FILED SENATE
Apr 3, 2023
GENERAL ASSEMBLY OF NORTH CAROLINA
S.B. 477
SESSION 2023 PRINCIPAL CLERK
S D
SENATE BILL DRS45224-MV-23
Short Title: Amend Bus. Corp. Act/Bus. Opp. Disclosures. (Public)
Sponsors: Senators Galey and Overcash (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO MAKE VARIOUS CHANGES TO THE NORTH CAROLINA BUSINESS
3 CORPORATION ACT AND TO ELIMINATE DUPLICATIVE STATE DISCLOSURE
4 REQUIREMENTS FOR BUSINESS OPPORTUNITY SELLERS THAT FILE
5 COMPARABLE DISCLOSURES WITH THE FEDERAL TRADE COMMISSION, AS
6 RECOMMENDED BY THE NORTH CAROLINA BAR ASSOCIATION.
7 The General Assembly of North Carolina enacts:
8
9 PART I. FACILITATE THE USE OF EMAIL AND OTHER COMMUNICATIONS
10 WITH SHAREHOLDERS
11 SECTION 1.(a) G.S. 55-1-40 reads as rewritten:
12 "§ 55-1-40. Chapter definitions.
13 In The following definitions apply in this Chapter unless otherwise specifically provided:
14 (1) "Articles of incorporation" include Articles of incorporation. – Include
15 amended and restated articles of incorporation and articles of merger.
16 (2) "Authorized shares" means the Authorized shares. – The shares of all classes
17 a domestic or foreign corporation is authorized to issue.
18 (2a) "Business entity," Business entity, as used in G.S. 55-11-10 and Article 11A
19 of this Chapter, means a Chapter. – A domestic corporation (including
20 corporation, including a professional corporation as defined in G.S. 55B-2),
21 G.S. 55B-2, a foreign corporation, a domestic or foreign nonprofit
22 corporation, a domestic or foreign limited liability company, a domestic or
23 foreign limited partnership, a registered limited liability partnership or foreign
24 limited liability partnership as defined in G.S. 59-32, or any other partnership
25 as defined in G.S. 59-36 whether or not formed under the laws of this State.
26 (3) "Conspicuous" means so Conspicuous. – So written that a reasonable person
27 against whom the writing is to operate should have noticed it. For example,
28 printing in italics or boldface or contrasting color, or typing in capitals or
29 underlined, is conspicuous.
30 (4) "Corporation" or "domestic corporation" means a Corporation or domestic
31 corporation. – A corporation for profit or a corporation having capital stock
32 that is incorporated under or subject to the provisions of this Chapter and that
33 is not a foreign corporation except that in G.S. 55-9-01 and G.S. 55-15-21
34 "corporation" includes domestic and foreign corporations.
35 (5) "Deliver" includes Deliver. – Includes mail.
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1 (6) "Distribution" means a Distribution. – A direct or indirect transfer of money
2 or other property (except its own shares) or incurrence of indebtedness by a
3 corporation to or for the benefit of its shareholders in respect of any of its
4 shares. A distribution may be in the form of a declaration or payment of a
5 dividend; a purchase, redemption, or other acquisition of shares; a distribution
6 of indebtedness; or otherwise.
7 (6a) "Dividend credit" Dividend credit, as used in G.S. 55-6-01(d)(5) means the
8 G.S. 55-6-01(d)(5). – The aggregate of all yearly dividend credits. "Yearly
9 dividend credit" means with respect to noncumulative preferred shares, the
10 amount by which the full dividend preference of such a share, to the extent
11 that such the preference is earned by the corporation with respect to such a the
12 share in a particular fiscal year, exceeds the dividends paid on said the share
13 for that year; provided, that no however, dividend credit shall not accrue
14 unless, and only to the extent that, there exists an earned surplus at the end of
15 such that fiscal year. Computations of earnings allocable to classes of shares
16 made in good faith by the board of directors in accordance with generally
17 accepted accounting principles shall be are conclusive. For the purpose of this
18 definition, a dividend is deemed paid if it has been declared and funds for its
19 payment have been set aside.
20 (6b) "Domestic limited liability company" has the Domestic limited liability
21 company. – The same meaning as the term "LLC" in G.S. 57D-1-03.
22 (6c) "Domestic limited partnership" has the Domestic limited partnership. – The
23 same meaning as in G.S. 59-102.
24 (6d) "Domestic nonprofit corporation" means a Domestic nonprofit corporation. –
25 A corporation as defined in G.S. 55A-1-40.
26 (7) "Effective date of notice" is defined Effective date of notice. – Defined in
27 G.S. 55-1-41.
28 (8) "Electronic" has the Electronic. – The same meaning as in G.S. 66-312.
29 (8a) "Electronic record" has the Electronic record. – The same meaning as in
30 G.S. 66-312.
31 (8b) "Electronic signature" has the Electronic signature. – The same meaning as in
32 G.S. 66-312.
33 (8c) Email. – An electronic transmission directed to a unique email address.
34 (8d) Email address. – A destination, commonly expressed as a string of characters,
35 consisting of a unique username or mailbox, commonly referred to as the
36 "local part" of the address, and a reference to an internet domain, commonly
37 referred to as the "domain part" of the address, whether or not displayed, to
38 which an email may be sent or delivered.
39 (9) "Entity" includes (without Entity. – Without limiting the meaning of such the
40 term in Article 9 of this Chapter): Chapter, includes any of the following:
41 a. Any of the following, whether domestic or foreign:
42 1. Corporation; nonprofit corporation; professional
43 corporation;corporation.
44 2. Limited liability company;company.
45 3. Profit and nonprofit unincorporated association;
46 andassociation.
47 4. Business trust, estate, partnership, trust;trust.
48 b. Two or more persons having a joint or common economic interest;
49 andinterest.
50 c. The United States, and any state and foreign government.
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1 (10) "Foreign corporation" means a Foreign corporation. – A corporation for profit
2 incorporated under a law other than the law of this State.
3 (10a) "Foreign limited liability company" has the Foreign limited liability company.
4 – The same meaning as the term "foreign LLC" in G.S. 57D-1-03.
5 (10b) "Foreign limited partnership" has the Foreign limited partnership. – The same
6 meaning as in G.S. 59-102.
7 (10c) "Foreign nonprofit corporation" means a Foreign nonprofit corporation. – A
8 foreign corporation as defined in G.S. 55A-1-40.
9 (11) "Governmental subdivision" includes Governmental subdivision. – Includes
10 authority, county, district, and municipality.
11 (12) "Includes" means a Includes. – A partial definition.
12 (13) "Individual" denotes Individual. – Denotes a natural person legally competent
13 to act and also includes the estate of an incompetent or deceased individual.
14 (13a) "Mail," Mail, when used as a verb, means to verb. – To deposit in the United
15 States mail with postage thereon prepaid and correctly addressed. When a
16 corporation mails an item to a shareholder, "correctly addressed" means
17 addressed to the shareholder's address as shown in the corporation's current
18 record of shareholders.
19 (14) "Means" denotes an exhaustive definition.
20 (14a) "Merger" Merger, as used in Article 9 includes Article 9. – Includes a "share
21 exchange" as used in Article 11.
22 (15) "Notice" includes Notice. – Includes demand and is defined in G.S. 55-1-41.
23 (16) "Person" includes Person. – Includes individual and entity.
24 (17) "Principal office" means the office (in Principal office. – The office, in or out
25 of this State) State, where the principal executive offices of a domestic or
26 foreign corporation are located, as designated in its most recent annual report
27 filed with the Secretary of State or, in the case of a domestic or foreign
28 corporation that has not yet filed an annual report, in its articles of
29 incorporation or application for a certificate of authority, respectively.
30 (18) "Proceeding" includes Proceeding. – Includes civil suit and criminal,
31 administrative, and investigatory action.
32 (18a) "Public corporation" means any Public corporation. – Any corporation that
33 has a class of shares registered under Section 12 of the Securities Exchange
34 Act of 1934, as amended (15 U.S.C. § 78l).
35 (19) "Record date" means the Record date. – The date established under Article 6
36 or 7 on which a corporation determines the identity of its shareholders for
37 purposes of this Chapter.
38 (20) "Secretary" means the Secretary. – The corporate officer to whom the board
39 of directors has delegated responsibility under G.S. 55-8-40(c) for custody of
40 the minutes of the meetings of the board of directors and of the shareholders
41 and for authenticating records of the corporation.
42 (20a) "Service-disabled veteran" means a Service-disabled veteran. – A veteran
43 with a disability that was incurred or aggravated during the veteran's service
44 in the Armed Forces of the United States.
45 (20b) "Service-disabled veteran-owned small business" means a Service-disabled
46 veteran-owned small business. – A business that satisfies both of the following
47 requirements:
48 a. The business's net annual receipts do not exceed one million dollars
49 ($1,000,000).
50 b. One or more service-disabled veterans own more than fifty percent
51 (50%) of the business.
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1 (21) "Shares" means the Shares. – The units into which the proprietary interests in
2 a corporation are divided.
3 (22) "Shareholder" means the Shareholder. – The person in whose name shares are
4 registered in the records of a corporation or the beneficial owner of shares to
5 the extent of the rights granted by a nominee certificate on file with a
6 corporation.
7 (23) "State", State, when referring to a part of the United States, includes States. –
8 Includes a state and commonwealth (and and their agencies and governmental
9 subdivisions) subdivisions and a territory and insular possession (and and their
10 agencies and governmental subdivisions) subdivisions of the United States.
11 (24) "Subscriber" means a Subscriber. – A person who subscribes for shares in a
12 corporation, whether before or after incorporation.
13 (24a) "Unincorporated entity" means a Unincorporated entity. – A domestic or
14 foreign limited liability company, a domestic or foreign limited partnership, a
15 registered limited liability partnership or foreign limited liability partnership
16 as defined in G.S. 59-32, or any other partnership as defined in G.S. 59-36,
17 whether or not formed under the laws of this State.
18 (25) "United States" includes United States. – Includes district, authority, bureau,
19 commission, department, and any other agency of the United States.
20 (25a) "Veteran" means an Veteran. – An individual entitled to any benefits or rights
21 under the laws of the United States by reason of service in the Armed Forces
22 of the United States.
23 (25b) "Veteran-owned small business" means a Veteran-owned small business. – A
24 business that satisfies both of the following requirements:
25 a. The business's net annual receipts do not exceed one million dollars
26 ($1,000,000).
27 b. One or more veterans own more than fifty percent (50%) of the
28 business.
29 (26) "Voting group" means all Voting group. – All shares of one or more classes
30 or series that under the articles of incorporation or this Chapter are entitled to
31 vote and be counted together collectively on a matter at a meeting of
32 shareholders. All shares entitled by the articles of incorporation or this
33 Chapter to vote generally on the matter are for that purpose a single voting
34 group."
35 SECTION 1.(b) G.S. 55-1-41 reads as rewritten:
36 "§ 55-1-41. Notice.
37 …
38 (b) Notice may be communicated in person; by electronic means; or by mail or private
39 carrier. If these forms of personal notice are impracticable as to one or more persons, notice may
40 be communicated to such those persons by publishing notice in a newspaper in the county
41 wherein where the corporation has its principal place of business in the State, or if it has no
42 principal place of business in the State, the county wherein where it has its registered office; or
43 by radio, television, or other form of public broadcast communication.
44 (c) Written notice by a domestic or foreign corporation to its shareholder is effective
45 when deposited in the United States mail with postage thereon prepaid and correctly addressed
46 to the shareholder's address shown in the corporation's current record of shareholders. Unless the
47 shareholder has previously notified the corporation in writing that the shareholder objects to
48 receiving notices and other communications by email, any notice by a corporation may be
49 delivered to its shareholder in the form of email to the email address shown in the corporation's
50 current record of shareholders and is effective when it is sent as provided in G.S. 66-325. To the
51 extent the corporation pursuant to G.S. 55-1-50 and the shareholder have agreed, and the
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1 shareholder has not provided notice of objection to the corporation, notice by a domestic
2 corporation to its shareholder may be delivered in the form of an electronic record sent by any
3 other electronic means and is effective when it is sent as provided in G.S. 66-325. A shareholder
4 may terminate any such agreement provide notice to the corporation of the shareholder's
5 objection to receiving notices and other communications by email or other electronic means at
6 any time on a prospective basis effective upon written notice of termination to the corporation or
7 upon such later date as may be specified in the notice.
8 (c1) A notice or other communication shall no longer be delivered to an email address or
9 by other electronic means pursuant to subsection (c) of this section if (i) the corporation receives
10 notice from the information processing system into which the notice or other communication was
11 entered that two consecutive notices or other communications given by email or other electronic
12 means have not been delivered as directed and (ii) the notice of non-delivery becomes known to
13 the secretary, transfer agent, or another person responsible for the g