The "Rhode Island Business Climate Reform Act" proposes significant amendments to the Rhode Island Business Corporation Act, focusing on corporate governance and shareholder rights. Key changes include the establishment of minimum ownership requirements for initiating derivative actions, allowing publicly traded entities and for-profit private entities with 500 or more equity owners to impose a threshold of up to 5% of outstanding equity for shareholders to bring such actions. The act also limits attorneys' fees in derivative actions by disqualifying mere disclosure-only settlements as substantial benefits for fee awards and introduces a business judgment rule that presumes directors and managers act in good faith.

Additionally, the act modifies requirements for foreign corporations regarding registered agents, allowing the Secretary of State to serve as a registered agent for foreign corporations and limited liability companies starting July 1, 2026. It includes provisions for advanced determinations of director independence and waivers of class-by-class voting.

The bill introduces new types of limited liability companies (LLCs), including "Anonymous Limited Liability Companies" (ALLCs), which do not require the names of members and managers to be placed on public filings, and "protected series limited liability companies," which allow for the establishment of designated series with separate rights and obligations.

It establishes a complex commercial litigation calendar in the Superior Court for cases involving claims of $1 million or more, and it raises the homestead estate exemption limit to be unlimited in value effective July 1, 2026. The legislation also streamlines the arbitration process through the introduction of the "Rhode Island Rapid Arbitration Act," clarifying trust management laws, and amending taxation laws by eliminating the minimum tax for certain entities and introducing a franchise fee for various business entities.

Overall, these reforms aim to create a more favorable business environment in Rhode Island, with staggered implementation dates for certain provisions, including a court of chancery to handle actions in equity and various provisions governing arbitrations.

Statutes affected:
8450: 7-16-11, 9-26-4.1, 44-11-2