SESSION OF 2023
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2455
As Recommended by House Committee on
Judiciary
Brief*
HB 2455 would create a new section of law and
substantially update various articles of the Kansas General
Corporation Code (Code).
The bill would also amend various provisions concerning
Secretary of State (SOS) business filings, reports, and fees in
the Code and the Kansas Revised Limited Liability Company
Act (RLLCA); Business Entity Transactions Act (BETA); the
Business Entity Standard Treatment Act (BEST Act); Kansas
Revised Uniform Limited Partnership Act (RULPA); and the
Kansas Uniform Partnership Act (KUPA).
The bill would repeal several statutes as follows:
●On and after January 1, 2024, KSA 17-72a03,
concerning public benefit corporation amendments
and mergers;
●KSA 17-7511, concerning the inspection of a
corporation’s income tax return to verify a business
entity information report to the SOS;
●KSA 17-7514, KSA 56-1a610, and KSA 56a-1204,
concerning applications for extension of time for
filing income tax returns submitted to the SOS; and
●KSA 56-1a608 and KSA 56a-1203 concerning
annual reports and related fees. [Note: Continuing
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org law requires such reports and fees be collected
biennially.]
[Note: The bill would also repeal the version of KSA 17-
6712 as amended by Section 36, concerning appraisal rights
in mergers and consolidations, on and after January 1, 2024.
The new section would retain most of the bill’s amendments,
as further explained below.]
The bill would also amend two sections of law
concerning taxation to remove cross-references to a statute
that would be repealed by the bill. .
Electronic Signatures and Electronic Transmissions
(New Section 1)
The bill would add a section to law governing the
formation of corporations in the Code. This new section would
provide that any act or transaction governed by the Code,
articles of incorporation, or bylaws could be provided for in a
“document,” which would be defined by the bill and would be
deemed the equivalent of an electronic transmission.
The bill would also specify that whenever a signature is
required or permitted under the Code, it could be a manual,
facsimile, conformed, or “electronic signature,” which would
be defined by the bill. The bill also would outline when an
electronic transmission is deemed delivered to a person. In
addition, the bill would allow persons to conduct transactions
in accordance with the Uniform Electronic Transactions Act as
long as the requirements of this section are satisfied.
The bill would specify the various types of transactions
to which the section would not apply, and other related
limitations of the section’s provisions.
The bill would state that the provisions of the Code
would control to the fullest extent permitted under the federal
Electronic Signatures in Global and National Commerce Act
2- 2455 in the event such Code provisions are deemed to modify,
limit, or supersede that Act.
Other Code Amendments (Sections 2-50)
Throughout the Code, the bill would amend law to
authorize certain actions of corporations in accordance with
the new section concerning electronic signatures and
electronic transmissions discussed above, unless otherwise
restricted. Additionally, the bill would provide express
authority for corporations to use networks of electronic
databases, including blockchain and distributed ledgers, for
certain electronic transmissions and records.
The bill would make additional substantive changes to
law governing various aspects of corporations, as follows.
Formation of Corporations (Sections 6-11)
The bill would amend law governing the formation of
corporations in the Code to:
●Specify an amendment, repeal, or elimination of a
provision eliminating or limiting the personal liability
of a director to the corporation or its stockholders
would not affect an act or omission by a director
occurring before such amendment, repeal, or
elimination unless the provision allows retroactive
application;
●Specify any person, whether or not an incorporator
or director, could provide an instruction that
consent to action would be effective at a future
time, including a time determined upon a
happening of an event not later than 60 days after
the instruction is given, and would be revocable
prior to the time the consent becomes effective;
3- 2455 ●Expand the types of catastrophes that would
trigger a corporation’s emergency powers to
include an epidemic, a pandemic, or a declaration
of a national emergency by the U.S. government.
In addition, the bill would make a corporation’s
emergency bylaws adoptable by a majority of
directors present if a quorum cannot be readily
convened, and would add language concerning
actions that could be taken to address the
emergency condition, including postponing
stockholder meetings and changing record and
payment dates of dividends declared;
●Clarify a court’s jurisdiction to interpret, apply, or
enforce, or determine the validity of, any
instrument, document, or agreement when a
corporation and one or more stockholders sells or
offers to sell stock or when a corporation agrees to
sell, lease, or exchange any of its property or
assets upon consent of the stockholders; and
●Allow nonstock corporations to ratify defective
corporate acts and stock.
Directors and Officers (Sections 12 and 13)
The bill would amend law governing directors and
officers to:
●Clarify that bylaws could set a board of directors’
quorum at a number below or above a majority of
directors, but the quorum could not be less than
one-third of the total number of directors;
●Specify which officers would be entitled to
mandatory indemnification for any act or omission
occurring after June 30, 2023, including the
corporation’s most highly compensated executive
officers as identified in public filings with the U.S.
Securities and Exchange Commission (SEC); and
4- 2455 ●Authorize a corporation to permissively grant
indemnification for other persons who are not
officers for acts or omissions occurring after June
30, 2023.
Stocks and Dividends (Sections 14-20)
The bill would amend law governing stocks and
dividends to:
●Permit stock certificates to be signed by any two
authorized officers of the corporation rather than by
certain specified officers;
●Provide that shares of a corporation’s capital stock
would not be entitled to vote nor counted for
quorum purposes if such shares belong to any
entity that is controlled directly or indirectly by the
corporation;
●Clarify the effective dates of amendments to a
corporation’s articles of incorporation electing not
to be governed by statutory provisions limiting
business combinations with interested
stockholders;
●Permit the ratification of defective corporate acts or
stocks when there is no valid outstanding stock for
ratifications occurring on or after July 1, 2023;
●Specify the date for determining shareholders to
vote to ratify a defective corporate act that involved
a vote of the shareholders would be the record
date of the such vote, not the date of the apparent
defective corporate act;
●Clarify that any act that is within a corporation’s
powers under the Code could be ratified or
validated, even if approval had not been obtained
5- 2455 as required by the corporation’s articles of
incorporation or bylaws; and
●Clarify the definition of “failure of authorization”
would include the failure to authorize or effect an
act or transaction in compliance with the disclosure
set forth in any proxy or consent solicitation
statement to the extent such failure would render
the act or transaction void or voidable.
Meetings, Elections, Voting, and Notices (Sections 21-28)
The bill would amend law governing meetings, elections,
voting, and notices to:
●Allow certain stockholder notices, including
consents, to be provided by U.S. mail, courier, or
email (the bill would not require an opt-in for email
service);
●Allow the use of electronic databases, including
blockchain, distributed ledgers, and stock ledgers,
for certain electronic transmissions and
recordkeeping;
●Allow certain stockholder records to be maintained
on behalf of a corporation, and would specify that
printed electronic records are valid and admissible
evidence in court proceedings; and
●Remove language concerning dated signatures on
written consents to no longer require such
signatures be dated.
Merger or Consolidation (Sections 29-37)
The bill would amend law governing merger or
consolidation to:
6- 2455 ●Replace references to “Kansas corporations” with
“domestic corporations” and replace references to
corporations organized in other states with “foreign
corporations”;
●Modify provisions regarding voting rights of
stockholders and proxies in conformance with New
Section 1 of the bill;
●Specify the information to be included in a merger
or consolidation agreement, and remove a
requirement that in a merger involving a holding
company, the resulting company’s organizational
documents be the same as the articles of
incorporation of the original corporation;
●Specify that for mergers or consolidations between
two domestic corporations consummated prior to
July 1, 2023, the surviving entity would be required
to amend its organizational documents to include
certain identical information to that of the
constituent corporation if it did not already contain
the required information;
●For mergers or consolidations between two
domestic corporations consummated pursuant to
an agreement or board of directors resolution
adopted on or after July 1, 2023, no vote by
stockholders would be required to approve such
merger or consolidation unless expressly required
by the corporation’s articles of incorporation;
●Allow certain surviving entities to amend their
organizational documents to reduce the number of
classes and shares of stock or other units and
remove certain language authorized by the Act;
●Revise provisions concerning required stockholder
votes to approve a merger to not require such vote
when the offer is conditioned on a tender of a
7- 2455 certain amount of shares of stock of the constituent
corporation;
●Allow for certain stock to become excluded or be
deemed rollover stock per a written agreement for
the purposes of the merger. Such provisions would
be effective only with respect to merger
agreements entered into on or after July 1, 2023;
●Require a merger agreement concerning a
surviving domestic corporation contain a statement
concerning whether amendments or changes in the
articles of incorporation are desired. For
consolidation involving domestic corporations, the
bill would require the articles of incorporation to be
attached to the agreement;
●Require merger or consolidation agreements
involving a surviving or resulting foreign
corporation to include information required by the
laws under which the corporation is organized;
●Require that for nonstock corporation mergers or
consolidations involving converted memberships,
the cash, property, rights, or securities provided in
exchange for such conversion be specified in the
agreement;
●Raise the fee for service of process by the SOS to
$50 from $40. Continuing law and provisions under
the bill would require an out-of-state nonstock
corporation to designate the SOS as its agent for
service of process by in-state corporations;
●Amend provisions related to the merger or
consolidation of a nonstock corporation with a
stock corporation by specifying what information
related to the articles of incorporation must be in
such agreement;
8- 2455 ●If the SOS is required to be appointed to receive
service of process for the surviving or resulting
corporation, and if a certificate of merger or
consolidation is required to be filed, the bill would
require such designation to be included in the filed
certificate;
●Under an agreement consummated before July 1,
2023, if a corporation’s articles of incorporation are
amended, appraisal rights would be available,
pursuant to continuing law [Note: A new statutory
section that would become effective on January 1,
2024, would not contain this specific appraisal
provision];
●Under an agreement consummated on or after July
1, 2023, the bill would:
○Set a threshold for maintaining a claim of
appraisal rights in certain mergers to be
greater than 1 percent of the outstanding
shares, or the value of the consideration
exceeds $1 million; and
○Allow corporations to tender payment of
appraisal amounts when litigation begins to
avoid accrual of interest; and
●Deny appraisal rights to persons who hold shares
in an SEC reporting company pursuant to an
intermediate merger under the bill.
Dissolution and Disposition of Corporate Assets (Sections 38
and 39)
The bill would amend law governing dissolution and
disposition of corporate assets to:
●Clarify the district court would have jurisdiction to
revoke or forfeit a corporation’s articles of
9- 2455 incorporation upon motion by the Attorney General;
and
●Allow the district court to appoint trustees for
winding up the affairs of those corporations whose
articles of incorporation have been revoked or
forfeited, and limit the court’s powers to revoke or
forfeit to this section.
Extension, Renewal, or Reinstatement of Corporate Status
(Sections 40-42)
The bill would amend law governing extension, renewal,
or reinstatement of corporate status to:
●Modify the process by which a corporation could
revoke a voluntary dissolution or restore certain
articles of incorporation that expired because of an
existing time limitation;
●Amend provisions relating to corporate revival for
nonrevoked corporations to:
○Replace references to “renewal,” “extension,”
and “reinstatement” with the term "revival";
○Set requirements for certificates of revival;
○Clarify rights and duties of a corporation upon
revival; and
○Add language defining "board of directors"
and "bylaws" for purposes of reviving a
corporation and establishing the requirements
for authorization by the board of directors.
Public Benefit Corporations (Sections 43-45)
The bill would amend law governing public benefit
corporations to:
10- 2455 ●Amend provisions regarding the management of
public benefit corporations by balancing pecuniary
interests of stockholders, best interests of those
materially affected by the corporation’s conduct,
and specific public benefit (balancing requirement)
to:
○Add language concerning conflicts of interest
for directors of public benefit corporations and
make the exculpatory provisions for directors
of public benefit corporations the default;
○Add language regarding enforcement
provisions of the balancing requirement to
eliminate the super-majority stockholder
voting requirements associated with article
amendments to add or remove public benefit
corporation provisions or to merge or
consolidate with another entity such that the
resulting entity would include or omit public
benefit corporation provisions; and
○Remove the special appraisal rights of
stockholders of a corporation that converts to
or from a public benefit corporation.
Amendments to BETA (Sections 53-58)
The bill would amend provisions in BETA governing
mergers of business entities to permit certain mergers or
combinations with a corporation that can be effected without
the vote of the stockholders when the merging entity owns 90
percent or more of the stock of the corporation. The bill would
allow such mergers to occur between domestic corporations
and both domestic and foreign non-corporation business
entities.
The bill would also state that the provisions of BETA
would control to the fullest extent permitted under the federal
Electronic Signatures in Global and National Commerce Act
11- 2455 in the event such provisions modify, limit, or supersede that
Act.
Amendments to Code, BETA, BEST Act, RULPA and
KUPA Concerning SOS Filings, Reports, and Fees
(Sections 51-52, 59-72; Other Various Sections
Throughout)
The bill would amend law concerning business entity
information filings, reports, and fees submitted to the SOS in
the Code, BETA, the BEST Act, RULPA, and KUPA to:
●Clarify business filing entity reports must contain
the location of the principal office, including a full
postal address, and would clarify other references
to addresses in these acts to mean postal
addresses;
●Standardize the attributes of addresses of
individuals and entities in periodic reports;
●Replace a per-page fee with a per-document fee
for requested copies of certified and uncertified
documents from the SOS;
●Expand the ability of the SOS to accept filings by
various electronic means, including electronic
uploads;
●Specify when filings must be made on forms
prescribed by the SOS;
●Remove language requiring the number of shares
of capital stock issued for domestic for-profit
corporations be included on business entity filing
reports;
●Remove language requiring number of
memberships or number of shares of capital stock
12- 2455 issued for non-profit corporations be included on
business entity filing reports;
●Add certificates of revocations of dissolution and
certificates of merger or consolidation to the SOS
fee schedule for corporate filings;
●Remove language requiring the SOS to maintain
copies of applications for extension tax returns of
limited liability companies; and
●Clarify provisions regarding resignation of resident
service agents and filing related certificates of
resignation.
Background
The bill was introduced by the House Committee on
Federal and State Affairs at the request of a representative of
the Kansas Bar Association (KBA). The bill was referred to
the House Committee on Judiciary on March 9, 2023.
House Committee on Judiciary
In the House Committee hearing on March 14, 2023,
two representatives of the KBA and a representative of the
SOS testified as proponents of the bill. Proponents generally
stated the purpose of the updates contained in the bill is to
bring Kansas statutes up to date with provisions contained in
the Delaware General Corporation Law (DGCL). [Note:
Kansas has patterned its Code on the DGCL since the
Code’s adoption in 1972.] Proponents also stated the bill
would standardize and improve requirements related to
business filings with the SOS.
No other testimony was provided.
13- 2455 Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, the SOS and the Department of
Revenue indicate enactment of the bill would not have a fiscal
effect.
Corporations; business entities; filings; Secretary of State; Kansas General
Corporation Code; Kansas Revised Limited Liability Company Act; Business Entity
Transactions Act; Kansas Revised Uniform Limited Partnership Act; Kansas Uniform
Partnership Act
14- 2455