LRB-2166/2
RJM:kmg:pg
2003 - 2004 LEGISLATURE
July 30, 2003 - Introduced by Senators Stepp, Kanavas, Darling, Leibham,
Roessler, George and
Reynolds, cosponsored by Representatives
McCormick, Ladwig, Gronemus, Jensen, Suder, Ott, Nischke, Hahn, J.
Fitzgerald, Krawczyk, Albers, Gundrum, Weber, Kreibich, Gunderson,
Vrakas, Hundertmark and Van Roy. Referred to Committee on Economic
Development, Job Creation and Housing.
SB218,2,2
1An Act to repeal 180.0825 (2) (a), 180.0825 (5) (a), (b) and (c) to (h) and 180.1105
2(1) (a) and (b);
to renumber and amend 180.0602 (3);
to consolidate,
3renumber and amend 180.0825 (2) (intro.) and (b);
to amend 179.02 (1),
4179.76 (4) (c), 179.77 (6) (c), 180.0502 (3), 180.0706 (title), 180.0824 (3),
5180.0825 (1), 180.1106 (1) (b), 180.1140 (11), 180.1150 (2), 180.1161 (4) (c),
6180.1201 (title), 180.1201 (2), 180.1302 (4), 180.1805 (5), 181.1106 (2), 181.1161
7(4) (c), 183.1205 (2) and 183.1207 (4) (c);
to repeal and recreate 180.1130 (14);
8and
to create 180.0602 (3) (b), 180.0706 (3), 180.0708, 180.0825 (5) (am) and
9(bm), 180.1105 (1) (am), (bm) and (c) to (f) and 180.1201 (1) (d) of the statutes;
10relating to: the authority of the board of directors of business corporations and
11corporate committees; corporate shareholder notices and meetings; mergers,
1conversions, and other business combinations; the transfer of corporate
2property to certain affiliates; and naming limited partnerships.
Analysis by the Legislative Reference Bureau
This bill makes numerous changes to the laws governing business corporations.
It also makes changes to the laws governing limited partnerships, nonstock
corporations, and limited liability companies. Significant changes include:
Business corporations
Classes or series of stock
Under current law, a corporation's articles of incorporation may authorize the
board of directors of the corporation to determine the preferences, limitations, and
relative rights of a class or series of shares of stock. Generally, the board must set
the terms of a class or series in an amendment to the articles of incorporation, which
need not be approved by the shareholders. Current law permits the board to revise
the terms by resolution, as long as no shares have been issued. After shares are
issued, any such revision must be by amendment to the articles of incorporation.
This bill similarly permits the board to set and revise the distinguishing
designation of a class or series. The bill also permits the board, at any time after the
required articles of amendment are filed, to decrease the number shares of the
applicable class or series (but not below the number of such shares that are
outstanding), to eliminate the class or series (if no shares are outstanding), or to
increase the number of shares of the class or series (but not beyond the number of
such shares that are authorized.
Shareholder notices and meetings
Current law contains several requirements pursuant to which a corporation
must provide notice to a shareholder. In addition, a corporation's articles of
incorporation and bylaws may also contain such requirements. This bill provides an
exemption from any such requirement if a specified number of notices or dividend
payments are returned to the corporation as undeliverable. The bill permits a
shareholder to reinstate the notice requirements by delivering to the corporation a
written statement setting forth the shareholder's current address. Current law does
not have any similar exemption, although current law does permit a shareholder to
waive any notice required under the corporate laws or the corporation's articles of
incorporation or bylaws.
This bill permits a corporation's articles of incorporation or bylaws to specify
the manner in which shareholder meetings will be conducted. The bill also sets
default rules for the conduct of these meetings if the articles of incorporation or
bylaws do not so specify. Under these default rules, a chairperson appointed by the
board of directors must preside over the meeting. The chairperson must determine
the order of business and time of adjournment and may establish rules for the
conduct of the meeting which the chairperson believes are fair to the interests of all
shareholders. In addition, the chairperson must provide notice of when the polls
close for each item voted upon at the meeting, except that if no such notice is provided
the polls close upon final adjournment of the meeting.
Committees
Current law permits the board of directors to create committees, unless the
articles of incorporation or bylaws provide otherwise. Currently, a committee must
have at least two members. This bill allows a committee to have only one member.
With certain exceptions, the creation of a committee, appointment of members
to it, and designation of alternative members currently must be approved by the
greater of: 1) a majority of all directors currently in office; or 2) the number of
directors required by the articles of incorporation or bylaws to take action (typically,
a majority of directors present, if a quorum is present). This bill deletes the possible
necessity for a majority vote of all directors currently in office, unless that
requirement is specified in the articles of incorporation or bylaws.
Current law prohibits a committee from doing any of the following: 1)
authorizing distributions; 2) approving or proposing to shareholders action that this
chapter requires be approved by shareholders; 3) filling vacancies on the board of
directors or, with certain exceptions, on any of its committees; 4) amending articles
of incorporation without shareholder action; 5) adopting, amending, or repealing
bylaws; 6) approving a plan of merger not requiring shareholder approval; 7)
authorizing or approving reacquisition of shares, except according to a formula or
method prescribed by the board of directors; or 8) authorizing or approving the
issuance or sale or contract for sale of shares, or determining the designation and
relative rights, preferences, and limitations of a class or series of shares, except that
the board of directors may authorize a committee or a senior executive officer of the
corporation to do so within limits prescribed by the board of directors. This bill
deletes all of these restrictions, except items 2) and 5).
Mergers, share exchanges, and business combinations
Currently, when a corporation approves a merger or share exchange, it must file
articles of merger or share exchange with the Department of Financial Institutions.
Among other things, the articles of merger or share exchange must include the plan
of merger or share exchange. This bill deletes this requirement and, instead,
requires the articles of merger to state that a plan of merger or share exchange has
been approved and adopted as required by law, that the plan is on file at the principle
place of business of the surviving corporation, and that the surviving corporation will
provide a copy of the plan, upon request and without cost, to any shareholder or, upon
payment of the cost of producing the copy, to any other interested person. The bill
also specifies other information that must be included in the articles of merger or
share exchange.
Currently, a corporation may not engage in a business combination (including
certain mergers) unless a specified supermajority of shareholders vote to approve the
combination. However, this requirement does not apply if the shareholders receive
a price for their shares that satisfies a specified formula. One factor in applying this
formula is to determine the valuation date of the shares. Currently, the valuation
date is defined as the later of the day before the date on which the shareholders' vote
concerning the combination or the day that is 20 days before the consummation of
the combination. This bill specifies, instead, that the valuation date is the day before
the first public announcement of the proposed business combination.
Current law restricts the ability of a corporation to engage in a business
combination (including certain mergers) for three years following the "stock
acquisition date," which is defined as the date on which any person first acquires at
least 10% of the corporation's stock. Under this bill, the "stock acquisition date" is
the time at which a person first acquires at least 10% of the corporation's stock.
With certain exceptions, the voting power of any person owning greater than
20% of a corporation's stock is currently limited to 10% of the full voting power of
those shares, unless the articles of incorporation provide otherwise or unless regular
voting power is restored by vote of the shareholders. This bill also permits the board
of directors to specify that regular voting power will apply.
Under current law, if a shareholder dissents from certain mergers, share
exchanges, or other business combinations, the shareholder may obtain payment of
the fair value of his or her shares. Currently, the fair value is determined pursuant
to several specified criteria. With limited exceptions, this bill provides an exemption
from these dissenter's rights if the applicable shares are registered on a national
securities exchange or quoted in the National Association of Securities Dealers, Inc.
This exemption is identical to the exemption that applies generally to other
dissenter's rights provisions.
Transfer of property to certain affiliates
Current law authorizes the board of directors of a corporation to sell, lease,
exchange, or otherwise dispose of all, or substantially all, of its property in the usual
and regular course of business; to sell, lease, exchange, or otherwise dispose of less
than substantially all of its property whether or not in the usual and regular course
of business; and to encumber any or all of its property whether or not in the usual
and regular course of business. Unless the articles of incorporation require
otherwise, the board may take these actions without shareholder approval. This bill
similarly permits the board to transfer any or all of its assets to one or more
corporations or other entities, all of the shares or interests of which are owned by the
corporation, unless the transfer is in connection with a plan or action involving the
sale, exchange, or disposal of all or substantially all of the assets of the corporation
and requires shareholder approval.
Other changes
Currently, the name of a limited partnership must contain the words "limited
partnership" without abbreviation. This bill allows the name to include abbreviated
versions of those words.
Under current law, when a limited partnership, business corporation, nonstock
corporation, or limited liability company merges with or converts to another entity
(or when a business corporation enters into a share exchange), title to all personal
property transfers, by operation of law, to the surviving entity. Title to real estate
generally must be transferred by deed, which must be recorded in the appropriate
office of the register of deeds. This bill deletes this special treatment for real estate.
As a result, under this bill, title to all property transfers, by operation of law, to the
surviving entity.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB218, s. 1
1Section
1. 179.02 (1) of the statutes is amended to read:
SB218,5,32
179.02
(1) Shall contain
, with or without abbreviation
, the words "limited
3partnership".
SB218, s. 2
4Section
2. 179.76 (4) (c) of the statutes is amended to read:
SB218,5,135
179.76
(4) (c) The business entity continues to be vested with title to all
6property owned by the business entity that was converted without reversion or
7impairment
, provided that, if the converting business entity has an interest in real
8estate in Wisconsin on the date of the conversion, the converting business entity shall
9transfer that interest to the business entity surviving the conversion and shall
10execute any real estate transfer return required under s. 77.22. The business entity
11surviving the conversion shall promptly record the instrument of conveyance under
12s. 59.43 in the office of the register of deeds for each county in which the real estate
13is located.
SB218, s. 3
14Section
3. 179.77 (6) (c) of the statutes is amended to read:
SB218,6,215
179.77
(6) (c) The title to all property owned by each business entity that is a
16party to the merger is vested in the surviving business entity without reversion or
17impairment
, provided that, if a merging business entity has an interest in real estate
18in Wisconsin on the date of the merger, the merging business entity shall transfer
19that interest to the business entity surviving the merger and shall execute any real
20estate transfer return required under s. 77.22. The business entity surviving the
1merger shall promptly record the instrument of conveyance under s. 59.43 in the
2office of the register of deeds for each county in which the real estate is located.
SB218, s. 4
3Section
4. 180.0502 (3) of the statutes is amended to read:
SB218,6,114
180.0502
(3) If
the name of a registered agent changes
or if the street address
5of
his or her a registered agent's business office
, he or she changes, the registered
6agent may change the
name of the registered agent or street address of the registered
7office of any corporation for which he
or, she
, or it is the registered agent
by notifying.
8To make a change under this subsection, the registered agent shall notify the
9corporation in writing of the change and
by signing, either manually or in facsimile,
10and delivering deliver to the department for filing a
signed statement that complies
11with sub. (2) and recites that the corporation has been notified of the change.
SB218, s. 5
12Section
5. 180.0602 (3) of the statutes is renumbered 180.0602 (3) (a) and
13amended to read:
SB218,6,2514
180.0602
(3) (a) After the articles of amendment are filed under sub. (2) and
15before the corporation issues any shares of the class or series that is the subject of
16the articles of amendment, the board of directors may alter or revoke
any the
17distinguishing designation of the class or series and the preferences, limitations
, or
18relative rights described in the articles of amendment, by adopting another
19resolution appropriate for that purpose.
The If the board of directors adopts such a
20resolution, the corporation shall file with the department revised articles of
21amendment that comply with sub. (2).
A Except as provided in par. (b), a
22distinguishing designation, preference, limitation
, or relative right may not be
23altered or revoked after the issuance of any shares of the class or series that are
24subject to the
distinguishing designation, preference, limitation
, or relative right,
25except by amendment of the articles of incorporation under s. 180.1003.
SB218, s. 6
1Section
6. 180.0602 (3) (b) of the statutes is created to read:
SB218,7,92
180.0602
(3) (b) 1. Except as otherwise provided in this subdivision, after the
3articles of amendment are filed under sub. (2), the board of directors may decrease
4the number of shares of the class or series that is the subject of the articles of
5amendment by adopting another resolution appropriate for that purpose. The
6shares specified in the resolution shall resume the status applicable to them
7immediately before their inclusion in the class or series. The board of directors may
8not decrease the number of shares under this subdivision below the number of such
9shares that are then outstanding.
SB218,7,2110
2. After the articles of amendment are filed under sub. (2), if no shares of the
11class or series that is the subject of the articles of amendment are then outstanding,
12the board of directors may eliminate from the articles of incorporation all matters set
13forth in the articles of amendment with respect to that class or series by adopting
14another resolution for that purpose. The board of directors shall prepare a certificate
15setting forth the content of any resolution under this subdivision, stating that none
16of the authorized shares of the class or series are outstanding, and stating that no
17such shares will be issued under the articles of amendment and shall deliver the
18signed certificate to the department for filing. A resolution under this subdivision
19takes effect upon filing of the certificate by the department and has the effect of
20eliminating from the articles of incorporation all matters set forth in the articles of
21amendment with respect to the applicable class or series.
SB218,8,322
3. Except as otherwise provided in this subdivision, after the articles of
23amendment are filed under sub. (2), the board of directors may increase the number
24of shares of the class or series that is the subject of the articles of amendment by
25adopting another resolution appropriate for that purpose. The board of directors
1may not increase the number of shares under this subdivision to be greater than the
2total number of authorized shares of the class or series as specified in the articles of
3incorporation.
SB218, s. 7
4Section
7. 180.0706 (title) of the statutes is amended to read:
SB218,8,5
5180.0706 (title)
Waiver of and exemption from notice.
SB218, s. 8
6Section
8. 180.0706 (3) of the statutes is created to read:
SB218,8,97
180.0706
(3) (a) Except as provided in par. (b), any notice required to be given
8by a corporation to a shareholder under this chapter is not required to be given if any
9of the following applies:
SB218,8,1310
1. Notice of 2 consecutive annual meetings, and all notices of meetings during
11the period between these annual meetings, have been sent to the shareholder at the
12shareholder's address as shown on the records of the corporation and have been
13returned as undeliverable.
SB218,8,1714
2. All, but not less than 2, payments of dividends on securities during a
15one-year period, or 2 consecutive payments of dividends on securities during a period
16of more than one year, have been sent to the shareholder at the shareholder's address
17as shown on the records of the corporation and have been returned as undeliverable.
SB218,8,2118
(b) If a shareholder to whom par. (a) applies delivers to the corporation a
19written notice containing the shareholder's current address, then, beginning 30 days
20after receipt of the notice by the corporation, the requirement that notice be given
21to the shareholder is reinstated, until such time as par. (a) may again apply.
SB218, s. 9
22Section
9. 180.0708 of the statutes is created to read:
SB218,8,24
23180.0708 Conduct of meeting. Unless the articles of incorporation or bylaws
24provide otherwise, every meeting of the shareholders shall be conducted as follows:
SB218,9,2
1(1) A chairperson shall preside over the meeting. The chairperson shall be
2appointed by the board of directors.
SB218,9,5
3(2) The chairperson shall determine the order of business and the time of
4adjournment and may establish rules for the conduct of the meeting which the
5chairperson believes are fair to the interests of all shareholders.
SB218,9,10
6(3) The chairperson shall determine and announce at the meeting the time at
7which the polls will close for each matter voted upon at the meeting. The polls close
8at the announced time, except that, if no such announcement is made, the polls close
9upon final adjournment of the meeting. After the polls close, no ballots, proxies, or
10votes, or revocations or changes thereto, may be accepted.
SB218, s. 10
11Section
10. 180.0824 (3) of the statutes is amended to read:
SB218,9,1612
180.0824
(3) Except as provided in ss. 180.0825
(2) and (3), 180.0831 (4) and
13180.0855 (1) and (2), if a quorum is present when a vote is taken, the affirmative vote
14of a majority of directors present is the act of the board of directors or a committee
15of the board of directors created under s. 180.0825, unless the articles of
16incorporation or bylaws require the vote of a greater number of directors.
SB218, s. 11
17Section
11. 180.0825 (1) of the statutes is amended to read:
SB218,9,2318
180.0825
(1) Unless the articles of incorporation or bylaws provide otherwise,
19a board of directors may create one or more committees, appoint members of the
20board of directors to serve on the committees and designate other members of the
21board of directors to serve as alternates. Each committee shall have
2 or more
22members at least one member. Unless otherwise provided by the board of directors,
23members of the committee shall serve at the pleasure of the board of directors.
SB218, s. 12
24Section
12. 180.0825 (2) (intro.) and (b) of the statutes are consolidated,
25renumbered 180.0825 (2) and amended to read:
SB218,10,4
1180.0825
(2) Except as provided in sub. (3), the creation of a committee,
2appointment of members to it and designation of alternate members, if any, shall be
3approved by the
greater of the following: (b) The number of directors required by the
4articles of incorporation or bylaws to take action under s. 180.0824 (3).
SB218, s. 13
5Section
13. 180.0825 (2) (a) of the statutes is repealed.
SB218, s. 14
6Section
14. 180.0825 (5) (a), (b) and (c) to (h) of the statutes are repealed.
SB218, s. 15
7Section
15. 180.0825 (5) (am) and (bm) of the statutes are created to read:
SB218,10,108
180.0825
(5) (am) Approve or recommend to shareholders for approval any
9action or matter expressly required by this chapter to be submitted to shareholders
10for approval.
SB218,10,1111
(bm) Adopt, amend, or repeal any bylaw of the corporation.
SB218, s. 16
12Section
16. 180.1105 (1) (a) and (b) of the statutes are repealed.