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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.