HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 1189 Corporate Actions
SPONSOR(S): Regulatory Reform & Economic Development Subcommittee, Abbott
TIED BILLS: IDEN./SIM. BILLS: CS/CS/SB 1198
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Regulatory Reform & Economic Development 13 Y, 0 N, As CS Fletcher Anstead
Subcommittee
2) Judiciary Committee 21 Y, 0 N Mawn Kramer
3) Commerce Committee 18 Y, 0 N Fletcher Hamon
SUMMARY ANALYSIS
Corporations and other business entities that do business in Florida are generally governed by the
requirements in the Florida Business Corporation Act, a law that is modeled after the Model Business
Corporation Act promulgated by the American Bar Association in 1950, or by related provisions in Florida law.
The Department of State (DOS) is the state’s central location responsible for receiving and maintaining a
number of corporate records. Florida law requires certain documents to be filed with the Division of
Corporations (division) of the DOS in order for a business to be organized as a corporation, partnership, limited
liability company (LLC), or other business/commercial entity in Florida.
The bill provides a statutory ratification procedure for corporate actions that may not have been properly
authorized and for shares that may have been improperly issued. These improperly authorized corporate
actions, that would otherwise be proper, are called “defective corporate actions.”
The statutory ratification process provided by the bill is intended to supplement common law ratification.
Subsequent ratified defective corporate actions, under these proposed provisions, would remain subject to
equitable review. The ratification procedure is intended to be available only where there is objective evidence
that a corporate action was defectively implemented. The bill gives specified affected parties the ability to file
motions in the circuit court of the applicable county.
The bill also provides a statutory mechanism for a registered agent to resign from more than one business
entity at a time, if the specified entity has been dissolved for ten continuous years or longer, by filing a
consolidated resignation statement with DOS. This mechanism applies to the following business entity types:
Domestic and foreign LLCs;
Domestic corporations; and
Domestic corporations not for profit.
The bill keeps the fee to file the registered agent resignation the same for the above listed business entity
types, even if filing to resign from more than one entity at a time using the consolidated resignation statement.
The bill does not appear to have a fiscal impact on local government expenses and revenues. However, the bill
does appear to have an indeterminable negative fiscal impact on state government revenues and an
indeterminate positive impact on the private sector.
The bill provides an effective date of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1189e.COM
DATE: 2/23/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Corporations and other business entities that do business within Florida are governed generally by the
requirements in the Florida Business Corporation Act, a law that is modeled after the Model Business
Corporation Act (MBCA) promulgated by the American Bar Association (ABA) in 1950, or by related
provisions in Florida law.1
Limited Liability Companies (Chapter 605)
A limited liability company (LLC) is a type of business entity recognized by and regulated under chapter
605, F.S., the Florida Revised Limited Liability Company Act. Benefits to forming a business as an LLC
include a flexible tax structure and a vertical liability shield, which limits the personal liability of the
LLC’s members and managers for company obligations. Currently, LLCs are the most popular business
entity in Florida, with over 2 million active LLCs as of 2023. 2
Corporations for Profit (Chapter 607)
A for profit corporation is a type of business entity recognized by and regulated under chapter 607, F.S.
In order for a for profit corporation to organize, the entity must file articles of incorporation with the
Department of State (DOS), which articles must include specifics such as a corporate name, address,
and number of shares, and, must designate a registered office and agent.3
Corporations Not for Profit (Chapter 617)
A corporation not for profit is a type of business entity recognized and regulated under chapter 617,
F.S., the Florida Not For Profit Corporation Act. The structure of corporations not for profit is similar to
that of for profit corporations, and the filing of articles of incorporation is required.
The Department of State
DOS is the state’s central location responsible for receiving and maintaining a number of corporate
records. Florida law requires certain documents to be filed with the Division of Corporations (division) of
the DOS in order for a business to be organized as a corporation, partnership, LLC, or other
business/commercial entity. Business entities can file these documents and check their status through
an internet portal that is maintained by the division.
FEES
In order to help maintain these records, the DOS is statutorily allowed to collect fees. Florida’s fee
requirements for business entities are some of the most competitive in the United States; where a
corporation in Delaware (the state with the most incorporations, because of their notoriously pro-
business laws) will pay no less than $175 and no more than $200,000 in annual fees, Florida only
requires an aggregate of $150 in fees per year.4
1 See generally Chapter 607, F.S.
2 Florida Department of State, Division of Corporations Yearly Statistics, https://dos.fl.gov/sunbiz/about-us/yearly-
statistics/ (last visited Feb. 14, 2024).
3 Section 607.0202, F.S.
4 U.S. Securities and Exchange Commission, Schedule 14-A, Saga Communications, Inc. Proxy Statement (Apr. 16,
2020), https://www.sec.gov/Archives/edgar/data/0000886136/000110465921050534/tm2111304-1_def14a.htm, (last
visited Feb. 14, 2024).
STORAGE NAME: h1189e.COM PAGE: 2
DATE: 2/23/2024
In 2013, the Legislature passed a law to make fees more uniform across the various business law
chapters. The relevant fees, of which each respective business entity must be aware, are as follows:5
Corporation Fees
New Florida/Foreign Corporation
Filing Fees $35.00
Registered Agent Designation $35.00
Annual Reports
Annual Report of a For Profit Corporation $150.00
Annual Report of Not For Profit Corporation $61.25
Resignation of Agent
Resignation of Registered Agent of an Active Corporation $87.50
Resignation of Registered Agent of an Administratively $35.00
Dissolved/Voluntarily Dissolved/Withdrawn
Corporation/Inactive Corporation
Limited Liability Company Fees
New Florida/Foreign LLC
Filing Fee $100.00
Registered Agent Designation Fee $25.00
Annual Reports
Annual Report $138.75
Resignation of Agent
Resignation of Registered Agent for an active LLC $85.00
Resignation of Registered Agent for a dissolved/inactive $25.00
LLC
Defective Corporate Actions
Under the Florida Business Corporation Act, there are certain requirements that a corporation must
establish in order to be considered a valid and properly authorized corporation. For instance, a
corporation must file its articles of incorporation with the DOS to transact business in the state. If a
corporation does not file those articles of incorporation or does not include required information in the
articles of incorporation, it may be considered an invalid corporation.6
Additionally, a corporation could have filed all documents correctly, but made an error in the
appointment of their board of directors. Subsequent actions by the corporation, after that incorrect
appointment of the board of directors, may be considered invalid. Another potential scenario of a
defective corporate action may arise when a corporation issues shares but did not adhere to the correct
share issuing guidelines. Any subsequent action, after that incorrect share issuance, may be
considered invalid.
Being an invalid corporation can also be referred to as being a “defective corporation” or an
“unauthorized corporation.” However, because of their nature, corporations and their agents, whether
they be the incorporator, the board of directors, an officer, or the shareholders, can take corporate
actions even though the corporation is technically defective, unauthorized, or invalid.
When an unauthorized or defective corporation takes a corporate action, such as improperly issuing
shares, legal issues can arise. For example, a corporation that is trying to make a business deal with
another entity or raise capital usually has to provide certain corporate records for the other parties’ due
diligence, and discovering a defective corporate action can immediately halt a transaction or potential
transaction. This is problematic where a business deal has already been agreed upon prior to the
discovery of the defective corporate action.
5 The Florida Department of State, Division of Corporations, Fees, https://dos.fl.gov/sunbiz/forms/fees/, (last visited Feb.
14, 2024).
6 Section 607.0120(1), F.S.
STORAGE NAME: h1189e.COM PAGE: 3
DATE: 2/23/2024
Currently, disputed acts or defective share issuances that are carried out by a corporation are governed
by common law in the court system.7 These disputes can cost business entities time and money to
resolve, in addition to the time and resources that have to be allocated by the state to the court system.
Amending Articles of Incorporation
The articles of incorporation govern a corporation. A corporation can amend or add as many articles of
incorporation as necessary.8 The amendment of an articles of incorporation must be adopted and
approved. The adopting and approving can be done several ways, including through the provided
method in the articles of incorporation, which method may be undertaken by shareholder action, or,
where such action is not required, by either the incorporators or board of directors.9
Such an amendment can be made with one single amendment form, for a fee of $35.00.10 This form,
called the articles of amendment form, must be signed and delivered to the DOS, among other specific
requirements laid out in statute.11
Active vs Dissolved Business Entities
The division annually assigns an accompanying status (that is, “active” or “inactive”) to a business
entity based on whether or not the business entity properly completed all of its filings and paid all
applicable fees. When a business entity pays their filing fees and files their initial required filings, (for an
LLC it is their articles of organization, and for a corporation it is their articles of incorporation) the
division will review the filings and, if everything is satisfactory, the business entity will be assigned an
“active” status.
After the initial filings, a business entity remains “active” if it files the statutorily-required annual report
and pays the associated fee. Typically, in the fall, the division will go through all of their filings and
determine if a business entity is up to date in all of their filings and fees. If the division does not have
the required information and associated fee on record, it will assign the business entity an “inactive”
status and the business entity will be administratively dissolved or it authority to operate will be
administratively revoked.12
A business entity can determine its status by logging in to the online portal operated by the DOS, or it
can file and pay a fee to have the DOS send them a certificate of status. Such fee is $5 for an LLC and
$8.75 for a corporation.13
A business entity that is no longer “active” may file a reinstatement application, accompanied by the
associated fee, to reactivate their business status and become an “active” business entity again.
Registered Agents
Generally, Florida law requires a business entity to designate a registered agent.14 A registered agent
must be an individual who resides in Florida and whose business address is identical to the address of
the registered office.15 The registered agent must also be available at that Florida address during
normal business hours and promptly forward any significant legal or state documents to the business.
7 Florida Bar Business Law Section, Chapter 607 White Paper: Summary of Ratification of Defective Corporate Actions
and Resignation of Registered Agent Proposed Legislation (2024).
8 Section 607.1001, F.S.
9 Section 607.1003(1-9), F.S., provides various methods for amending the articles of incorporation.
10 Florida Department of State, Division of Corporations, Articles of Amendment form,
https://form.sunbiz.org/pdf/cr2e011.pdf, (last visited on Feb. 14, 2024).
11 Section 607.1006, F.S.
12 Note that a general partnership is not required to file an annual report or pay an annual report fee.
13 For LLCs see section 605.0213(12), F.S., and for Corporations see section 607.0122(19), F.S.
14 S. 607.0501, F.S.
15 Id.
STORAGE NAME: h1189e.COM PAGE: 4
DATE: 2/23/2024
Registered agents are required to serve as the contact for the business and receive service of process,
legal notifications, and other official state documents for the business.
The DOS is required to maintain an accurate record of each business’s registered agent and registered
office for service of process, and must promptly furnish any such information upon request and
payment of the required fee.16 An individual within the business may serve as the entity’s registered
agent. Additionally, a business entity with an active Florida filling or registration may serve as a
registered agent; however, an entity cannot serve as its own registered agent. Further, where a
business entity does not appoint and maintain a registered agent, the DOS may administratively
dissolve that business entity.17
In Florida, a registered agent is required for the following business entities:
LLCs;
Corporation/Foreign Corporation (for profit);
Corporation/Foreign Corporation (not for profit);
Limited Partnerships (domestic and foreign); and
Limited Liability Partnerships (domestic and foreign).18
In order for a registered agent to resign as the registered agent of the business entity, the registered
agent must complete a specific form, accompanied by the payment of the required fee, and mail it in to
the division. Currently, a registered agent serving as such for more than one business entity who
wishes to resign from all such positions must pay a separate fee to resign as the registered agent of
each individual business entity.
Effect of the Bill
Ratification of Defective Corporate Actions
The bill creates statutory procedures for ratifying a defective corporate action and provides a judicial
process for contesting the validity of certain corporate actions or putative shares. Under the bill, a
defective corporate action is not void or voidable if the defective corporate action was ratified in
accordance with the ratification or validation requirements proposed by the bill. The bill also
emphasizes that:
The ratification or validation process is not the exclusive means of ratifying or validating any
defective corporate action;
The absence or failure of ratification will not, in and of itself, affect the validity or effectiveness
of any corporate action properly ratified under common law or otherwise; and
The ratification or validation process does not create a presumption that any such corporate
action is or was a defective corporate action or is or was void or voidable.
DEFINITIONS
The bill defines certain terms, including:
16 Id.
17 For limited partnerships, s. 620.1809, F.S. governs.
18 Note that a general partnership is not required to have a registered agent . Section 620.8301, F.S., states that each
general partner is an agent of the partnership.