O F F I C E O F L E G I S L A T I V E R E S E A R C H
P U B L I C A C T S U M M A R Y
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PA 21-39—sSB 986
Judiciary Committee
AN ACT CONCERNING RE VISIONS TO THE CONNE CTICUT
UNIFORM TRUST CODE, RULE AGAINST PERPETU ITIES,
CONNECTICUT UNIFORM POWER OF ATTORNEY ACT,
CONNECTICUT BUSINESS CORPORATION ACT AND CONNECTICUT
REVISED NONSTOCK COR PORATION ACT
SUMMARY: This act 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 that the meeting be held at a
physical location. The act makes related changes regarding, among other things,
meetings ordered by a court and electronic access to the required list of
shareholders or members for meetings. Among other things, it also changes
certain procedures for nonstock corporation actions that are voted on by mail.
Separately, the act makes various changes in the state’s Uniform Trust Code,
such as (1) defining “terms of a trust” under the code and other trust laws and (2)
requiring designated representatives to act in good faith on the beneficiary’s
behalf.
Among other things, the act does the following:
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 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).
The act also makes a technical correction to a 2019 change (PA 19-137) 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 act makes other minor, technical, and conforming changes.
EFFECTIVE DATE: (1) Upon passage for the corporation and rule against
perpetuities provisions, with the latter applicable to any trusts created on or after
January 1, 2020; (2) October 1, 2021, for the power of attorney and land
conveyance provisions; and (3) January 1, 2022, for the trust code and QDTA
provisions.
§§ 10-24 — CORPORATIONS
Authorization for Remote Meetings (§§ 10-11, 13-14, 17-18, 21 & 22)
Prior law allowed business corporation boards to authorize any class or series
of shareholders to participate in a meeting remotely, but the meeting itself had to O L R P U B L I C A C T S U M M A R Y
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occur at a physical location. It did not allow nonstock corporation members to
participate in a meeting remotely.
The act allows a business or nonstock corporation’s board of directors to
determine that any annual or special meeting of shareholders or members be held
entirely remotely, subject to the conditions below, unless the bylaws require that
the meeting be held at a physical location. As under existing law for business
corporations, the act also allows nonstock corporation members to participate at
an in-person meeting remotely if authorized by the board of directors. The act
makes several related conforming changes.
Existing law sets certain parameters for shareholders participating remotely.
The act 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 present and may vote at
the meeting if the corporation implements reasonable measures to do the
following:
1. verify that each participant is a shareholder (or member as 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, in certain circumstances, to order that a
corporation meeting be held (e.g., upon a shareholder’s or member’s application
because the required annual meeting was not held within a specified timeframe).
The act allows courts to order remote-only meetings unless the bylaws require
meeting at a physical location. These meetings must follow the parameters
described 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 notice of
the meeting. It must make the list available two business days after giving notice
of the meeting for inspection by (1) any shareholder or (2) any member entitled to
vote. (Business corporations that prepare a separate list of shareholders entitled to
vote must make that list similarly available promptly after fixing the record date
for voting.)
The act generally gives corporations the option of making these lists available
on a reasonably accessible electronic network, rather than just at their principal
office or another location in the same city as the meeting as under prior law. For
remote-only meetings, the act requires that the voting list be made available for
inspection on the electronic network during the meeting.
In either case, a corporation providing a list electronically must provide, in the
meeting notice, information on how to access it. Additionally, a corporation may O L R P U B L I C A C T S U M M A R Y
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take reasonable steps to ensure that an electronic list is available only to its
shareholders or members.
Bylaw Amendments (§§ 16 & 24)
The act specifies how corporations may amend or repeal bylaws that prohibit
remote-only meetings. For business corporations, these actions may be taken 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.
The act applies analogous requirements to nonstock corporations (i.e., the
actions may be taken by only the members or by the members or board, as
applicable).
Existing law provides that if the board originally adopted the bylaws, then
either the board or shareholders (members in a nonstock corporation) may amend
or repeal provisions that set greater board quorum or voting requirements than
provided by law. The act extends these provisions to such bylaws originally
adopted by the incorporator or incorporators. As under existing 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.
Nonstock Corporation Votes by Mail (§ 20)
By law, any nonstock corporate action that must be voted on by the members,
including a director’s election, may be approved through an election held by mail.
The act changes certain procedures regarding these elections and makes related
minor and technical changes.
The act 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.
Solicitations for votes by ballot must (1) indicate the quorum requirements, (2)
state the percentage of approvals needed to approve each matter other than
director elections, and (3) specify the ballot receipt deadline.
Under the act, 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
number required for a comparable meeting. The act eliminates a prior provision
which provided that, unless the certificate of incorporation provided otherwise,
mail-in votes conducted this way (for director elections or other matters) had to be
determined based on the total number of votes, rather than the total number
entitled to vote. The act prohibits these ballots from being revoked unless the
certificate of incorporation or bylaws allow revocation.
Prior law provided that, if not otherwise set by law, the record date for
determining which members were entitled to vote in a mail election was the date
the first member signed the ballot. The act instead sets it as the date the O L R P U B L I C A C T S U M M A R Y
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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
existing law, the trust code’s definitions apply to the code itself and to the
Connecticut Uniform Directed Trust Act. This act additionally applies the
definitions to various other trust-related statutes (i.e., the entirety of Chapter
802c).
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 act 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, 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 act requires the designated representative to act in good faith on the
beneficiary’s behalf. Additionally, in situations where a trustee must send a notice
to the trust’s qualified beneficiaries, the act 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 act 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 O L R P U B L I C A C T S U M M A R Y
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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.)
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
Existing law requires that a power of attorney be signed by (1) the principal or
(2) someone else at the principal’s direction and in his or her conscious presence.
The act 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 prior law, if the party conveying land (i.e., the grantor) was a natural
person, the conveyance could be signed only 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 act additionally allows the conveyance to be signed by an agent
authorized by a validly executed, acknowledged, and witnessed power of
attorney.