This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1189.RRS
DATE: 2/4/2024
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1189 Corporate Actions
SPONSOR(S): Abbott
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Regulatory Reform & Economic Development
Subcommittee
Fletcher Anstead
2) Civil Justice Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
Corporations that do business within Florida are governed by the requirements in the Florida Business
Corporation Act, a law that is modeled after the Model Business Corporation Act promulgated by the American
Bar Association in 1950.
The Department of State is the state’s central location responsible for receiving and maintaining a number of
corporate records. Florida law requires certain documents to be filed with the Division of Corporations (division)
of the DOS in order for a business to be organized as a corporation, partnership, limited liability company
(LLC), or other business/commercial entity.
The bill provides a statutory ratification procedure for corporate actions that may not have been properly
authorized and for shares that may have been improperly issued. These improperly authorized corporate
actions, that would otherwise be proper, are called defective corporate actions.
The bill provides a statutory ratification process that is intended to supplement common law ratification.
Subsequent ratified defective corporate actions, under these proposed provisions, would remain subject to
equitable review. The ratification procedure is intended to be available only where there is objective evidence
that a corporate action was defectively implemented. The bill gives specified affected parties the ability to file
motions in the circuit court of the applicable county.
The bill also provides a statutory method, though filing a single composite statement, for a registered agent to
resign from more than one corporate entity at a time, if the specified entity has been inactive for 10 years or
longer. The bill applies to the following business entity types:
LLCs and foreign LLCs;
Corporations and foreign corporations;
Nonprofit corporations; and
Limited partnerships and foreign limited partnerships.
The bill keeps the fee to file the registered agent resignation the same for the above listed business entity
types, even if filing to resign from more than one entity at a time.
The bill has no impact on local government expenses and revenues. It has an indeterminable negative impact
on state government revenues and an indeterminate positive impact on the private sector.
The bill provides an effective date of July 1, 2024. STORAGE NAME: h1189.RRS PAGE: 2
DATE: 2/4/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Corporations that do business within Florida are governed by the requirements in the Florida Business
Corporation Act, a law that is modeled after the Model Business Corporation Act (MBCA) promulgated
by the American Bar Association (ABA) in 1950.
1
Limited Liability Companies (Chapter 605)
A Limited Liability Company (LLC) is a type of business entity recognized by and regulated under
chapter 605, F.S., the Florida Revised Limited Liability Company Act. Benefits to forming a business as
an LLC include a flexible tax structure and a vertical liability shield, which limits the personal liability of
the LLC’s members and managers for company obligations. Currently, LLCs are the most popular
business entity in Florida, with over 2 million active LLCs as of 2023.
2
Corporations for Profit (Chapter 607)
A for profit corporation is a type of business entity recognized and regulated under chapter 607, F.S. In
order for a corporation to organize, the entity must file articles of incorporation, including specifics such
as a corporate name, address, number of shares, and the designation of a registered office and agent.
3
Corporations Not for Profit (Chapter 617)
A corporation not for profit is a type of business entity recognized and regulated under chapter 617,
F.S. The structure of corporations not for profit are similar to for profit corporations, needing the filing of
articles of incorporation.
The Department of State
The Department of State (DOS) is the state’s central location responsible for receiving and maintaining
a number of corporate records. Florida law requires certain documents to be filed with the Division of
Corporations (division) of the DOS in order for a business to be organized as a corporation,
partnership, LLC, or other business/commercial entity. Business entities can file these documents and
check their status through an internet portal that is maintained by the division.
Fees
In order to help maintain these records, the DOS is statutorily allowed to collect fees. Florida’s fee
requirements for business entities are some of the most competitive in the United States; where a
corporation in Delaware (the state with the most incorporations, because of their notoriously pro-
business laws) will pay no less than $175 and no more than $200,000 in annual fees, Florida only
requires an aggregate of $150 in fees per year.
4
In 2013, the Legislature passed a law to make fees more uniform across the various business law
chapters. However, each specific type of business entity should be aware of the various fees
associated with their respective business organization chapter.
1
See generally Chapter 607, F.S.
2
Florida Department of State, Division of Corporations Yearly Statistics, available at https://dos.fl.gov/sunbiz/about-
us/yearly-statistics/ (last visited January 2024).
3
Section 607.0202, F.S.
4
U.S. Securities and Exchange Commission, Schedule 14-A, Saga Communications, Inc. Proxy Statement (Apr. 16,
2020), available at https://www.sec.gov/Archives/edgar/data/0000886136/000110465921050534/tm2111304-
1_def14a.htm, (last visited January 22, 2024). STORAGE NAME: h1189.RRS PAGE: 3
DATE: 2/4/2024
The relevant fees for the bill are as follows:
5
Corporation Fees
New Florida/Foreign Corporation
Filing Fees $35.00
Registered Agent Designation $35.00
Annual Reports
Annual Report of a For Profit Corporation $150.00
Annual Report of Not For Profit Corporation $61.25
Resignation of Agent
Resignation of Registered Agent of an Active Corporation $87.50
Resignation of Registered Agent of an Administratively
Dissolved/Voluntarily Dissolved/Withdrawn
Corporation/Inactive Corporation
$35.00
Limited Liability Company Fees
New Florida/Foreign LLC
Filing Fee $100.00
Registered Agent Designation Fee $25.00
Annual Reports
Annual Report $138.75
Resignation of Agent
Resignation of Registered Agent for an active LLC $85.00
Resignation of Registered Agent for a dissolved/inactive
LLC
$25.00
Defective Corporate Actions
Under the Florida Business Corporation Act, there are certain requirements that a corporation must
establish in order to be considered a valid corporation and properly authorized. For instance, a
corporation must file its articles of incorporation with the DOS to transact business in the state. If a
corporation does not file those articles of incorporation or does not include the requirements of the
articles of incorporation, they are not entitled to filing by the department and may be considered an
invalid corporation.
6
Additionally, a corporation could have filed all documents correctly, but made an error in the
appointment of their board of directors. Subsequent actions by the corporation, after that incorrect
appointment of the board of directors, may be considered invalid. Another potential scenario of a
defective corporate action may arise when a corporation issues shares but did not adhere to the correct
share issuing guidelines. Any subsequent action, after that incorrect share issuance, may be
considered invalid.
Being an invalid corporation can also be referred to as being a defective corporation or an unauthorized
corporation. However, because of their nature, corporations, whether it be the incorporator, the board
of directors, an officer or agent of the corporation, or the shareholders, can take actions even though
the corporation is technically defective, unauthorized, or invalid.
When an unauthorized or defective corporation takes an action, such as improperly issuing shares, a
legal situation can arise. For example, a corporation that is trying to make a business deal with another
entity or raise capital usually has to reveal certain corporate records for the other parties due diligence,
discovering a defective corporate action can immediately halt a transaction or potential transaction. If a
business deal has already been agreed upon prior to the discovering the defective corporate action,
legal issues can arise.
5
The Florida Department of State, Division of Corporations, Fees, available at https://dos.fl.gov/sunbiz/forms/fees/, (last
visited January 22, 2024).
6
Section 607.0120(1), F.S. STORAGE NAME: h1189.RRS PAGE: 4
DATE: 2/4/2024
Currently, disputed acts or defective share issuances that are carried out by a defective or
unauthorized corporation are governed by common law in the court system. These disputes can cost
business entities time and money to resolve, in addition to the time and resources that have to be
allocated by the state via the court system.
Amending Articles of Incorporation
The articles of incorporation govern a corporation. A corporation can amend or add as many articles of
incorporation as necessary.
7
The amendment of an articles of incorporation must be adopted and
approved. The adopting and approving can be done several ways, including, through the provided
method in the articles of incorporation, either by the incorporators or board of directors, if shareholder
action is not required, or by the shareholders or shareholders through voting groups.
8
The amendment can be done in one single amendment form for a fee of $35.00.
9
This form, called the
articles of amendment form, must be signed and delivered to the DOS, among other specific
requirements laid out in statute.
10
Active vs Dissolved Business Entities
The division annually assigns an accompanying status to business entities based on that business
entities’ filings and payment of fees. When a business entity pays their filing fees and files their initial
required filings, (for an LLC it is their articles of organization, and for a corporation it is their articles of
incorporation) the division will review the filings and if everything is satisfied the business entity will be
assigned an “active” status.
After the initial filings to begin the business entity, a business entity is considered “active” when it has
filed the annual report and paid the associated fee. Typically in the fall, the division will go through all of
their filings and determine if a business entity is up to date in all of their filings and fees. If the division
does not have the required information and associated fee on record they will assign the business
entity an “inactive” status and the business entity will be administratively dissolved or administratively
revoked.
11
A business entity can determine their status by logging in to the online portal operated by the DOS, or
they can file and pay to have the DOS send them a certificate of status, for a $5 fee for an LLC or an
$8.75 fee for a corporation.
12
A business entity may file a reinstatement application, accompanied with the associated fee, to
reactivate their business status and become an “active” business entity again.
Registered Agents
Generally, one of the statutory requirements that a business entity must meet is designating a
registered agent.
13
A registered agent must be an individual who resides in this state whose business
address is identical to the address of the registered office.
14
The registered agent must also be
available at that Florida address during normal business hours and promptly forward any significant
legal or state documents to the business. Registered agents are required to serve as the contact for the
7
Section 607.1001, F.S.
8
Section 607.1003(1-9), F.S., provides various methods for amending the articles of incorporation.
9
Florida Department of State, Division of Corporations, Articles of Amendment form, available at
https://form.sunbiz.org/pdf/cr2e011.pdf, (last visited on January 22, 2024).
10
Section 607.1006, F.S.
11
Note that a general partnership is not required to file an annual report or pay an annual report fee.
12
For LLCs see section 605.0213(12), F.S., and for Corporations see section 607.0122(19), F.S.
13
S. 607.0501, F.S.
14
Id. STORAGE NAME: h1189.RRS PAGE: 5
DATE: 2/4/2024
business entity that receives service of process, legal notifications, and other official state documents
for a business entity.
The DOS is required to maintain an accurate record of the registered agent and registered office for
service of process, and must promptly furnish any information disclosed thereby upon request and
payment of the required fee.
15
An individual within the business may serve as the entity’s registered
agent. Additionally, a business entity with an active Florida filling or registration may serve as a
registered agent, however an entity cannot serve as its own registered agent.
Additionally, if a business entity does not appoint and maintain a registered agent, the DOS may
administratively dissolve that business entity.
16
In Florida, a registered agent is required for the following:
Limited Liability Companies;
Corporation/Foreign Corporation (for profit);
Corporation/Foreign Corporation (not for profit);
Limited Partnerships (domestic and foreign); and
Limited Liability Partnerships (domestic and foreign).
17
In order for a registered agent to resign as the registered agent of the business entity, the registered
agent must complete a specific form, accompanied by the payment of the fee, and mail it in to the
division. Currently, a registered agent must pay a separate fee to resign as a registered agent of each
business entity, separately.
Effect of the Bill
Ratification of Defective Corporate Actions
The bill creates:
Required procedures for ratifying a defective corporate action.
Filing requirements for ratifying a defective corporate action.
Provisions contemplating the jurisdiction and process for judicial proceedings regarding the
validity of corporate actions.
Procedural Requirements
The bill creates definitions for certain terms, including:
“Corporate action,” which is defined as any action taken by or on behalf of a corporation,
including any action taken by the incorporator the board of directors, a committee of the board
of directors, an officer or agent of the corporation, or the shareholders;
“Defective corporate action,” which is defined as any corporate action purportedly taken which
is, and at the time such corporate action was purportedly taken would have been, within the
power of the corporation, but is void or voidable due to a failure of authorization; or an
overissue; and
“Failure of authorization,” which is defined as the failure to authorize, approve, or otherwise
effect a corporate action in compliance with this chapter, the corporation’s articles of
incorporation or bylaws, a corporate resolution, or any plan or agreement to which the
corporation is a party, if and to the extent such failure would render such corporate action void
or voidable.
15
Id.
16
For limited partnerships, s. 620.1809, F.S. governs.
17
Note that a general partnership is not required to have a registered agent. Section 620.8301, F.S., states that each
general partner is an agent of the partnership. (Note that a general partnership can still designate a separate registered
agent, through their initial general partnership registration form, but partners of the general partnership are deemed to be
agents and therefore the statutes do not require a general partnership to have a registered agent.) STORAGE NAME: h1189.RRS PAGE: 6
DATE: 2/4/2024
Under the bill, a defective corporate action is not void or voidable if the defective corporate action was
ratified (under the ratification requirements that are proposed by the bill.) The bill also emphasizes that
the ratification process for a defective corporate action is not the exclusive means of ratifying or
validating any defective corporate action.
Additionally, the bill provides that an overissue of shares over and above the number authorized in the
corporation’s articles of incorporation can be remedied by the adoption of an amendment to the articles
of incorporation or other corporate action that authorizes or creates the putative shares that resulted in
the overissue. This provision enables a corporation to cure an overissue occurring when shares have
been duly authorized but are issued before articles of amendment are filed.
PROCEDURE FOR RATIFYING DEFECTIVE CORPORATION ACTIONS
The bill specifies steps that a corporation must take to remedy a defective corporate action. This
includes stating:
The defective corporate action to be ratified;
The number and type of putative shares purportedly issued (if shares were issued);
The date of the defective corporate action;
The nature of the failure of authorization; and
The approval of the ratification of the defective corporate action by the board of directors.
This bill provides a similar mechanism as described above for a scenario where the defective corporate
action to be ratified relates to the election of the initial board of directors of the corporation. In this
described scenario, the bill provides that after the board of directors takes action, it must refer the
matter to shareholders for approval. The bill allows the board of directors to abandon ratification even
after approval without further action.
PROCEDURE FOR ACTION ON RATIFICATION
The bill sets forth specific procedural requirements for the ratification of defective corporate actions.
Specifically, the board of directors are subject to the same quorum and voting requirements for the
ratification process that exist at the time such ratifying action is taken and that notice, of whether the
defective corporate action is to be ratified at a meeting or by written consent, is required to be given to
shareholders. The bill also provides notice requirements for whether the corporate action is to be
ratified by written consent.
If the shareholders are meeting to ratify the election of a director, or if the ratification is through written
consent, the bill requires that it must be approval by a majority vote. The bill clarifies that putative
shares existing on the record date are only entitled to notice of matters relating to ratification and that
such shares are not:
Entitled to vote,
Counted for quorum purposes, nor
Counted in any written consent and that to ratify putative shares, an amendment to the articles
of incorporation must be approved.
NOTICE REQUIREMENTS
The bill creates notice requirements to shareholders and holders of putative shares when shareholder
action to approve the ratification of the defective corporate action is not required. The bill requires
“prompt” notice to shareholders following the ratification of a corporate action by the board of directors.
The bill provides for exceptions to the notice requirements, specifically, that notice is not required to be
submitted to shareholders if notice is given pursuant to other applicable law, and a disclaimer that
notice required by this section may be given in any manner that is authorized, and in the case of a
public company, notice may be given by any means required by the United States Securities and
Exchange Commission.
EFFECTS OF RATIFICATION STORAGE NAME: h1189.RRS PAGE: 7
DATE: 2/4/2024
The bill specifies that the following provisions apply upon the validation effective time, without regard to
the 120-day period during which a claim may be brought pursuant to other applicable law:
Each defective corporate action ratified is not void or voidable as a result of the failure of
authorization set forth and identified, and is deemed a valid corporate action effective as of the
date of the defective corporate action.
The issuance of each putative share or fraction of a putative share purportedly issued pursuant
to a defective corporate action identified in the action taken is not void or voidable, and each
such putative share is deemed to be an identical share or fraction of a valid share as of the time
it was purportedly issued.
Any corporate action taken subsequent to the defective corporate action ratified in reliance on
such defective corporate action having been validly effected, and any subsequent defective
corporate action resulting from such original defective corporate action, is valid as of the
respective time such corporate action was taken.
This bill clarifies that any corporate action that was taken, subsequent to the defective corporate action
that was ratified, in reliance on such defective corporate action and any subsequent defective corporate
action resulting directly or indirectly from such original defective corporate action, is valid as of the
respective time such corporate action was taken.
Filing Requirements
The bill establishes a new filing requirement (articles of validation) for defective corporate actions
ratified that would have normally required a filing, regardless of whether or not the filing was properly
made. The bill provides specific requirements for the content of the articles of validation, including that
the articles of validation must be filed with the DOS and that the articles of validation will serve to
amend or be a substitute for any other filings related to the defective corporate action.
Judicial Proceedings
The bill confers jurisdiction on the circuit court in the applicable county to hear and determine claims
regarding the validity of any corporate action. The bill provides that it can be a successor thereto, a
director of a corporation, or any shareholder of the corporation that can make the filing to a court to
determine the validity of any corporate action and that when the filing is made, the court may make any
findings or orders it deems proper under the circumstances.
Additionally, the bill clarifies that service of process for any of these such proceedings should follow the
same rules as set forth in ch. 48, F.S.,
18
and that any action brought forth must be done so within 120
days after the validation effective time. The bill also sets forth a non-exclusive list of various factors that
may be considered by the court and certain actions that the court may decide for determinations on the
validity of the challenged corporate action.
Resignation of a Registered Agent
The bill amends the requirements relating to the resignation of registered agents for certain entities and
amends the fees related to such resignations.
Inactive Entities
INACTIVE LLCS AND FOREIGN LLCS
The bill creates a mechanism for a registered agent to resign as the registered agent of more than one
inactive limited liability company (LLC) or inactive foreign LLC, that has been inactive for 10 years or
longer, through a single composite statement. Additionally, the bill sets forth requirements that the
composite resignation statement should contain the name of each inactive or dissolved company and
18
Chapter 48, F.S., codifies Florida’s Rules of Civil Procedure relating to process and service of process. STORAGE NAME: h1189.RRS PAGE: 8
DATE: 2/4/2024
the date of the respective companies’ dissolution or inactivity. The resignation statement, or composite
resignation statement, if resigning from two or more companies at a time, once filed with the DOS, must
also be delivered to the company or each respective companies’ current mailing address as it appears
in the records of the DOS.
INACTIVE CORPORATIONS
The bill creates a mechanism for a registered agent of more than one inactive corporation that has
been inactive for 10 years or longer, through a single composite statement. Additionally, the bill sets
forth requirements that the composite resignation statement should contain the name of each inactive
or dissolved corporation and the date of the respective corporation’s dissolution or inactivity. The
resignation statement, or composite resignation statement, if resigning from two or more corporations
at a time, once filed with the DOS, must also be delivered to the corporation or each respective
corporations’ current mailing address as it appears in the records of the DOS.
INACTIVE FOREIGN CORPORATIONS
The bill creates a mechanism for a registered agent of more than one inactive foreign corporation that
has been inactive for 10 years or longer, through a single composite statement. Additionally, the bill
sets forth requirements that the composite resignation statement should contain the name of each
inactive or dissolved foreign corporation and the date of the respective foreign corporation’s dissolution
or inactivity. The resignation statement, or composite resignation statement, if resigning from two or
more corporations at a time, once filed with the DOS, must also be delivered to the corporation or each
respective corporations’ current mailing address as it appears in the records of the DOS.
INACTIVE NONPROFIT CORPORATIONS
The bill creates a mechanism for a registered agent of more than one inactive nonprofit corporation that
has been inactive for 10 years or longer, through a single composite statement. Additionally, the bill
sets forth requirements that the composite resignation statement should contain the name of each
inactive or dissolved corporation and the date of the respective corporation’s dissolution or inactivity.
The resignation statement, or composite resignation statement, if resigning from two or more
corporations at a time, once filed with the DOS, must also be delivered to the corporation or each
respective corporations’ current mailing address as it appears in the records of the DOS.
INACTIVE LPS AND FOREIGN LPS
The bill creates a mechanism for a registered agent to resign as the registered agent of more than one
inactive limited partnership (LP) or inactive foreign LP, that has been inactive for 10 years or longer,
through a single composite statement. Additionally, the bill sets forth requirements that the composite
resignation statement should contain the name of each inactive or dissolved company and the date of
the respective LPs or foreign LPs’ dissolution or inactivity. The resignation statement, or composite
resignation statement, if resigning from two or more partnerships at a time, once filed with the DOS,
must also be delivered to the partnership or each respective partnerships’ current mailing address as it
appears in the records of the DOS.
Fees
Lastly, the bill provides that the fee to resign as a registered agent of:
A dissolved or inactive LLC is the same, regardless of whether one is resigning from one entity
or more than one entity.
An inactive corporation is the same, regardless of whether one is resigning from one
corporation or more than one corporation.
An inactive corporation is the same, regardless of whether one is resigning from one
corporation or more than one corporation.
B. SECTION DIRECTORY:
Section 1: Creates s. 607.0145, F.S.; relating to definitions. STORAGE NAME: h1189.RRS PAGE: 9
DATE: 2/4/2024
Section 2: Creates s. 607.0146, F.S.; relating to defective corporate actions.
Section 3: Creates s. 607.0147, F.S.; relating to ratification of defective corporate actions.
Section 4: Creates s. 607.0148, F.S.; relating to action on ratification.
Section 5: Creates s. 607.0149, F.S.; relating to notice requirements.
Section 6: Creates s. 607.015, F.S.; relating to effects of ratification.
Section 7: Creates s. 607.0151, F.S.; relating to filings.
Section 8: Creates s. 607.0152, F.S.; relating to judicial proceedings.
Section 9: Amends s. 605.0115, F.S.; relating to resignation of LLC registered agents.
Section 10: Amends s. 607.0503, F.S.; relating to resignation of corporation registered agents.
Section 11: Amends s. 607.1509, F.S.; relating to resignation of foreign corporation registered
agents.
Section 12: Amends s. 617.0502, F.S.; relating to resignation of corporation not for profit registered
agents.
Section 13: Amends s. 620.1116, F.S.; relating to resignation of limited partnership registered
agents.
Section 14: Amends s. 605.0213, F.S.; conforming a provision.
Section 15: Amends s. 607.0122, F.S.; conforming a provision.
Section 16: Amends s. 617.0122, F.S.; conforming a provision.
Section 17: Amends s. 605.0207, F.S.; conforming a provision.
Section 18: Amends s. 605.0113, F.S.; conforming a provision.
Section 19: Reenacts s. 658.23, F.S.
Section 20: Reenacts s. 607.0501, F.S.
Section 21: Reenacts s. 607.193, F.S.
Section 22: Reenacts s. 607.0120, F.S.
Section 23: Reenacts s. 607.1507 , F.S.
Section 24: Reenacts s. 39.8298, F.S.
Section 25: Reenacts s. 252.71, F.S.
Section 26: Reenacts s. 288.012, F.S.
Section 27: Reenacts s. 617.1807, F.S.
Section 28: Reenacts s. 617.2006, F.S.
Section 29: Reenacts s. 617.0501, F.S.
Section 30: Reenacts s. 617.0502, F.S.
Section 31: Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
The bill has an indeterminate negative impact on state government because the DOS is likely to
see a reduced amount in collected fees if a registered agent is able to resign from more than one
corporation at a time by only paying one fee, as opposed to current law which requires a registered
agent to pay a fee to resign from each corporation separately.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
STORAGE NAME: h1189.RRS PAGE: 10
DATE: 2/4/2024
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill has an indeterminate positive impact on the private sector because registered agents will be
able to resign from more than one corporation at a time by only paying one fee, as opposed to current
law which requires a registered agent to pay a fee to resign from each corporation separately.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill does not create rule-making authority nor require the promulgation of rules.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES