SESSION OF 2020
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2401
As Further Amended by House Committee on
Judiciary

Brief*
HB 2401 would amend the Kansas General Corporation
Code as it relates to stockholder quorums needed to transact
business. The bill would add language specifying that, for
businesses with over 500 stockholders and articles of
incorporation or bylaws that provide no stockholder may vote
more than one share:
● A quorum would consist of no less than 10 percent
of the shares entitled to vote at the meeting; and
● Such a business could amend its articles of
incorporation by a majority of a quorum voting at a
special or annual meeting.
The provisions of the bill would expire on July 1, 2023.
The bill also would make technical updates to statutory
references, as it was introduced in the 2019 Legislative
Session.
The bill would be in effect upon publication in the
Kansas Register.


____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
Background
The bill introduced by the House Committee on Federal
and State Affairs at the request of Representative Highberger
in the 2019 Legislative Session.
In the House Committee on Federal and State Affairs
hearing on January 23, 2020, proponent testimony was
provided by Representatives Horn and Highberger and a
representative of The Merc Co+op. Proponents generally
stated the businesses described in the bill struggle to comply
with current quorum requirements for shareholder meetings
and elections. Proponents stated many grocery cooperatives
that provide services to rural areas are organized under this
structure and a 10 percent quorum requirement would still be
difficult but would be a more achievable standard. Written-
only proponent testimony was provided by a private citizen.
Written-only neutral testimony was provided by the Kansas
Cooperative Council. No opponent testimony was provided.
The House Committee on Federal and State Affairs
amended the bill to make it effective upon publication in the
Kansas Register.
On February 4, 2020, the bill was withdrawn from the
House Calendar and referred to the House Committee on
Judiciary. At the House Committee on Judiciary hearing,
proponent testimony was provided by Representative
Highberger and a representative of The Merc Co+op. Written-
only neutral testimony was provided by the Kansas Bar
Association, indicating a need to narrowly tailor any change
to the Kansas General Corporation Code to protect the
interests of all private corporations formed in Kansas.
The House Committee on Judiciary amended the bill
further to sunset the provisions of the bill on July 1, 2023, and
to update statutory references.
According to the fiscal note prepared by the Division of
the Budget in 2019, the Office of the Secretary of State
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indicates enactment of the bill could result in additional
revenue to the agency and the State General Fund if the bill
resulted in an increase in filings for amendments to articles of
incorporation, but the agency is unable to estimate how many
additional filings might be made or what increase in revenue
might result. Any fiscal effect associated with the bill was not
reflected in The FY 2020 Governor’s Budget Report.


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Statutes affected:
As introduced: 17-6506, 17-6602
As Amended by House Committee: 17-6506, 17-6602
As Further Amended by House Committee: 17-6506, 17-6602