CERTIFICATION OF ENROLLMENT
SUBSTITUTE SENATE BILL 5786
Chapter 22, Laws of 2024
68th Legislature
2024 Regular Session
BUSINESS CORPORATION ACT—VARIOUS PROVISIONS
EFFECTIVE DATE: June 6, 2024
Passed by the Senate February 6, 2024 CERTIFICATE
Yeas 49 Nays 0
I, Sarah Bannister, Secretary of
the Senate of the State of
DENNY HECK Washington, do hereby certify that
President of the Senate the attached is SUBSTITUTE SENATE
BILL 5786 as passed by the Senate
and the House of Representatives on
the dates hereon set forth.
Passed by the House February 27, 2024
Yeas 94 Nays 0
SARAH BANNISTER
LAURIE JINKINS Secretary
Speaker of the House of
Representatives
Approved March 13, 2024 11:09 AM FILED
March 14, 2024
Secretary of State
JAY INSLEE State of Washington
Governor of the State of Washington
 SUBSTITUTE SENATE BILL 5786
Passed Legislature - 2024 Regular Session
State of Washington 68th Legislature 2024 Regular Session
By Senate Law & Justice (originally sponsored by Senators Pedersen,
Padden, Mullet, Nobles, and Salomon; by request of Washington State
Bar Association)
READ FIRST TIME 01/26/24.
1 AN ACT Relating to making updates to the Washington business
2 corporation act; amending RCW 23B.07.250, 23B.07.270, 23B.08.080,
3 23B.08.240, 23B.09.030, 23B.10.030, 23B.12.020, 23B.13.020,
4 23B.13.200, 23B.13.210, 23B.13.220, 23B.17.015, 23B.25.100, and
5 23B.25.130; reenacting and amending RCW 23B.01.400; adding a new
6 chapter to Title 23B RCW; and repealing RCW 23B.11.010, 23B.11.020,
7 23B.11.030, 23B.11.035, 23B.11.040, 23B.11.045, 23B.11.050,
8 23B.11.060, 23B.11.070, 23B.11.080, 23B.11.090, 23B.11.100, and
9 23B.11.110.
10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
11 NEW SECTION. Sec. 1. The definitions in this section apply
12 throughout this chapter unless the context clearly requires
13 otherwise.
14 (1) "Acquired entity" means the domestic corporation that will
15 have all of one or more classes or series of its shares acquired in a
16 share exchange.
17 (2) "Acquiring entity" means the domestic corporation that will
18 acquire all of one or more classes or series of shares of the
19 acquired entity in a share exchange.
20 (3) "New owner liability" means owner liability of a person,
21 resulting from a merger or share exchange, that is (a) in respect of
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 1 an entity which is different from the entity in which the person held
2 shares or interests immediately before the merger or share exchange
3 became effective; or (b) in respect of the same entity as the one in
4 which the person held shares or interests immediately before the
5 merger or share exchange became effective if (i) the person did not
6 have owner liability immediately before the merger or share exchange
7 became effective, or (ii) the person had owner liability immediately
8 before the merger or share exchange became effective, the terms and
9 conditions of which were changed when the merger or share exchange
10 became effective.
11 (4) "Party to a merger" means any domestic corporation or other
12 entity that will merge under a plan of merger.
13 (5) "Surviving entity" in a merger means the domestic corporation
14 or other entity into which one or more other domestic corporations or
15 other entities are merged.
16 NEW SECTION. Sec. 2. (1) By complying with this chapter, one or
17 more domestic corporations may merge with one or more domestic
18 corporations or other entities in accordance with a plan of merger,
19 resulting in a surviving entity.
20 (2) By complying with the provisions of this chapter applicable
21 to other entities, an other entity may be a party to a merger with a
22 domestic corporation, but only if the merger is permitted by the
23 organic law of the other entity.
24 (3) If the organic law or organic rules of a domestic other
25 entity do not provide procedures for the approval of a merger, a plan
26 of merger may nonetheless be approved by the unanimous consent of all
27 of the interest holders of that other entity, and the merger may
28 thereafter be effected as provided in the other provisions of this
29 chapter. For the purposes of applying this chapter in such a case:
30 (a) The other entity, its interest holders, interests, and
31 organic rules taken together will be deemed to be a domestic
32 corporation, shareholders, shares, and articles of incorporation,
33 respectively, and vice versa as the context may require; and
34 (b) If the business and affairs of the other entity are managed
35 by a person or persons that are not identical to the interest
36 holders, that group will be deemed to be the board of directors.
37 (4) The plan of merger must include:
38 (a) As to each party to the merger, its name, jurisdiction of
39 organization, and type of entity;
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 1 (b) The surviving entity's name, jurisdiction of organization,
2 and type of entity;
3 (c) The manner and basis of converting the shares of each merging
4 domestic corporation and interests of each merging other entity into
5 shares or other securities, interests, obligations, rights to acquire
6 shares, other securities or interests, cash, or other property, or of
7 canceling some or all of such shares or interests, or any combination
8 of the foregoing; and
9 (d) Any other provisions required by the laws under which any
10 party to the merger is organized or by which it is governed, or by
11 the articles of incorporation or organic rules of any such party.
12 (5) In addition to the requirements of subsection (4) of this
13 section, a plan of merger may contain amendments to the articles of
14 incorporation or public organic record of any party to the merger
15 that will be the surviving entity, a restatement that includes one or
16 more amendments to the surviving entity's articles of incorporation
17 or public organic record, and any other provision not prohibited by
18 law.
19 (6) Terms of a plan of merger may be made dependent on facts
20 objectively ascertainable outside the plan in accordance with RCW
21 23B.01.200(3).
22 (7) A plan of merger may be amended only with the consent of each
23 party to the merger, except as provided in the plan of merger. An
24 amendment to a plan of merger that has previously been approved by a
25 party's shareholders or interest holders must be approved:
26 (a) In the same manner as the plan was approved, if the plan of
27 merger does not provide for the manner in which it may be amended; or
28 (b) In the manner provided in the plan of merger, except that
29 shareholders or interest holders that were entitled to vote on or
30 consent to approval of the plan of merger are entitled to vote on or
31 consent to any amendment of the plan of merger that will change:
32 (i) The amount or kind of shares or other securities, interests,
33 obligations, rights to acquire shares, other securities or interests,
34 cash, or other property to be received under the plan of merger by
35 the shareholders or interest holders of any party to the merger;
36 (ii) The articles of incorporation of any domestic corporation,
37 or the organic rules of any other entity, that will be the surviving
38 entity of the merger, unless (A) the change constitutes an amendment
39 to the articles of incorporation or organic rules of the surviving
40 entity that would be permitted without approval of shareholders or
p. 3 SSB 5786.SL
1 interest holders by RCW 23B.10.020 or by comparable provisions of the
2 organic law of any such other entity, or (B) the shareholders or
3 interest holders that were entitled to vote on or consent to approval
4 of the plan of merger will not continue as or become shareholders or
5 interest holders of the surviving entity; or
6 (iii) Any of the other terms or conditions of the plan of merger
7 if the change would adversely affect such shareholders or interest
8 holders in any material respect.
9 NEW SECTION. Sec. 3. (1) By complying with this chapter:
10 (a) A domestic corporation may acquire all of the shares of one
11 or more classes or series of shares of another domestic corporation
12 in exchange for shares or other securities, obligations, rights to
13 acquire shares or other securities, cash, other property, or any
14 combination of the foregoing, pursuant to a plan of share exchange;
15 or
16 (b) All of the shares of one or more classes or series of shares
17 of a domestic corporation may be acquired by another domestic
18 corporation in exchange for shares or other securities, obligations,
19 rights to acquire shares or other securities, cash, other property,
20 or any combination of the foregoing, pursuant to a plan of share
21 exchange.
22 (2) The plan of share exchange must include:
23 (a) The name of each domestic corporation the shares of which
24 will be acquired and the name of the domestic corporation that will
25 acquire those shares; and
26 (b) The manner and basis of exchanging shares of a domestic
27 corporation that is the acquired entity for shares or other
28 securities, obligations, rights to acquire shares, other securities,
29 cash, other property, or any combination of the foregoing.
30 (3) In addition to the requirements of subsection (2) of this
31 section, a plan of share exchange may contain any other provision not
32 prohibited by law.
33 (4) Terms of a plan of share exchange may be made dependent on
34 facts objectively ascertainable outside the plan in accordance with
35 RCW 23B.01.200(3).
36 (5) A plan of share exchange may be amended only with the consent
37 of each party to the share exchange, except as provided in the plan
38 of share exchange. A domestic corporation may approve an amendment to
39 a plan of share exchange:
p. 4 SSB 5786.SL
 1 (a) In the same manner as the plan of share exchange was
2 approved, if the plan of share exchange does not provide for the
3 manner in which it may be amended; or
4 (b) In the manner provided in the plan of share exchange, except
5 that shareholders that were entitled to vote on or consent to
6 approval of the plan of share exchange are entitled to vote on or
7 consent to any amendment of the plan of share exchange that will
8 change:
9 (i) The amount or kind of shares or other securities,
10 obligations, rights to acquire shares, other securities, cash, or
11 other property to be received under the plan by the shareholders of
12 the acquired entity; or
13 (ii) Any of the other terms or conditions of the plan of share
14 exchange if the change would adversely affect such shareholders in
15 any material respect.
16 NEW SECTION. Sec. 4. In the case of a domestic corporation that
17 is a party to a merger or the acquired entity in a share exchange,
18 the plan of merger or share exchange must be approved in the
19 following manner:
20 (1) The plan of merger or share exchange must first be approved
21 by the board of directors.
22 (2) Except as provided in subsection (6) of this section, and in
23 sections 6, 7, and 11 of this act, the plan of merger or share
24 exchange must then be approved by the shareholders. In submitting the
25 plan of merger or share exchange to the shareholders for approval,
26 the board of directors must recommend that the shareholders approve
27 the plan or, in the case of an offer referred to in section 6(1)(b)
28 of this act, that the shareholders tender their shares to the offeror
29 in response to the offer, unless (a) the board of directors makes a
30 determination that because of conflicts of interest or other special
31 circumstances it should not make such a recommendation, or (b) RCW
32 23B.08.245 applies. If either (a) or (b) of this subsection applies,
33 the board of directors must inform the shareholders of the basis for
34 so proceeding.
35 (3) The board of directors may set conditions for the approval of
36 the plan of merger or share exchange by the shareholders or the
37 effectiveness of the plan.
38 (4) If the plan of merger or share exchange is required to be
39 approved by the shareholders, and if the approval is to be given at a
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 1 meeting, the corporation must notify each shareholder, regardless of
2 whether entitled to vote, of the meeting of shareholders at which the
3 plan is to be submitted for approval. The notice must state that the
4 purpose, or one of the purposes, of the meeting is to consider the
5 plan and must contain or be accompanied by a copy of the plan or a
6 summary of the material terms and conditions of the proposed merger
7 or share exchange and the consideration to be received by
8 shareholders. If the corporation is to be merged into a domestic
9 corporation or other entity, the notice must also include or be
10 accompanied by a copy or summary of the articles of incorporation and
11 bylaws of that domestic corporation or the organic rules of that
12 other entity.
13 (5)(a) With respect to a domestic corporation formed before
14 August 1, 2024:
15 (i) Unless the articles of incorporation, or the board of
16 directors acting in accordance with subsection (3) of this section,
17 require a different vote, shareholder approval of the plan of merger
18 or share exchange requires (A) the approval of two-thirds of the
19 voting group comprising all the votes entitled to be cast on the
20 plan, and (B) the approval of two-thirds of the votes entitled to be
21 cast on the plan by each other voting group entitled under section 5
22 of this act or the articles of incorporation to vote separately on
23 the plan; and
24 (ii) The articles of incorporation may require a different vote
25 than that provided in this subsection, or a different vote by
26 separate voting groups, so long as the required vote is not less than
27 a majority of all the votes entitled to be cast on the plan and of
28 each other voting group entitled to vote separately on the plan.
29 (b) With respect to a domestic corporation formed on or after
30 August 1, 2024, unless the articles of incorporation, or the board of
31 directors acting in accordance with subsection (3) of this section,
32 require a greater vote, shareholder approval of the plan of merger or
33 share exchange requires (i) the approval of a majority of the voting
34 group comprising all the votes entitled to be cast on the plan, and
35 (ii) the approval of a majority of the votes entitled to be cast on
36 the plan by each other voting group entitled under section 5 of this
37 act or the articles of incorporation to vote separately on the plan.
38 (6) Unless the articles of incorporation provide otherwise,
39 approval of a plan of merger by the shareholders of a domestic
40 corporation that is a party to the merger is not required if:
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 1 (a) Such corporation will survive the merger;
2 (b) Except for amendments permitted by RCW 23B.10.020, its
3 articles of incorporation will not be changed; and
4 (c) Each shareholder of such corporation whose shares were
5 outstanding immediately before the merger becomes effective will hold
6 the same number of shares, with identical preferences, rights, and
7 limitations, immediately after the merger becomes effective.
8 (7) If as a result of a merger or share exchange one or more
9 shareholders of a domestic corporation would become subject to new
10 owner liability, approval of the plan of merger or share exchange
11 requires the express written consent of each such shareholder to
12 become subject to that new owner liability in connection with the
13 merger or share exchange, unless in the case of a shareholder that
14 already has owner liability with respect to that domestic
15 corporation, (a) the new owner liability is with respect to a
16 domestic corporation (which may be a different or the same domestic
17 corporation in which the person is a shareholder) or other entity,
18 and (b) the terms and conditions of the new owner liability are
19 substantially identical to those of the existing owner liability
20 (other than for changes that eliminate or reduce that owner
21 liability).
22 NEW SECTION. Sec. 5. (1) Subject to subsection (2) of this
23 section, separate voting by voting groups is required:
24 (a) On a plan of merger, by each class or series of shares of a
25 domestic corporation that is a party to the merger that:
26 (i) Is to be converted under the plan into shares, other
27 securities, interests, obligations, rights to acquire shares, oth