant to a document recorded in the county property
459 records.
460 Section 12. This act shall take effect upon becoming a law.
