On January 1, 2020 a significantly re-vamped version of the Florida Business Corporation Act (the “FBCA”), which can be found at Chapter 607, Part I, of the Florida Statutes, will be going into effect. The revised FBCA borrows language from the Florida Revised Limited Liability Act (“FRLLCA”), which can be found at Chapter 605 of the Florida Statutes, in an attempt to harmonize the two acts where appropriate. The changes to the FBCA will become effective for all corporations on January 1, 2020. This article is the first of three and highlights some of the changes to the previous FBCA that may impact your business filings. Future newsletters will address (1) the revised FCBA’s impact on litigation and (2) the revised FCBA’s changes to mergers, share exchanges, and other transactions.
1. As part of the FBCA, the Florida Department of State (the “Department”) is expected to make available to the public new forms and templates for the following requests: application for
a certificate of status, a foreign corporation’s application for a certificate of authority, a foreign corporation’s notice of withdrawal, and an annual report.
2. The FBCA now permits for the reservation of a corporate name for a 120-day period.
3. The FBCA has expanded the number of definitions found in the FBCA from 31 to 80. For instance, the FBCA has now defined “authorized entity” to clarify the types of entities that are
permitted to be a registered agent for a corporation.
4. The FBCA has now incorporated terms from the Uniform Electronic Transmissions Act and the Electronic Signatures in Global and National Commerce Act. If a corporation’s Articles of
Incorporation or bylaws provide for electronic notice to directors, the recipient does not need to consent to the transmission. This change may necessitate that corporations amend
existing corporate bylaws.
5. Directors are only required to receive two days’ notice rather than three for an organizational meeting of directors.
6. A foreign corporation that is authorized to transact business in Florida but that is subsequently dissolved, wound up, merged into another foreign entity, is now required to deliver a
notice of withdrawal of authority to the Department of State.
7. The FBCA now allows for the authorization of a board committee or officers to designate and determine equity compensation awards when issuing shares pursuant to Section 607.0624,
Florida Statutes. The Board of Directors is no longer required to set parameters for equity compensation awards when issuing shares.
8. Only one officer is required to sign a share certificate (but more can be required in the bylaws or other operative documents).
9. Corporations are no longer required to include e-mail addresses in shareholder lists.
10. Board committees are now permitted to have only one member, unless otherwise provided for in the Articles of Incorporation. This is a change from the previous requirement that Board
committees have at least two members.
11. In the event that the Board of Directors seeks to amend the Articles of Incorporation, the Board must provide shareholders with a full copy of the amendment as opposed to just a
summary of the proposed amendment.
12. In the event that a corporation does not have any outstanding shares, the Board of Directors may amend the Articles of Incorporation.
13. The new FBCA now enumerates purposes for the transfer of shares and other securities but retains the rule that absolute restriction on alienation is prohibited, which deviates from the
FRLLCA.
14. The new FBCA has included substantial changes to the structure and organization of the provisions regarding mergers, share exchanges, conversions and domestications which may require
revisions to a corporation’s documents. For instance, the FCBA has expanded the plan of merger requirements.
15. The new FBCA now requires notification to all shareholders, whether or not they are entitled to vote, of a proposed merger or share exchange.
16. If your company is planning on converting into a non-Florida entity (or vice versa), Articles of Conversion must be filed for both inbound or outbound conversions.
17. In the event your company is going through a dissolution, the FBCA requires that the directors are responsible to arrange for payment of claims and make distributions to shareholders.
18. An administratively dissolved corporation may apply for reinstatement at any time. The reinstatement will relate back to the date of dissolution.
19. The FBCA has updated the list of records that a corporation is required to maintain.
20. Upon the request by a shareholder, a corporation must make annual financial statements available within 5 business days or 120 days if the corporation does not have the requested
financial statements.
The above list contains only a few of the changes to the FBCA that will be going into effect on January 1, 2020. If you believe that your company may be impacted, please contact Rodriguez-Albizu Law, P.A. to discuss how the changes to the FBCA can impact your company.
