AB1112: Bill Text

3. The directors of the parent corporation become the directors of the holding company.

4. The provisions of the holding company's articles of incorporation and bylaws (or, if the holding company is a limited liability company, its operating agreement) are generally identical to those of the parent corporation's.

5. The provisions of the surviving entity's articles of incorporation and bylaws or operating agreement are generally identical to those of the parent corporation's.

6. If the surviving entity is a limited liability company, its operating agreement contains provisions that grant members certain rights enjoyed by shareholders of the parent corporation under current law or under the parent company's articles of incorporation or bylaws.

7. The parent corporation's board determines that the merger will not result in any gain or loss for federal income tax purposes.

Other changes related to 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 (department). 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 business combination (including certain mergers) must be approved by a specified supermajority of shareholders, unless the shareholders receive a minimum price for their shares, computed under a specified formula. This bill redefines a component of the formula, the valuation date, as the day before the first public announcement of the proposed business combination.

With certain exceptions, the voting power of a person owning greater than 20 percent of a corporation's stock is currently limited to 10 percent of the full voting power of those shares, unless the corporation's articles of incorporation provide otherwise or unless regular voting power is restored by vote of the shareholders. This bill 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. Under current law, a dissenting shareholder is entitled to receive fair value if either of the following apply: 1) the corporation that issued the stock held by the dissenting shareholder (issuing corporation) is a party to a merger for which shareholder approval is required under certain provisions in current law or under the issuing corporation's articles of incorporation; or 2) the corporation is a subsidiary corporation that is merging with a parent corporation.

Under the bill, a dissenting shareholder may also obtain fair value if the issuing corporation is a parent corporation that is merging with a subsidiary, unless the merger satisfies certain conditions specified in the bill relating to the effect of the merger on the rights of shareholders.

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.

Currently, a parent corporation that owns at least 90 percent of the outstanding interests of a subsidiary business entity may merge with the subsidiary without the approval of the parent's shareholders or the owners of the interests in the subsidiary. Under the bill, such a merger requires the approval of the parent's shareholders unless certain conditions relating to the rights of the parent's shareholders are satisfied.

Classes or series of stock

Under current law, a corporation's articles of incorporation may authorize the board to determine the relative rights of a class or series of shares of stock. Generally, the board may set the terms of a class or series without shareholder approval. The board may revise the terms by resolution, as long as no shares have been issued. The board may revise the terms of shares that have already been issued only by amendment to the articles of incorporation.

Under this bill, at any time after filing articles of amendment creating a class or series of shares, the board may: 1) decrease the number shares of a class or series, but not below the number of outstanding shares of the class or series; 2) eliminate a class or series, if no shares of the class or series are outstanding; or 3) increase the number of shares of a class or series, but not beyond the number of shares authorized by the articles of incorporation.

Shareholder notices and meetings

Current law requires a corporation to notify shareholders of certain events and information. This bill exempts a corporation from all such notice requirements as to an individual shareholder if a specified number of notices or dividend payments sent to the shareholder are returned to the corporation as undeliverable. A shareholder may reinstate the notice requirements by delivering to the corporation the shareholder's current address.

Transfer of property to certain affiliates and other changes related to business corporations

Current law also prescribes the conditions under which a board may transfer the corporation's property. This bill permits a board to transfer the corporation's assets to other entities that are wholly owned by the corporation, except in connection with a plan that involves a transfer of all or substantially all of the corporation's assets and that requires shareholder approval.

This bill also permits a corporation to specify in its articles of incorporation or bylaws the rules for conducting shareholder meetings, and sets default rules for corporations that do not adopt their own rules. The bill also makes changes to current law regarding the formation and membership of a committee created by a board, and the bill deletes certain restrictions on the power of such committees. Further, the bill makes changes to current law relating to identifying a registered agent.

Other changes

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 the requirement that a deed be executed and recorded. Under the bill, if a limited partnership, business corporation, nonstock corporation, or limited liability company merges with or converts to another entity, the articles of merger or certificate of conversion filed with department must indicate whether a business entity that does not survive the merger or conversion has a fee simple ownership interest in real estate in this state.

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.

The bill requires that the surviving entity of a merger or conversion file a report with the Department of Revenue (DOR) that specifies the effective date of the merger or conversion, the name and address of each business entity that is a party to the merger or conversion, the name of any person at the surviving entity that DOR may contact with regard to submitting the report and the information contained in the report, the parcel identification number and location of all fee simple ownership interests in real estate located in this state acquired by the surviving entity in the merger or conversion, a certified copy of the document providing evidence of the merger or conversion, and, in the case of a conversion, a sworn statement that the ownership interests in the surviving entity are identical with the ownership interests in the original entity immediately preceding the conversion. Under the bill, forms prescribed by the department of financial institutions for articles of merger and certificates of conversion must contain a notice of the real estate reporting requirement.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB1112, s. 1 Section 1. 73.13 of the statutes is created to read:

AB1112,6,3 73.13 Merger and conversion real estate reports. (1) If an acquired business entity in a merger or the converted business entity in a conversion owned a fee simple ownership interest in any Wisconsin real estate immediately prior to the merger or conversion, the surviving business entity shall submit a report to the department of revenue, on a form prescribed by the department, no later than 60 days after the effective date of the merger or conversion that provides the following information:

AB1112,6,4 (a) The effective date of the merger or conversion.

AB1112,6,6 (b) The name, address, and federal employer identification number of each business entity that is a party to the merger or conversion.

AB1112,6,11 (c) The name, telephone number, and address of any person at the surviving business entity that the department of revenue may contact with regard to submitting the report and the information contained in the report and the address to which tax bills should be sent, if different from the address for the contact person described in this paragraph.

AB1112,6,14 (d) The parcel identification number of each fee simple ownership interest in Wisconsin real estate owned by the acquired business entity in a merger or by the converted entity in a conversion and municipality in which such interest is located.

AB1112,6,17 (e) In the case of a conversion, a sworn statement that, after the conversion, the ownership interests in the surviving entity are identical with the ownership interests in the original entity immediately preceding the conversion.

AB1112,6,21 (f) A certified copy of the document providing evidence of the merger or conversion, as filed with the state in which the surviving entity is organized and a copy of any merger or conversion plan, regardless of whether the plan is required to be filed with the state in which the surviving entity is organized.

AB1112,7,2 (2) (a) If a surviving entity required to submit a report under sub. (1), fails to file the report within the time provided under sub. (1), the surviving entity is subject to a penalty in an amount equal to $200 for each day that the report is late, but not to exceed $7,500, except that no penalty shall be imposed under this paragraph if the surviving entity can show good cause for submitting a late report and if submitting a late report is not the result of the surviving entity's intentional act or omission.

AB1112,7,11 (b) If a surviving entity required to submit a report under sub. (1), fails to specify in the report each municipality in which a fee simple ownership interest in Wisconsin real estate owned by the acquired business entity in a merger, or by the converted business entity in a conversion, is located, the surviving entity is subject to a penalty in an amount equal to $1,500 for each municipality not specified in the report and in which such ownership interest in located, except that no penalty shall be imposed under this paragraph if the surviving entity can show good cause for the failure to specify each municipality as described under sub. (1) (d) and if such failure is not the result of the surviving entity's intentional act or omission.

AB1112,7,14 (3) The reports submitted under this section are confidential information, except that the department of revenue may disclose the reports and information from the reports for the sole purpose of administering and enforcing this subchapter.

AB1112, s. 2 Section 2. 179.02 (1) of the statutes is amended to read:

AB1112,7,17 179.02 (1) Shall contain, with or without abbreviation, the words "limited partnership".

AB1112, s. 3 Section 3. 179.76 (4) (c) of the statutes is amended to read:

AB1112,8,2 179.76 (4) (c) The business entity continues to be vested with title to all property owned by the business entity that was converted without reversion or impairment, provided that, if the converting business entity has an interest in real estate in Wisconsin on the date of the conversion, the converting business entity shall transfer that interest to the business entity surviving the conversion and shall execute any real estate transfer return required under s. 77.22. The business entity surviving the conversion shall promptly record the instrument of conveyance under s. 59.43 in the office of the register of deeds for each county in which the real estate is located.

AB1112, s. 4 Section 4. 179.76 (5) (bm) of the statutes is created to read:

AB1112,8,5 179.76 (5) (bm) A statement indicating whether the business entity that is to be converted has a fee simple ownership interest in any Wisconsin real estate.

AB1112, s. 5 Section 5. 179.76 (5m) of the statutes is created to read:

AB1112,8,10 179.76 (5m) If the department prescribes a form for the certificate of conversion under sub. (5), the form shall indicate that if the business entity that is to be converted has a fee simple ownership interest in Wisconsin real estate, the entity is required to file a report with the department of revenue under s. 73.13.

AB1112, s. 6 Section 6. 179.77 (5) (bm) of the statutes is created to read:

AB1112,8,14 179.77 (5) (bm) A statement indicating whether a business entity that merged with or into the surviving entity in the merger has a fee simple ownership interest in any Wisconsin real estate.

AB1112, s. 7 Section 7. 179.77 (5r) of the statutes is created to read:

AB1112,8,20 179.77 (5r) If the department prescribes a form for the articles of merger under sub. (5), the form shall indicate that if a business entity that is acquired in the merger has a fee simple ownership interest in Wisconsin real estate, the business entity that survives the merger is required to file a report with the department of revenue under s. 73.13.

AB1112, s. 8 Section 8. 179.77 (6) (c) of the statutes is amended to read:

AB1112,9,4 179.77 (6) (c) The title to all property owned by each business entity that is a party to the merger is vested in the surviving business entity without reversion or impairment, provided that, if a merging business entity has an interest in real estate in Wisconsin on the date of the merger, the merging business entity shall transfer that interest to the business entity surviving the merger and shall execute any real estate transfer return required under s. 77.22. The business entity surviving the merger shall promptly record the instrument of conveyance under s. 59.43 in the office of the register of deeds for each county in which the real estate is located.

AB1112, s. 9 Section 9. 180.0121 (1) (a) 4. of the statutes is amended to read:

AB1112,9,10 180.0121 (1) (a) 4. An application for a certificate of conversion under s. 180.1161 (5). The form prescribed under this subdivision shall indicate that if the business entity that is to be converted has a fee simple ownership interest in Wisconsin real estate, the entity is required to file a report with the department of revenue under s. 73.13.

AB1112, s. 10 Section 10. 180.0121 (2) of the statutes is amended to read:

AB1112,9,18 180.0121 (2) The department may prescribe and furnish on request forms for other documents required or permitted to be filed by this chapter, but use of these forms is not mandatory. If the department prescribes a form for articles of merger under s. 180.1105, the form shall indicate that if a business entity that is acquired in the merger has a fee simple ownership interest in Wisconsin real estate, the business entity that survives the merger is required to file a report with the department of revenue under s. 73.13.

AB1112, s. 11 Section 11. 180.0502 (3) of the statutes is amended to read:

AB1112,9,25 180.0502 (3) If the name of a registered agent changes or if the street address of his or her a registered agent's business office, he or she changes, the registered agent may change the name of the registered agent or street address of the registered office of any corporation for which he or, she, or it is the registered agent by notifying. To make a change under this subsection, the registered agent shall notify the corporation in writing of the change and by signing, either manually or in facsimile, and delivering deliver to the department for filing a signed statement that complies with sub. (2) and recites that the corporation has been notified of the change.

AB1112, s. 12 Section 12. 180.0602 (3) of the statutes is renumbered 180.0602 (3) (a) and amended to read:

AB1112,10,16 180.0602 (3) (a) After the articles of amendment are filed under sub. (2) and before the corporation issues any shares of the class or series that is the subject of the articles of amendment, the board of directors may alter or revoke any the distinguishing designation of the class or series and the preferences, limitations, or relative rights described in the articles of amendment, by adopting another resolution appropriate for that purpose. The corporation shall file and filing with the department revised articles of amendment that comply with sub. (2). A Except as provided in par. (b), a distinguishing designation, preference, limitation, or relative right may not be altered or revoked after the issuance of any shares of the class or series that are subject to the distinguishing designation, preference, limitation, or relative right, except by amendment of the articles of incorporation under s. 180.1003.

AB1112, s. 13 Section 13. 180.0602 (3) (b) of the statutes is created to read:

AB1112,10,25 180.0602 (3) (b) 1. Except as otherwise provided in this subdivision, after the articles of amendment are filed under sub. (2), the board of directors may decrease the number of shares of the class or series that is the subject of the articles of amendment by adopting another resolution appropriate for that purpose. The shares specified in the resolution shall resume the status applicable to them immediately before their inclusion in the class or series. The board of directors may not decrease the number of shares under this subdivision below the number of such shares that are outstanding.

AB1112,11,12 2. After the articles of amendment are filed under sub. (2), if no shares of the class or series that is the subject of the articles of amendment are outstanding, the board of directors may eliminate from the articles of incorporation all matters set forth in the articles of amendment with respect to that class or series by adopting another resolution for that purpose. The board of directors shall prepare a certificate setting forth the content of any resolution under this subdivision, stating that none of the authorized shares of the class or series are outstanding, and stating that no such shares will be issued under the articles of amendment and shall deliver the signed certificate to the department for filing. A resolution under this subdivision takes effect upon filing of the certificate by the department and has the effect of eliminating from the articles of incorporation all matters set forth in the articles of amendment with respect to the applicable class or series.

AB1112,11,19 3. Except as otherwise provided in this subdivision, after the articles of amendment are filed under sub. (2), the board of directors may increase the number of shares of the class or series that is the subject of the articles of amendment by adopting another resolution appropriate for that purpose. The board of directors may not increase the number of shares under this subdivision to be greater than the total number of authorized shares of the class or series as specified in the articles of incorporation.

AB1112, s. 14 Section 14. 180.0706 (title) of the statutes is amended to read:

AB1112,11,21 180.0706 (title) Waiver of and exemption from notice.

AB1112, s. 15 Section 15. 180.0706 (3) of the statutes is created to read:

AB1112,11,25 180.0706 (3) (a) Except as provided in par. (b), any notice required to be given by a corporation to a shareholder under this chapter is not required to be given if any of the following applies:

AB1112,12,4 1. Notice of 2 consecutive annual meetings, and all notices of meetings during the period between these annual meetings, have been sent to the shareholder at the shareholder's address as shown on the records of the corporation and have been returned as undeliverable.

AB1112,12,8 2. All, but not less than 2, payments of dividends on securities during a one-year period, or 2 consecutive payments of dividends on securities during a period of more than one year, have been sent to the shareholder at the shareholder's address as shown on the records of the corporation and have been returned as undeliverable.

AB1112,12,12 (b) If a shareholder to whom par. (a) applies delivers to the corporation a written notice containing the shareholder's current address, then, beginning 30 days after receipt of the notice by the corporation, the requirement that notice be given to the shareholder is reinstated, until such time as par. (a) may again apply.

AB1112, s. 16 Section 16. 180.0708 of the statutes is created to read:

AB1112,12,15 180.0708 Conduct of meeting. Unless the articles of incorporation or bylaws provide otherwise, every meeting of the shareholders shall be conducted as follows:

AB1112,12,17 (1) A chairperson shall preside over the meeting. The chairperson shall be appointed by the board of directors.

AB1112,12,20 (2) The chairperson shall determine the order of business and the 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.

AB1112,12,25 (3) The chairperson shall determine and announce at the meeting the time at which the polls will close for each matter voted upon at the meeting. The polls close at the announced time, except that, if no such announcement is made, the polls close upon final adjournment of the meeting. After the polls close, no ballots, proxies, or votes or revocations or changes to ballots, proxies, or votes may be accepted.

AB1112, s. 17 Section 17. 180.0824 (3) of the statutes is amended to read:

AB1112,13,6 180.0824 (3) Except as provided in ss. 180.0825 (2) and (3), 180.0831 (4) and 180.0855 (1) and (2), if a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors or a committee of the board of directors created under s. 180.0825, unless the articles of incorporation or bylaws require the vote of a greater number of directors.

AB1112, s. 18 Section 18. 180.0825 (1) of the statutes is amended to read:

AB1112,13,13 180.0825 (1) Unless the articles of incorporation or bylaws provide otherwise, a board of directors may create one or more committees, appoint members of the board of directors to serve on the committees and designate other members of the board of directors to serve as alternates. Each committee shall have 2 or more members at least one member. Unless otherwise provided by the board of directors, members of the committee shall serve at the pleasure of the board of directors.

AB1112, s. 19 Section 19. 180.0825 (2) (intro.) and (b) of the statutes are consolidated, renumbered 180.0825 (2) and amended to read:

AB1112,13,19 180.0825 (2) Except as provided in sub. (3), the creation of a committee, appointment of members to it, and designation of alternate members, if any, shall be approved by the greater of the following: (b) The number of directors required by the articles of incorporation or bylaws to take action under s. 180.0824 (3).

AB1112, s. 20 Section 20. 180.0825 (2) (a) of the statutes is repealed.

AB1112, s. 21 Section 21. 180.0825 (5) (a) to (h) of the statutes are repealed.

AB1112, s. 22 Section 22. 180.0825 (5) (am) and (bm) of the statutes are created to read:

AB1112,13,25 180.0825 (5) (am) Approve or recommend to shareholders for approval any action or matter expressly required by this chapter to be submitted to shareholders for approval.

AB1112,14,1 (bm) Adopt, amend, or repeal any bylaw of the corporation.