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Relating to
corporations and fundamental business transactions.
No significant fiscal
implication to the State is anticipated.
HB 2142 modifies the
Business Organization Code by making a variety of relatively small changes
which, generally, tighten the code and reduce ambiguities, and reflect better
what are believed to be changes in current business practices. These changes
apply to the procedure, requirements, and permissible behavior of for-profit
corporations.
Among the changes to
the Business Organization Code which would appear, if HB 2142 were adopted, are
the following. Certificates of formation and amendment on behalf of for-profit
corporations could be made by one or more directors, as opposed to the majority
of the board of directors. Formulas could be used in converting or exchanging
ownership in the instance of a merger. Property may remain outstanding in the
instance of a merger. Plans of exchange and plans of conversion would also be
able to use a formula. Plans of conversion on file at the place of business
would no longer need to be signed. In the event of a merger (under section
21.459) shareholders would be required to be informed of their right to
dissent. Time constraints are put in place regarding when shareholders would
have to be notified.
In addition to these
changes, a number of other small modifications are made to the code, mostly
eliminating ambiguity. In addition, “owner liability” would also be given a set
definition if HB 2142 were to pass.
Although HB 2142 does
in fact enlarge the code, we feel that most of these additions grant business
more flexibility as opposed to saddling then with more restrictive regulation.
The bill is also beneficial in that it would make the code easier to
understand. Most of these changes are relatively minor but they are beneficial
enough to earn our support on the ground of affording private business with
greater flexibility under the law. Thus, we support HB 2142.