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OLR Bill Analysis
sSB 986
AN ACT CONCERNING REVISIONS TO THE CONNECTICUT
UNIFORM TRUST CODE, RULE AGAINST PERPETUITIES,
CONNECTICUT UNIFORM POWER OF ATTORNEY ACT,
CONNECTICUT BUSINESS CORPORATION ACT AND
CONNECTICUT REVISED NONSTOCK CORPORATION ACT.
SUMMARY:
This bill allows a business or nonstock corporation’s board of
directors to determine that a shareholder or member meeting, as
applicable, may be held entirely remotely, unless the bylaws require
the meeting to be held at a physical location. The bill makes related
changes regarding electronic access to the required list of shareholders
or members for meetings. These provisions generally codify the
governor’s executive orders on remote meetings (EO 7I, § 11 (Mar. 21,
2020); EO 7NN, § 2 (May 13, 2020)).
The bill specifies when the shareholders or members alone, or also
the board, may amend certain bylaw provisions, including those
prohibiting remote-only meetings. It changes certain procedures for
nonstock corporation actions without a meeting.
It makes various changes to the state’s Uniform Trust Code, such as
(1) defining “terms of the trust” under the code and other trust laws
and (2) requiring designated representatives to act in good faith on the
beneficiary’s behalf.
The bill:
1. specifies that if someone is signing a power of attorney on
behalf of a principal, both must be physically present at the
signing;
2. allows land conveyances by natural persons to be signed by an 2021SB-00986-R000490-BA.DOCX
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agent authorized by a power of attorney; and
3. makes a minor change to a definition in the Connecticut
Qualified Dispositions in Trust Act (QDTA) (§ 6).
It makes a technical correction to a 2019 change to the rule against
perpetuities (§ 7). That provision generally extended, from 90 to 800
years, the period within which certain interests must vest to be valid.
Lastly, the bill makes other minor, technical, and conforming
changes.
EFFECTIVE DATE: Upon passage for the corporation and rule
against perpetuities provisions, and the latter applies to any trusts
created on or after January 1, 2020; October 1, 2021, for the power of
attorney and land conveyance provisions; and January 1, 2022, for the
trust code and QDTA provisions.
§§ 10-24 — CORPORATIONS
The bill allows a business or nonstock corporation’s board of
directors to determine that any shareholder or member annual or
special meeting be held entirely remotely, subject to the conditions
below, unless the bylaws require the meeting to be held at a physical
location. The bill makes several related conforming changes.
Current statute does not authorize entirely remote meetings but it
does allow business corporation boards to authorize any class or series
of shareholders to participate in a meeting remotely. The bill extends
this latter provision to non-stock corporations (§ 22).
Existing law sets certain parameters for shareholders participating
remotely (CGS § 33-703(b)). The bill extends these provisions to (1)
nonstock corporation members and (2) meetings held entirely remotely
for both business and nonstock corporations. Under these provisions,
remote participants are deemed to be present and may vote at the
meeting if the corporation implements reasonable measures to:
1. verify that each participant is a shareholder (or member as 2021SB-00986-R000490-BA.DOCX
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applicable) and
2. provide a reasonable opportunity for them to participate in the
meeting and vote on submitted matters, including an
opportunity to communicate and read or hear the proceedings
substantially concurrent with the proceedings.
Court-Ordered Meetings (§§ 12 & 19)
Existing law allows courts to order a corporation meeting to be held
in certain circumstances (e.g., upon a shareholder’s or member’s
application because the required annual meeting was not held within a
specified timeframe).
The bill allows courts to order remote-only meetings unless the
bylaws require meeting at a physical location. These meetings must
follow the guidelines above and any other court-imposed guidelines
and procedures.
Notice Requirements (§§ 15 & 23)
By law, after setting a meeting date, a corporation must prepare an
alphabetical list of all shareholders or members, as applicable, entitled
to vote at the meeting. It must make the list available for inspection
two business days after giving notice of the meeting to (1) any
shareholder or (2) any member entitled to vote.
The bill generally gives corporations the option of making the list
available on a reasonably accessible electronic network, rather than
just at its principal office or another location near the meeting as under
current law. For remote-only meetings, the bill requires that the list be
made available for inspection on the electronic network during the
meeting.
In either case, a corporation providing the list electronically must
provide, in the meeting notice, information on how to access it.
Additionally, a corporation may take reasonable steps to ensure that
the electronic list is available only to its shareholders or members.
Bylaw Amendments (§§ 16 & 24) 2021SB-00986-R000490-BA.DOCX
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The bill provides that business corporation bylaws that prohibit
remote-only meetings may be amended or repealed as follows:
1. only by the shareholders, if shareholders originally adopted the
provision, or
2. by either the shareholders or the board, if the incorporator,
incorporators, or board originally adopted it.
Current law provides that if the board originally adopted the
bylaws, then either the board or shareholders may amend or repeal
provisions that set greater board quorum or voting requirements than
provided by law. The bill extends these provisions to such bylaws
originally adopted by the incorporator or incorporators. As under
current law, board action to adopt or amend these provisions must
meet the quorum requirement and be adopted by the vote required
under the unamended bylaws or under the proposed amendment,
whichever is greater.
The bill contains analogous provisions for nonstock corporations (§
24).
Nonstock Corporation Action Without Meeting (§ 20)
By law, any nonstock corporate action that may be taken at a
members’ meeting, including an election, may also be taken without a
meeting if the members consent. The bill changes certain procedures
regarding these actions and makes related minor and technical
changes.
The bill requires the corporation to deliver a notice with a written
ballot to all members entitled to vote on the matter, setting forth the
proposed actions, and allowing members to vote on each proposal or
director candidate, as applicable.
Under the bill, for matters other than director elections, votes
conducted this way are valid only if the number of votes cast and
approvals at least equals the required number for a comparable
meeting. The bill eliminates a current provision, which provides that 2021SB-00986-R000490-BA.DOCX
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unless the certificate of incorporation provides otherwise, votes
conducted this way must be determined based on the total number of
votes, rather than the total number entitled to vote.
It requires solicitations for votes by ballot to (1) indicate the quorum
requirements, (2) state the percentage of approvals necessary to
approve each matter other than director elections, and (3) specify the
ballot receipt deadline.
The bill prohibits these ballots from being revoked, unless the
certificate of incorporation or bylaws allow revocation.
Current law provides that, if not otherwise set by law, the record
date for determining which members are entitled to take action
without a meeting is the date the first member signs the consent or
ballot. The bill instead sets it as the date the (1) first member signs the
consent or (2) corporation delivers the required notice.
§§ 1-5 — TRUST CODE
Definitions (§ 1)
PA 19-137 adopted the Connecticut Uniform Trust Code,
establishing numerous rules on creating, modifying, terminating, and
enforcing trusts. Under current law, the trust code’s definitions apply
to the code itself and to the Connecticut Uniform Directed Trust Act.
The bill applies the definitions to various other trust-related statutes
(the entirety of Chapter 802c of the statutes).
Several provisions in the trust code refer to the “terms of a trust.”
For example, the trust code generally allows the terms of a trust to
override its provisions, with 14 enumerated exceptions (CGS § 45a-
499e).
The bill defines the “terms of a trust,” except as provided below, as
the manifestation of the settlor’s intent regarding a trust’s provisions
as (1) expressed in the trust instrument or (2) established by other
evidence that would be admissible in a judicial proceeding.
Alternatively, the terms of a trust are its provisions as established, 2021SB-00986-R000490-BA.DOCX
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determined, or amended by:
1. a trustee or other person authorized under the trust instrument,
a statute, or a court order;
2. a court order; or
3. a nonjudicial settlement agreement, or court approval of the
combination of a testamentary trust with another trust or
division of a testamentary trust into separate trusts, pursuant to
applicable provisions of the trust code.
Designated Representatives (§§ 2 & 3)
Under the trust code, a trust instrument generally may (1) designate
someone other than the settlor to represent and bind a beneficiary or
(2) authorize someone, other than a trustee or the settlor, to designate
someone to represent and bind a beneficiary. The representative may
receive notices or other reports on the beneficiary’s behalf. (These
provisions do not apply if the beneficiary is a charity.)
The bill requires the designated representative to act in good faith
on the beneficiary’s behalf.
In situations where a trustee must send a notice to the trust’s
qualified beneficiaries, the bill eliminates the requirement for the
trustee to also send it to any designated representatives. Instead, it
authorizes the trustee to send notices to those representatives who are
qualified to represent a beneficiary, instead of sending it to the
beneficiary.
Limitation on Beneficiary’s Creditor (§ 5)
The bill prohibits a beneficiary’s creditor, other than a settlor’s
creditor if the settlor is also a beneficiary, from attaching or compelling
a distribution of property that is subject to a power of withdrawal that
has lapsed, been waived, or released over all or part of the trust
property. (A power of withdrawal is a presently exercisable power of
appointment that meets certain requirements.) 2021SB-00986-R000490-BA.DOCX
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Existing law additionally prohibits these creditors from attaching or
compelling a distribution that is subject to certain powers in three
specific situations.
§ 8 — POWERS OF ATTORNEY
Current law requires a power of attorney to be signed by (1) the
principal or (2) someone else at the principal’s direction and in his or
her conscious presence. The bill specifies that if someone else is signing
for the principal, they both must be physically present at the same
location when the document is signed.
§ 9 — LAND CONVEYANCES
Under current law, if the party conveying land (i.e., the grantor) is a
natural person, the conveyance must be signed by the grantor or his or
her agent authorized for that purpose by a power executed,
acknowledged, and witnessed in the manner required for conveyances.
The bill additionally allows the conveyance to be signed by an agent
authorized by a validly executed, acknowledged, and witnessed power
of attorney.
COMMITTEE ACTION
Judiciary Committee
Joint Favorable Substitute
Yea 36 Nay 0 (03/29/2021)