19.0127.01000
Sixty-sixth
Legislative Assembly HOUSE BILL NO. 1045
of North Dakota
Introduced by
Representative Toman
1 A BILL for an Act to create and enact subsection 16 to section 9-16-01, section 9-16-19, a new
2 section to chapter 10-19.1, and section 10-32.1-102 of the North Dakota Century Code, relating
3 to electronic transaction definitions, blockchain technology and smart contracts, number of
4 shareholders, and series limited liability companies; and to amend and reenact sections
5 9-16-02, 10-06.1-17, 10-19.1-01, and 10-19.1-01.2, subsection 6 of section 10-19.1-66,
6 subsection 1 of section 10-19.1-73.3, sections 10-19.1-76.3 and 10-19.1-81, subsections 1, 2,
7 and 11 of section 10-19.1-84, subsection 1 of section 10-19.1-110, subsection 2 of section
8 10-19.1-146, and subsection 2 of section 10-35-28 of the North Dakota Century Code, relating
9 to electronic transactions, filing of an annual report by corporations engaged in farming or
10 ranching, Business Corporation Act definitions, knowledge and notice, share certificates,
11 corporate voting list and voting trusts, acceptance of shareholder act by the corporation,
12 corporate records, corporate dissolution procedure, and the filing of an annual report by a
13 publicly traded corporation.
14 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
15 SECTION 1. Subsection 16 of section 9-16-01 of the North Dakota Century Code is created
16 and enacted as follows:
17 16. "Writing" or "written" includes blockchain technology as defined in section 9-16-19.
18 SECTION 2. AMENDMENT. Section 9-16-02 of the North Dakota Century Code is amended
19 and reenacted as follows:
20 9-16-02. Scope.
21 1. Except as otherwise provided in subsection 2 or 3, this chapter applies to electronic
22 records and electronic signatures relating to a transaction.
23 2. ThisExcept as provided in subsection 3, this chapter does not apply to a transaction to
24 the extent the transaction is governed by:
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1 a. A law governing the creation and execution of wills, codicils, or testamentary
2 trusts;
3 b. The Uniform Commercial Code other than section 41-01-20 and chapters 41-02
4 and 41-02.1; and
5 c. Chapters 41-03, 41-04, 41-04.1, 41-05, 41-07, 41-08, or 41-09.
6 3. Section 9-16-19 applies only to title 10 and transactions governed by chapters 41-02,
7 41-02.1, and 41-07.
8 4. This chapter applies to an electronic record or electronic signature otherwise excluded
9 from the application of this chapter under subsection 2 or 3, to the extent it is governed
10 by a law other than those specified in subsection 2 or 3.
11 4.5. A transaction subject to this chapter is also subject to other applicable substantive law.
12 SECTION 3. Section 9-16-19 of the North Dakota Century Code is created and enacted as
13 follows:
14 9-16-19. Signatures and records secured through blockchain technology - Smart
15 contracts - Ownership of information - Definitions.
16 1. A signature secured through blockchain technology is considered to be in an electronic
17 form and to be an electronic signature.
18 2. A record or contract secured through blockchain technology is considered to be in an
19 electronic form and to be an electronic record.
20 3. Smart contracts may exist in commerce. A contract relating to a transaction may not
21 be denied legal effect, validity, or enforceability solely because the contract contains a
22 smart contract term.
23 4. Notwithstanding title 10 or chapters 41-02, 41-02.1, and 41-07, a person in or affecting
24 interstate or foreign commerce using blockchain technology to secure information the
25 person owns or has the right to use retains the same rights of ownership or use with
26 respect to that information as before the person secured the information using
27 blockchain technology. This subsection does not apply to the use of blockchain
28 technology to secure information in connection with a transaction to the extent the
29 terms of the transaction expressly provide for the transfer of rights of ownership or use
30 with respect to that information.
31 5. As used in this subsection:
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1 a. "Blockchain technology" means distributed ledger technology that uses a
2 distributed, decentralized, shared, and replicated ledger, which may be public or
3 private, permissioned or permissionless, or driven by tokenized crypto economics
4 or tokenless and which is protected with cryptography, is immutable, and
5 auditable and provides an uncensored truth.
6 b. "Smart contract" means an event-driven program, with state, that runs on a
7 distributed, decentralized, shared, and replicated ledger and which can take
8 custody over and instruct transfer of assets on that ledger.
9 SECTION 4. AMENDMENT. Section 10-06.1-17 of the North Dakota Century Code is
10 amended and reenacted as follows:
11 10-06.1-17. Annual report - Contents - Filing requirements.
12 Before April sixteenth of each year, everya corporation engaged in farming or ranching after
13 June 30, 1981, and everya limited liability company engaged in farming or ranching shall file
14 with the secretary of state an annual report signed as provided in subsection 5458 of section
15 10-19.1-01 if a corporation and subsection 47 of section 10-32.1-02 if a limited liability company.
16 If the corporation or limited liability company is in the hands of a receiver or trustee, it must be
17 signed on behalf of the corporation or limited liability company by the receiver or trustee. An
18 annual report in a sealed envelope postmarked by the United States postal service before the
19 date provided in this section or an annual report in a sealed packet with a verified shipment date
20 by any other carrier service before the date provided in this section meets the filing date
21 requirement. An annual report must include the following information with respect to the
22 preceding calendar year:
23 1. The name of the corporation or limited liability company.
24 2. The name of the registered agent of the corporation or limited liability company as
25 provided in chapter 10-01.1 and, if a noncommercial registered agent, the address of
26 the registered office of the corporation or limited liability company in this state.
27 3. With respect to each corporation:
28 a. A statement of the aggregate number of shares the corporation has authority to
29 issue, itemized by classes, par value of shares, shares without par value, and
30 series, if any, within a class.
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1 b. A statement of the aggregate number of issued shares, itemized by classes, par
2 value of shares, shares without par value, and series, if any, within a class.
3 4. With respect to each shareholder or member:
4 a. The name and address of each, including the names and addresses and
5 relationships of beneficiaries of trusts and estates which own shares or
6 membership interests;
7 b. The number of shares or membership interests or percentage of shares or
8 membership interests owned by each;
9 c. The relationship of each;
10 d. A statement of whether each is a citizen or permanent resident alien of the United
11 States; and
12 e. A statement of whether at least one is an individual residing on or operating the
13 farm or ranch.
14 5. With respect to management:
15 a. If a corporation, then the names and addresses of the officers and members of
16 the board of directors; or
17 b. If a limited liability company, then the names and addresses of the managers and
18 members of the board of governors.
19 6. A statement listing the acreage [hectarage] and location listed by section, township,
20 range, and county of all land in the state owned or leased by the corporation or limited
21 liability company and used for farming or ranching. The statement must also designate
22 which, if any, of the acreage [hectarage] is leased from or jointly owned with any
23 shareholder or member and list the name of the shareholder or member with that
24 acreage [hectarage].
25 7. A statement of the percentage of the annual average gross income of the corporation
26 or limited liability company which has been derived from farming or ranching
27 operations over the previous five years or for each year of existence if less than five
28 years.
29 8. A statement of the percentage of gross income of the corporation or limited liability
30 company derived from nonfarm rent, nonfarm royalties, dividends, interest, and
31 annuities during the period covered by the report.
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1 9. A corporation engaged in farming which fails to file an annual report is subject to the
2 penalties for failure to file an annual report as provided in chapter 10-19.1, except that
3 the penalties must be calculated from the date of the report required by this section.
4 10. A limited liability company engaged in farming which fails to file an annual report is
5 subject to the penalties for failure to file an annual report as provided in chapter
6 10-32.1, except that the penalties must be calculated from the date of the report
7 required by this section.
8 SECTION 5. AMENDMENT. Section 10-19.1-01 of the North Dakota Century Code is
9 amended and reenacted as follows:
10 10-19.1-01. Definitions.
11 For purposes of this chapter, unless the context otherwise requires:
12 1. "Acquiring corporation" means the domestic or foreign corporation that acquires the
13 shares of a corporation in an exchange.
14 2. "Acquiring organization" means the foreign or domestic organization acquiring the
15 ownership interests of another foreign or domestic organization participating in an
16 exchange.
17 3. "Address" means:
18 a. In the case of a registered office or principal executive office, the mailing address,
19 including the zip code, of the actual office location, which may not be only a
20 post-office box; and
21 b. In any other case, the mailing address, including the zip code.
22 4. "Articles" means:
23 a. In the case of a corporation incorporated under or governed by this chapter,
24 articles of incorporation, articles of amendment, a resolution of election to
25 become governed by this chapter, a demand retaining the two-thirds majority for
26 shareholder approval of certain transactions, a statement of change of registered
27 office, registered agent, or name of registered agent, a statement establishing or
28 fixing the rights and preferences of a class or series of shares, a statement of
29 cancellation of authorized shares, articles of merger, articles of abandonment,
30 articles of conversion, and articles of dissolution.
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1 b. In the case of a foreign corporation, the term includes all records serving a similar
2 function required to be filed with the secretary of state or other officer of the state
3 of incorporation of the foreign corporation.
4 5. "Authenticated electronic communication" means:
5 a. That the electronic communication is delivered:
6 (1) To the principal place of business of the corporation; or
7 (2) To an officer or agent of the corporation authorized by the corporation to
8 receive the electronic communication; and
9 b. That the electronic communication sets forthprovides information from which the
10 corporation can reasonably conclude that the electronic communication was sent
11 by the purported sender.
12 6. "Ballot" means a written ballot or a ballot transmitted by electronic communications.
13 7. "Board" or "board of directors" means the board of directors of a corporation.
14 8. "Board member" means:
15 a. An individual serving on the board of directors in the case of a corporation; and
16 b. An individual serving on the board of governors in the case of a limited liability
17 company.
18 9. "Bylaws" means the code adopted for the regulation or management of the internal
19 affairs of a corporation, regardless of how that code is designated.
20 10. "Class", when used with reference to ownership interests, means a category of
21 ownership interests that differs in designation or one or more rights or preferences
22 from another category of ownership interests of the organization.
23 11. "Closely held corporation" means a corporation that does not have more than
24 thirty-five shareholders.
25 12. "Constituent corporation" means a corporation or a foreign corporation that:
26 a. In a merger, is either the surviving corporation or a foreign or domestic
27 corporation that is merged into the surviving organization; or
28 b. In an exchange, is either the acquiring corporation or a foreign or domestic
29 corporation whose shares are acquired by the acquiring organization.
30 13. "Constituent organization" means an organization that:
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1 a. In a merger, is either the surviving organization or an organization that is merged
2 into the surviving organization; or
3 b. In an exchange, is either the acquiring organization or an organization whose
4 securities are acquired by the acquiring organization.
5 14. "Converted organization" means the organization into which a converting organization
6 converts pursuant to sections 10-19.1-104.1 through 10-19.1-104.6.
7 15. "Converting organization" means an organization that converts into another
8 organization pursuant to sections 10-19.1-104.1 through 10-19.1-104.6.
9 16. "Corporation" or "domestic corporation" means a corporation, other than a foreign
10 corporation, organized for profit and incorporated under or governed by this chapter.
11 17. "Data address" means the string of alphanumeric characters on a distributed or other
12 electronic network or database which may be accessed only by knowledge or
13 possession of a private key to facilitate or record transactions on the distributed or
14 other electronic network or database.
15 18. "Director" means a member of the board.
16 18.19. "Distribution" means a direct or indirect transfer of money or other property, other than
17 its own shares, with or without consideration, or an incurrence or issuance of
18 indebtedness, by a corporation to any of its shareholders in respect of its shares, and
19 may be in the form of a dividend, an interim distribution, or a distribution in liquidation,
20 or as consideration for the purchase, redemption, or other acquisition of its shares, or
21 otherwise.
22 19.20. "Division" or "combination" means dividing or combining shares of a class or series,
23 whether issued or unissued, into a greater or lesser number of shares of the same
24 class or series.
25 20.21. "Domestic organization" means an organization created under the laws of this state.
26 21.22. "Electronic" means relating to technology having electrical, digital, magnetic, wireless,
27 optical, electromagnetic, or similar capabilities.
28 22.23. "Electronic communication" means any form of communication, not directly involving
29 the physical transmission of paper, including a process of communication which uses
30 a distributed or other electronic network or database, or that:
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1 a. Creates a record that may be retained, retrieved, and reviewed by a recipient of
2 the communication; and
3 b. May be directly reproduced in paper form by the recipient through an automated
4 process.
5 23.24. "Electronic record" means a record created, generated, sent, communicated, received,
6 or stored by electronic means.
7 24.25. "Electronic signature" means an electronic sound, symbol, or process attached to or
8